Should I refinance with original lender @ 2.625%?
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Should I refinance with original lender @ 2.625%?
Do any of these other offers sound decent (much better than original lender) but could I get better?:
1. LW: 2.625% rate, 0 points, $900 in fees, $2000 in 3rd party costs
2. SF: 2.75% rate, 0 points, no lender fees, $425 for appraisal, estimated $1200 for title, etc.
Last week I spoke with my original mortgage lender to refinance my 30-yr fixed to 15-yr fixed. He was out of the office but got back to me today with the specifics. He went ahead and locked in the rate that week, but I haven't yet signed. Please let me know if this sound like a bogus deal. I've only compared with 2 other lenders (last week) and their costs were higher. I only plan on living in this house for no more than 3 years but I'm afraid rates are only continuing to rise
Current
Purchased October 2015
30-yr fixed @ 3.875%
Value $307,000
Loan balance $197,000
Mortgage w/ taxes+ins $1268/mo
Refinance
15-yr fixed @ 2.625%
mortgage w/ taxes+ins $1708/mo
Cost is 1 point = $2295 (lender credit $251) so $2044
Prepaids $665 (since this is my original lender I don't have to worry about this)
Closing costs $3783
So if I'm reading this correctly, my total cost to refinance would be $5827 ($2044+$3783) which seems like a ridiculous amount for a loan balance of $197,000, especially given that I purchased the home less than a year ago from this lender. I think a majority of those costs (appraisal, title search, origination fee) should be waived
Should I tell my original lender to go kick dust?
1. LW: 2.625% rate, 0 points, $900 in fees, $2000 in 3rd party costs
2. SF: 2.75% rate, 0 points, no lender fees, $425 for appraisal, estimated $1200 for title, etc.
Last week I spoke with my original mortgage lender to refinance my 30-yr fixed to 15-yr fixed. He was out of the office but got back to me today with the specifics. He went ahead and locked in the rate that week, but I haven't yet signed. Please let me know if this sound like a bogus deal. I've only compared with 2 other lenders (last week) and their costs were higher. I only plan on living in this house for no more than 3 years but I'm afraid rates are only continuing to rise
Current
Purchased October 2015
30-yr fixed @ 3.875%
Value $307,000
Loan balance $197,000
Mortgage w/ taxes+ins $1268/mo
Refinance
15-yr fixed @ 2.625%
mortgage w/ taxes+ins $1708/mo
Cost is 1 point = $2295 (lender credit $251) so $2044
Prepaids $665 (since this is my original lender I don't have to worry about this)
Closing costs $3783
So if I'm reading this correctly, my total cost to refinance would be $5827 ($2044+$3783) which seems like a ridiculous amount for a loan balance of $197,000, especially given that I purchased the home less than a year ago from this lender. I think a majority of those costs (appraisal, title search, origination fee) should be waived
Should I tell my original lender to go kick dust?
Last edited by crazylightgirl on Sat Sep 17, 2016 3:22 pm, edited 3 times in total.
Re: Should I refinance with original lender @ 2.625%?
I would. We just, last month, did a 20 year at 3.25 with escrow waivers with our only costs being the "third-party" title insurance etc... Our total out of pocket was less than $500 bucks-- we did have an appraisal waiver, otherwise the appraisal was another few hundred.
Went though uswidefinancial.com. They currently show a 15 year at 2.625 with only the title fees, etc... being out of pocket. 1 point would get the rate to 2.375. If you wanted a true no cost option, they show those as well.
We have done our last 2 refinances with them. Easy to use and each one took about 6 weeks start to finish.
Went though uswidefinancial.com. They currently show a 15 year at 2.625 with only the title fees, etc... being out of pocket. 1 point would get the rate to 2.375. If you wanted a true no cost option, they show those as well.
We have done our last 2 refinances with them. Easy to use and each one took about 6 weeks start to finish.
Re: Should I refinance with original lender @ 2.625%?
The fees seem steep to me. I'm in the process of re-financing from a 30 to a 20 - locked in at 3%, zero fees whatsoever. I would get three lenders and pit them against each other (an easy way to do this is to go to LendingTree and input your info - be prepared for an onslaught of calls and e-mails...but it was worth it in my opinion as the calls eventually stopped). Tell them you'll give each the opportunity to EARN your business and s/he with the best rate and lowest fees wins. Your goal is to pay the bank the least amount of interest. If your current lender isn't the winner, tough. That's business. Good luck.
Re: Should I refinance with original lender @ 2.625%?
It looks like you are considering paying $5,827 in order to save interest on a mortgage for only a couple of years. This does not make sense to me.
If you have $5,827 lying around, and the extra $500 a month, why not just pay an extra $1k on the principal each month?
I don't know how to do the math on this issue, but my gut instinct is that this is way too much to pay on a refinance. I know things are not like they used to be, but that number just seems ridiculous to me.
If you have $5,827 lying around, and the extra $500 a month, why not just pay an extra $1k on the principal each month?
I don't know how to do the math on this issue, but my gut instinct is that this is way too much to pay on a refinance. I know things are not like they used to be, but that number just seems ridiculous to me.
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Re: Should I refinance with original lender @ 2.625%?
Shop around, you can get a no-cost refi for the same rate.
Re: Should I refinance with original lender @ 2.625%?
