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#383448 - 09/28/12 12:00 PM Time to refinance?
nickbuol Offline
connoisseur

Registered: 09/16/04
Posts: 4516
Loc: Marion, IA
With interest rates at all time lows right now, how does one figure out if it is time to refinance?

We are 1 year into our current home ownership and have a special mortgage situation.

When we bought our house, instead of putting 20% down or whatever, we actually took out a second mortgage right from the start (called an 80/20 loan) to fund 100% of the house. Then we took the proceeds from the sale of our previous home and invested that money into this house. That way we increase the equity and get to enjoy the additional space right away.

Anyway, the 80% loan is at 4.25% and is due basically in 29 years.
The remaining 20% loan is at 5.25% and is due in 9 years (it was a 10 year loan with a balloon payment at the end).

Current re-financing rates at our bank are showing at 3.50% with zero points. I would have to pay for an appraisal and whatever the other closing costs are.

Does this make sense? I sounds like it would, but I am just not sure....
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#383449 - 09/28/12 12:55 PM Re: Time to refinance? [Re: nickbuol]
Ken.C Offline
shareholder in the making

Registered: 05/03/03
Posts: 17789
Loc: NoVA
I have a similar question! Curious what y'all have to say.
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#383451 - 09/28/12 01:57 PM Re: Time to refinance? [Re: nickbuol]
medic8r Offline
axiomite

Registered: 02/05/06
Posts: 6402
Loc: Fredericksburg, Virginia
I refinanced a year ago and it helped my cash flow and debt consolidation significantly. For me, it was a no-brainer.

Everyone's situation is unique, but I would say that if you plan to be in that house indefinitely, or at least for a few years, then you will more than recoup your closing costs and be locked in at historically low interest rates.
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"The Universe is the game of the self, which plays hide and seek forever and ever" - Alan Watts

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#383452 - 09/28/12 02:14 PM Re: Time to refinance? [Re: medic8r]
a401classic Offline
connoisseur

Registered: 11/29/06
Posts: 1194
Loc: Alpharetta, GA
We just refinanced - first new payment due on Oct 1... We found a great rate at 2.75% on a 10 year note coming out of the first half of a 15 year note at 4.875%. Even after pulling some cash for home repairs and such our payments are $100/month lower!

Most calculators will do amortization calculations - run the numbers, you'll know if it makes sense.

Scott
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#383455 - 09/28/12 05:00 PM Re: Time to refinance? [Re: nickbuol]
medic8r Offline
axiomite

Registered: 02/05/06
Posts: 6402
Loc: Fredericksburg, Virginia
Dang, that is a great rate, Scott. A ten year mortgage is awfully aggressive, but if you can swing that monthly payment, then you are not gonna pay anywhere near the total interest of a 30 year or even 20 or 15 year.

I vote for Scott for treasurer of the Axiomoe Fan Club.
_________________________
"The Universe is the game of the self, which plays hide and seek forever and ever" - Alan Watts

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#383458 - 09/28/12 05:53 PM Re: Time to refinance? [Re: nickbuol]
terzaghi Offline
connoisseur

Registered: 04/04/07
Posts: 4848
Loc: Tulsa, Oklahoma
I am waiting on a quote from our previous mortgage broker regarding refinancing as well.

We are under a 4% note for 20 years, was wondering what a 15 year mortgage would cost, what interest rate, and how much closing costs would be. I haven't heard back yet.
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#383460 - 09/28/12 06:46 PM Re: Time to refinance? [Re: nickbuol]
CatBrat Offline
axiomite

Registered: 08/05/09
Posts: 5913
Loc: Milky Way Galaxy
I tried one of the online financial places to refinance, but they either never responded, or got thrown out with the rest of the spam. I guess I need to try again. Never thought about a 10 year note.

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#383504 - 09/30/12 01:22 PM Re: Time to refinance? [Re: nickbuol]
michael_d Offline
connoisseur

Registered: 07/23/04
Posts: 3915
Loc: Up yonder
If you can swing a 15 year at the lower rate, go for it.

General rule of thumb, is to refi if you can gain a whole point or more. Anything less than that, then the refi fees blow the deal.
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#383514 - 09/30/12 11:02 PM Re: Time to refinance? [Re: medic8r]
a401classic Offline
connoisseur

Registered: 11/29/06
Posts: 1194
Loc: Alpharetta, GA
well we didn't get there in one step. We started with a 30. When rates dropped enough we went to a 20, then to a 15. We had 8 years left on that when the college fund wasn't enough and we needed some repairs around the house. When we saw the rates at more than 2 point lower than we were at, it made the 10 yr note possible.

One can usually taka a 30 year note amd make it a 17 year note ny making a 13th payment (all to principal) every year, or most will allow for additional principal to be added whenever you you have the "spare" cash. What we have found over the years is that there is never really any "spare", so we pay heavy on the debt first and live on the rest. Sometimes it works, sometimes we reach for the plastic.

ymmv
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My HT

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#383515 - 10/01/12 12:16 AM Re: Time to refinance? [Re: a401classic]
pmbuko Offline
shareholder in the making

Registered: 04/02/03
Posts: 16289
Loc: Leesburg, Virginia
That sounds like us, minus the refis, most of the time.

We just bailed on our failed experiment in real estate by successfully negotiating a short-sale on our town home with both our lenders. We were told that most lenders won't give you the time of day unless you start missing payments. The payments weren't a problem for us -- it was the home repairs, space issues, and the fact that we bought at the peak and the market had fallen so far that were getting to us -- so we didn't want to play that game. Luckily our real estate agent was amazing and kept on top of the lenders until we found some mutually acceptable terms. We're still waiting for any negative credit rating fallout to occur, but it should be minimal.
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