Refinance Home Mortgage

Question: When to refinance home mortgage?

(Posted by: mhalweg on 2009-02-03 07:57:54)

When is it worth refinancing. i locked my 30 yr mortgage at 6.375 or 6.125 i have to look it up. it was a 157k loan. right now the rate is at 5.375 i think. the cost to refinance is $1300. the guy at the bank said that a good time to do it would be when the rate is at least 1 % lower. he also said that i would make up the $1300 probably in the first year. any input on when to refinance would be great. thanks when is it worth refinancing. i locked my 30 yr mortgage at 6.375 or 6.125 i have to look it up. it was a 157k loan. right now the rate is at 5.375 i think. the cost to refinance is $1300. the guy at the bank said that a good time to do it would be when the rate is at least 1 % lower. he also said that i would make up the $1300 probably in the first year. any input on when to refinance would be great. thanks I do all my banking at US Bank. I was told awhile ago that with each 1/ 8 % rate deduction it's about $5 less for the monthly payment. i wouldn't be able to pay any fees out of pocket. they'd have to be added to the loan.

Posted by: Rusty on 2009-02-03, 09:08:50

I worked at a mortgage Company for 15 years and the rule of thumb is if you're not lowering your interest by at least 2% financially it isn't worth it Did the Loan Officer tell you what the difference, in dollars and cents, would decrease if you refinanced for a 1% lower interest rate. It's very little. What about discount fees if you have to pay 2% of the loan to get a !% lower interest rate you should stay where you are. You should figure out all the costs of refinancing, discount, origination fee, appraisal, credit report, job and bank account verifications, etc. It's always surprising to people that they have to start over and qualify for a new loan, but you do. Figure out how much it will cost you to refinance whether you add it to the loan or pay out of pocket. Then figure out how much you will save in lower monthly payments and see how long it would take to recoup what it cost to refinance against how much you will be saving in the lower payment amount. .Don't let anyone talk you into a refi to lower your interest by 1%........it makes no financial sense.

Posted by: Inspector Clouseau on 2009-02-03, 08:56:57

Typically that is the rule of thumb - refinance when the rates are 1% or lower than your current rate. Was the bank guy with the bank you have your other accounts with? e.g. checking and savings. Oftentimes they will waive most, if not all the fees. I'd check around. Get at least 2 other quotes. $1300 seems a bit steep to me. Hope this Helps