Yes, the non-recurring closing costs are just too high for it to make sense. Try to price a no-cost loan, where the loan rebate will be larger, in exchange for a slightly higher rate. Unfortunately, with relatively smaller loan balances like yours, the rebate tends to be small as well.crazylightgirl wrote: Should I tell my original lender to go kick dust?
It might make more sense to continue to keep the same loan and just make monthly prepayments to pay off the loan sooner, and avoid those closing costs.
That said, you may have better luck with a different lender. I can recommend a loan officer for an internet lender who did my last refi at no-cost for 3.375% for 30 year fixed 4 years ago. The loan balance was about double yours then, though. He emailed me again a few months ago after Brexit telling me he might be able to do 3.25% no-cost/30 year fixed, but the rates did not drop low enough for it to happen. PM me if you want his info. He may be able to do 2.625% 15 year no-cost.
Re: Should I refinance with original lender @ 2.625%?
I just refi'd my primary to a 15 year 2.825% no points or closing cost loan from a 4% 30 year. About 50% LTV. Seems like you could get a better deal. Good luck!
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Re: Should I refinance with original lender @ 2.625%?
bump for edited post
Re: Should I refinance with original lender @ 2.625%?
Looks better. For just another 3 years, I'm not sure it is better than just paying extra on the current mortgage.
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Re: Should I refinance with original lender @ 2.625%?
Why? You're paying fees, lots of fees and points. Your monthly payment is going up. And you're moving soon. Makes no sense.
If you can find a zero cost, it might be worth doing. Much of the benefit in interests rates is going from 30 years down to 15.
http://www.bankrate.com/
30 year fixed refi 3.47%
15 year fixed refi 2.71%
If you can find a zero cost, it might be worth doing. Much of the benefit in interests rates is going from 30 years down to 15.
http://www.bankrate.com/
30 year fixed refi 3.47%
15 year fixed refi 2.71%
Re: Should I refinance with original lender @ 2.625%?
IMO, you want the fees and 3rd party costs to be as close to 0 as possible. These costs are not tax-deductible, unlike the interest you are paying at a higher rate right now.crazylightgirl wrote:Do any of these other offers sound decent (much better than original lender) but could I get better?:
1. LW: 2.625% rate, 0 points, $900 in fees, $2000 in 3rd party costs
2. SF: 2.75% rate, 0 points, no lender fees, $425 for appraisal, estimated $1200 for title, etc.
Right now, at 3.875% and $197k loan balance, you are paying $636 of interest per month.
With option 1, your monthly interest payment is $430 - or a $206 reduction . If you are deducting that interest and are in a 30% combined federal/state tax bracket, the $206 is really only a $144 improvement in your monthly cash flow. With total non recurring costs of $2900, that means it will take you 20 months to recoup all those costs - you will only start seeing a benefit in month 21.
With option 2, your monthly interest payment is $451- or a $185 reduction . If you are deducting that interest and are in a 30% combined federal/state tax bracket, the $185 is really only a $129 improvement in your monthly cash flow. With total non recurring costs of $1625, that means it will take you 12.5 months to recoup all those costs - you will only start seeing a benefit in month 13.
Which option is better depends on how long you will stay in the property. If you know for sure that you will stay more than 20 months, then #1 is good. If you stay between 12-20 months, then #2 is better. And if you move within 12 months, it's better to just keep your current loan.
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Re: Should I refinance with original lender @ 2.625%?
madbrain wrote:crazylightgirl wrote:Do any of these other offers sound decent (much better than original lender) but could I get better?:
1. LW: 2.625% rate, 0 points, $900 in fees, $2000 in 3rd party costs
2. SF: 2.75% rate, 0 points, no lender fees, $425 for appraisal, estimated $1200 for title, etc.
Right now, at 3.875% and $197k loan balance, you are paying $636 of interest per month.
With option 2, your monthly interest payment is $451- or a $185 reduction . If you are deducting that interest and are in a 30% combined federal/state tax bracket, the $185 is really only a $129 improvement in your monthly cash flow. With total non recurring costs of $1625, that means it will take you 12.5 months to recoup all those costs - you will only start seeing a benefit in month .
So option 2 sounds better assuming I stay for 2 years. I'm really trying to take the bogle head approach. If say I buy another home worth 1.3x my current home value, should I even bother refinancing and instead put that extra money into savings for the new home? Or is that still money wasted on interest? Or 3rd option to just put extra payments each month similar to a 15yr payment at my current 3.87 rate. With my current income that would come close to 30% to 33% take home pay.
Re: Should I refinance with original lender @ 2.625%?
Whether the extra interest is "wasted" depends on how much you value the flexibility of a lower minimum payment that a 30 yr mortgage provides.crazylightgirl wrote: If say I buy another home worth 1.3x my current home value, should I even bother refinancing and instead put that extra money into savings for the new home? Or is that still money wasted on interest?
Even though it will save you interest, a 15 year mortgage has a much higher minimum payment than a 30 year mortgage.
If you are trying to buy another home, your monthly debt payments to income ratio will determine how much you can borrow.
Unless you sell your current home first before applying for the loan on your next home, lenders will consider your current mortgage payment as part of your monthly debt payments when applying for the loan on your next home.
Your income may not allow to qualify for a 15 yr payment on your current home + mortgage payment on your next home; but it might allow you to qualify for 30 yr payment on your current home + mortgage payment on your next home.