Simple Mortgage Refinance

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Allan12
Posts: 184
Joined: Wed Nov 28, 2012 2:40 pm

Simple Mortgage Refinance

Post by Allan12 » Tue Apr 12, 2016 11:38 am

I currently have paid 3.5 years of $320,000, 3.625% 30 year Mortgage, with a balance of $295,000.

I am refinancing to a 15 year mortgage, $300,000, 3.0% rate. The $5,000 increase of mortgage balance would represent refinancing fees rolled in.

I am using the same bank to save on NYC associated fees, and simplicity within the escrow account.

I can buy a point for approximately $3,000 and would bring my rate down to 2.875%. Is it worth it to buy a point, or 2 points? Seems like according to my calculations the savings is less than $2,000.

This house represents my 'forever' home, and I anticipate keeping it for my lifetime.

Please let me know if you think its worthwhile to purchase a point or 2.

orca91
Posts: 1223
Joined: Thu Mar 03, 2016 7:17 pm

Re: Simple Mortgage Refinance

Post by orca91 » Tue Apr 12, 2016 11:55 am

Allan12 wrote:I can buy a point for approximately $3,000 and would bring my rate down to 2.875%. Is it worth it to buy a point, or 2 points? Seems like according to my calculations the savings is less than $2,000.


Based on that statement and without running any numbers, I say, no, not worth it for the point.

Of course, you can deduct points if I recall. So, there may be more to it...

But, my simple thinking says just take the 3.0% deal and pay ahead on that some if you want to save a couple thousand.

Allan12
Posts: 184
Joined: Wed Nov 28, 2012 2:40 pm

Re: Simple Mortgage Refinance

Post by Allan12 » Tue Apr 12, 2016 11:58 am

orca91 wrote:
Allan12 wrote:I can buy a point for approximately $3,000 and would bring my rate down to 2.875%. Is it worth it to buy a point, or 2 points? Seems like according to my calculations the savings is less than $2,000.


Based on that statement and without running any numbers, I say, no, not worth it for the point.

Of course, you can deduct points if I recall. So, there may be more to it...

But, my simple thinking says just take the 3.0% deal and pay ahead on that some if you want to save a couple thousand.


I ran the numbers and it seems like the difference is like around $1,000. And that's not including PV or FV, or on the other hand deducting mortgage points.

To me it's not worth it, just want to make sure I am not missing anything.

c1over8
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Joined: Fri Apr 01, 2016 10:15 am

Re: Simple Mortgage Refinance

Post by c1over8 » Tue Apr 12, 2016 12:13 pm

I calculate the payment on $300,000, 15 years, 3% to be $2,071.74/month, $372,914.09 over the life of the loan.
I calculate the payment on $300,000, 15 years, 2.875% to be $2,053.76/month, $369,676.29 over the life of the loan.

$372,914.09 -$369,676.29 = $3,237.80

So isn't the net savings $3,000.00 (cost of point) - $3,237.80 (interest savings over life of loan) = $237.80.

Jack FFR1846
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Re: Simple Mortgage Refinance

Post by Jack FFR1846 » Tue Apr 12, 2016 12:21 pm

Seems like an awful expensive refi to me. Not much interest rate savings with high costs. Unless this would rid you of PMI, I think I'd skip it and just pay extra every month. I'm the king of "refi it to save 1/8 percent", but I only do no cost refi's, so these costs seem astronomical to me.
Bogle: Smart Beta is stupid

4th and Inches
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Joined: Mon Nov 12, 2012 8:53 pm

Re: Simple Mortgage Refinance

Post by 4th and Inches » Tue Apr 12, 2016 1:04 pm

$5k in refinance costs seems really high.

AnonJohn
Posts: 91
Joined: Wed Oct 07, 2015 2:45 pm

Re: Simple Mortgage Refinance

Post by AnonJohn » Tue Apr 12, 2016 3:38 pm

I'm with Jack, although I'm merely the ambivalent viscount of refinancing to save 1/4 - 3/8 a point. I'm in the middle of refinancing to a 2 7/8% 15 year loan and getting my closing costs covered by a lender credit. $5000 seems awfully high. I plan to walk away with $200. Suggest you look for a no-cost refinance option.

But I'd also echo what Jack said re: PMI. If you have it and can get rid of it, that's huge.

Allan12
Posts: 184
Joined: Wed Nov 28, 2012 2:40 pm

Re: Simple Mortgage Refinance

Post by Allan12 » Tue Apr 12, 2016 4:15 pm

How does one go about finding these rates with no fees?

Are the online banks associated with zillow rate finder legitimate?

I am in NYC, so the mortgage refinance tax is $3,000. I can avoid that by having the mortgage assigned to the new company, but that requires an attorney, and the quotes I've received are between $1,000 and $2,000. And plus I don't know if I can trust these online companies to handle a complex situation.

I figure the amount of interest I will be saving in the long run is worth it!

PMI is non existent in my case.

AnonJohn
Posts: 91
Joined: Wed Oct 07, 2015 2:45 pm

Re: Simple Mortgage Refinance

Post by AnonJohn » Wed Apr 13, 2016 7:51 am

I went through Zillow - eRates mortgage. I'm doing it for the second time, so I guess I'd recommend it. But I totally understand why you ask the question.

The model seems to be to churn stuff through immediately re-sell it. I ended up with Fannie Mae holding the mortgage and a servicing company out of Arkansas. The servicing company initially looked iffy but turned out fine. eRates people seem reasonably good at what they do, but you need to keep an eye out since they move volume, mistakes can crop up. Maybe not for the first time mortgagee. Ultimately if Fannie holds the mortgage, that was OK by me. I'd prefer a local bank that held it to term, but it's hard to find guarantees of that and the cost was too high for me.

That NY tax is brutal. I can't understand why they'd want to discourage people from saving money and presumably spending it in the state. They could make up the revenue easily in other ways.

The only other tip I can offer - ask your original title company about a re-issue / repeat customer rate. Can be good for saving a few hundred.

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