mortgage refinance question (1 Viewer)

bubbawilson

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Would it be worth it to refinance at this time?

What morgage company is currently advertising no closing costs?


I currently have a 30 year fixed at 6.75%, I bought in August of 2007 when the rates were a little higher because I had an offer on my previous home and wanted to sale it quickly.
 

dapperdan

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Almost any mortgage company can do a no closing cost refinance.

I'll use a representative loan that I've done recently. There were approximately $3,000 in legitimate, no-recurring closing costs. This includes lender fee ($700), mtg broker fee ($500), processing fee ($495), Escrow fee ($380.10), Title fee ($550), and appriasal fee($400). On top of that, is the amount that the originator wants to make originating the loan. Say that's $1,000, maybe $1,500. So you've got roughly $4,500 in total non-recurring fees (one-time fees) that can be paid by the broker/lender.

How does the mtg broker or bank pay for it? Through the pricing mechanism of interest rates. Each interest rate is priced depending on how close or how far it is to where current interest rates are trading. For example, let's say interest rates are at 5.375%. But if you want to get a slightly higher rate, say 5.75%, there is a 1.750% lender fee that the bank is going to pay the broker. So on a $257,000 loan (x 1.75%), presto, you've got your closing costs covered.
 
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bubbawilson

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would it be worth my while if I've only been in my home for 6 mos.?
 

FWtex

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Almost any mortgage company can do a no closing cost refinance.

Is there really such a thing??? No cost = higher rate. Someone has to pay the clsoing cost and I promise you it is not going to be the bank.
 
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bubbawilson

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what I would like to do is refinance what I owe about 170,000 from 6.75% to the current rate.

Is this smart to do at this point and if i roll the closing cost back into the loan I would still come out better right?
 

jimwnola

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It's pretty much a math question and you have to know the size of your loan, what interest rate you can get now, how long you plan to spend in the house, and the impact on your taxes. The real saving comes from trying to move to a 15 year loan, from a 30 year. How important your interest deduction to your taxes is also a factor. There are all sort of websites that can tell you about current rates and much you will pay out on each loan. Generally, if you plan to stay in your house for a long time, almost any drop in the interest rate is worth it in the long run.
 

dapperdan

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Is there really such a thing??? No cost = higher rate. Someone has to pay the clsoing cost and I promise you it is not going to be the bank.

Yep. Depending on the size of the loan, anywhere from 1/4% to 1/2% higher rate.
 

jimwnola

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Go to bankrate.com

As an example, the monthly note for $170,000 loan is about 1100 a month. A 15 year, at 5.1 is 1350 a month. Theoretically, it advertises there may be fixed rate 15 year mortgages for as litte as 5.04%.

By paying $250 more a month for 15 years, you avoid paying another 15 years of 1100 a month. It gets complicated because of taxes, inflation, discounting for interest you could be earning ,etc. Still, for many, it might make sense to consider.
 

efil4stnias

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so you are not trying to take any "equity" out, just looking to refi? I remember from years ago that someone in the finance field said that the refi should get you 1% or more LESS than current rate (sheesh did that just make sense? ) to make it worth it. I would imagine any rate lower than current would be a boon, but you have to figure in you non-recurring closing costs. Thats money out of you pocket now.

Kinda look at it from an auto perspective....is it better to get a $2000 (aka closing costs ) rebate or 2.9% ( aka lower interest rate ) financing for 48 months? Sometimes its better to take the $2000 rebate vs the rate and vice versa- depends on how much money you come up with to "put down" ( aka cash toward closing costs )

in dapperdan's example you would theoretically have to get to around 6.5 interest rate to avoid closing costs due to the value of your refi. So to avoid closing costs you will refi for .25% savings. Is it worth it?
 

jimwnola

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any more help out there?

It's pretty much all there on bankrate.com and other similar sites. You use a mortgate calculator to compare what you have to pay on each loan, at each rate, and see what savings are incurred over the years. You then have to go out and find the mortgage loan at the advertised rate, and see what fees, points, and other costs are involved. If you plan to stay in home for a long time, it is generally worth it pay more up front cost for a lower rate.

If dropping your rate 1 percent leads to paying just overt $100 less a month for 30 years, that is a saving of over $36,000. If it costs you $1500 up front, it is worth it, unless you think you can use the $1,500 to earn $35,000 during that same time, or you move out long before you realize the savings.
 

bclemms

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I would wait a couple more months because rates will come down even more.
 
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bubbawilson

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Thanks to all. I actually called my lender this morning and she told me that she had been watching the rates and my loan and would call me when it makes sense for me to do this.

This is the third mortgage I have done with her, so I trust her judgement
 

efil4stnias

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http://biz.yahoo.com/cnnm/080318/031408_ratecut_mortgages.html

Not looking too positive. Anyone on here a mortgage broker/lender type?

I was hoping to hit around 4.8% or so on a 30 year before I would refi. Any realistic chance of that?

from the article...


"For instance, a borrower with an adjustable rate of 4.5% could have faced a rate reset up to 7.5% before the Fed started cutting rates in September. Before the rate cuts, that homeowner would have seen an increase of $370 in monthly payments on a $200,000 loan.

But after Tuesday that rate could reset only a little higher. And for some, the rate might not go up at all - and may actually drop - according to Greg McBride of Bankrate.com. "The Fed rate cuts far are more significant to [borrowers with ARMs] in terms of staving off delinquencies on loans," he said.

Long-term rate solution. Sending long-term fixed rates back down will be more complicated than fixing inflation, because the continuing housing crisis is also exacerbating the rise in long-term fixed rates."


so the bailout/putting off of foreclosures continues....
 

jazzjack

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Hold out a couple of months and contact your lender for a streamline refinance. Lower closing costs. Rates will usually fall a bit in the spring/early summer and go up in the fall.
 

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