Should I Refinance My Home

Question: Should i refinance my home or not?

(Posted by: funfireworks on 2008-01-30 22:08:16)

I have a 30yr fixed rate at 6.375 % and am 4 yrs 4 months into it. And currently pay a extra payment each year. I financed $254, 600 and now owe $224, 790. I am at 83.9 % LTV and pay $183 PMI monthly. I have a found a rate with Quicken Loans for 4.75 % fixed 15 yrs. The loan discount fee 1.75 % (cost $4149.69), I think this buys down the interest rate. Other closing cost and fees came to $4137. This will cost me a total of $8287. On the good faith estimate I would now be refinancing $237, 125. I probably will pay the house off in the next 7 to 10 years, hopefully. Would this refinance be a good move for me? Thanks, Darrell

Posted by: DAVE on 2008-01-30, 22:23:41

Darrell, Keep your options open. Sounds pretty good but see if you can get better.Shop around without commitment look at other companies and see what they have to offer. You might want to inquire about 10 year fixed loan. Interest rates are even lower. By the way that discount you are buying seems pretty high. I am quoting the about the same rate for a 15 year fixed with no buy down.

Posted by: GVD on 2008-01-30, 22:42:07

It actually makes little sense given that you are only keeping it for 7-10 years longer. What will the rate be after the first year or 2? Is it a temporary buy down? $4137 to buy a 15 year to 4.75% does not make sense either, when you can currently get a 15 year at 4.875% at par. (No points) You obviously have the financial profile to warrant such an offer so I'm more than confident in saying that you can find a better deal or at least take a closer look at how you want to structure the refi. You are arbitrarily inflating your balance $12,335 for this refi in order to pay it back off in 7 years. That's $1762.14 per year extra for the next 7 years. So, your refi has to save you $146.85 per month for the next 7 years to pay for it. And that is just to break even. That makes no sense. Don't get me wrong, what you are getting is not robbery or anything, I just don't believe it takes your financial goals into account. Did you tell them you were planning to pay the house off in 7-10 years? Actually sit with an experienced broker and tell them what you want to do and see what options they can offer.

Posted by: words_that_live_on on 2008-01-30, 22:55:33

I look at this in dollars when it is transferred. You will pay almost 400 a month for 15 yrs after losing 8 thousand dollars equity. Once you got the good interest rate you then throw it away by paying it off in ten years.

Posted by: 99balloons on 2008-01-30, 23:10:46

You have several options! First of all, there are better deals out there than what Quicken has to offer. Since I am limited on what I know about you, such as fico scores and whether or not this is a full doc loan, and or if you need a little cash out. But, any ways, here I go. Step #1. See a Reputable mortgage broker who has a good selection of lenders. Step#2, If possible, pay down loan to stay at 80% LTV. Step#3, if needing a little cash which would exceed that magical 80% LTV, go FHA. Low rates in the mid 5's, plus the mi factor is only .5, which means your monthly mortgage insurance would be much lower that what you currently have now. The underwriting standards on FHA loans has changed in that now a termite clearance is not required unless there is very noticeable problems with the home and its been noted by the appraiser. If your in California, I can help. Good Luck! Jeff