Worth refinancing?

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Topic Author
jb1
Posts: 446
Joined: Sun Nov 27, 2016 8:33 am
Location: NC

Worth refinancing?

Post by jb1 » Fri May 15, 2020 8:46 am

Current:
30 year
165k owed 4.75%
PITI- $1234

Have been renting out the rooms to cover $1200 the last 18 months

Quoted:
30 year
170k loan on 3.625
PITI- 1032

Have a couple moving out and will have another guy move in. Total rent will be $875 meaning Id pay $157 per month

Thoughts?

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ResearchMed
Posts: 10278
Joined: Fri Dec 26, 2008 11:25 pm

Re: Worth refinancing?

Post by ResearchMed » Fri May 15, 2020 8:52 am

jb1 wrote:
Fri May 15, 2020 8:46 am
Current:
30 year
165k owed 4.75%
PITI- $1234

Have been renting out the rooms to cover $1200 the last 18 months

Quoted:
30 year
170k loan on 3.625
PITI- 1032

Have a couple moving out and will have another guy move in. Total rent will be $875 meaning Id pay $157 per month

Thoughts?
Why does "who is living there" (previous couple vs another guy) affect your decision?

Shouldn't this decision be to minimize your costs and interest?
(The "income" is fixed regardless of which mortgage you have. Or are there other factors you haven't mentioned?)

Are there any financing costs? If so, then it would be a matter of how long would it take for the monthly savings to cover/exceed that extra cost.

RM
This signature is a placebo. You are in the control group.

Topic Author
jb1
Posts: 446
Joined: Sun Nov 27, 2016 8:33 am
Location: NC

Re: Worth refinancing?

Post by jb1 » Fri May 15, 2020 8:55 am

ResearchMed wrote:
Fri May 15, 2020 8:52 am
jb1 wrote:
Fri May 15, 2020 8:46 am
Current:
30 year
165k owed 4.75%
PITI- $1234

Have been renting out the rooms to cover $1200 the last 18 months

Quoted:
30 year
170k loan on 3.625
PITI- 1032

Have a couple moving out and will have another guy move in. Total rent will be $875 meaning Id pay $157 per month

Thoughts?
Why does "who is living there" (previous couple vs another guy) affect your decision?

Shouldn't this decision be to minimize your costs and interest?
(The "income" is fixed regardless of which mortgage you have. Or are there other factors you haven't mentioned?)

Are there any financing costs? If so, then it would be a matter of how long would it take for the monthly savings to cover/exceed that extra cost.

RM
Personally its been nice barely paying anything to live the last 18 months. Also I have an 800 credit score, unsure why the rate was 4.75 to begin with. Goal would be to lower monthly payments. Closing costs would be lumped in (assume 3-5k).

HomeStretch
Posts: 4673
Joined: Thu Dec 27, 2018 3:06 pm

Re: Worth refinancing?

Post by HomeStretch » Fri May 15, 2020 9:03 am

The true principal & interest savings on a 30-year loan in the amount of your outstanding balance ($165k) at 4.75% versus 3.625% is $109/month or $1,308/year per an online calculator I used.

IMO it makes sense to refinance if:
(1) your true closing costs (excluding prepaids/escrows) are less than $2,600 (which is a two-year payback) and you will remain in the home for 3+ years;
(2) you don’t increase your loan amount from the $165k current balance outstanding to the $170k proposed amount of the new loan; and
(3) you pay off the new loan over the same term as the remaining term on your current loan.

Otherwise, if you intend to borrow more or take longer to pay the mortgage or have high closing costs, it may not make sense to refinance. Not enough info in your post to say. I ignored any tax impact of the refinance in my reply.

ETA: per your later post, if closing costs are $3k - $5k,your payback period is 2.2-3.8 years.
Last edited by HomeStretch on Fri May 15, 2020 9:06 am, edited 1 time in total.

Topic Author
jb1
Posts: 446
Joined: Sun Nov 27, 2016 8:33 am
Location: NC

Re: Worth refinancing?

Post by jb1 » Fri May 15, 2020 9:05 am

HomeStretch wrote:
Fri May 15, 2020 9:03 am
The true principal & interest savings on a 30-year loan in the amount of your outstanding balance ($165k) at 4.75% versus 3.625% is $109/month or $1,308/year per an online calculator I used.

IMO it makes sense to refinance if:
(1) your true closing costs (excluding prepaids/escrows) are less than $2,600 (which is a two-year payback) and you will remain in the home for 3+ years;
(2) you don’t increase your loan amount from the $165k current balance outstanding to the $170k proposed amount of the new loan; and
(3) you pay off the new loan over the same term as the remaining term on your current loan.

Otherwise, if you intend to borrow more or take longer to pay the mortgage or have high closing costs, it may not make sense to refinance. Not enough info in your post to say. I ignored any tax impact of the refinance in my reply.
I do plan on owning it for 10+ years, in regards to living there, I want to get a new place 2021-2022

HomeStretch
Posts: 4673
Joined: Thu Dec 27, 2018 3:06 pm

Re: Worth refinancing?

Post by HomeStretch » Fri May 15, 2020 9:11 am

jb1 wrote:
Fri May 15, 2020 9:05 am
I do plan on owning it for 10+ years, in regards to living there, I want to get a new place 2021-2022
If by “get a new place 2021-2022” you mean that you will move out and turn your current home into a 100% rental, would you have to let your lender know and refinance it as a rental at that time?

If yes, the payback period on the refinance now doesn’t seem to make sense as it is 2.2 - 3.8 years.

JLJL
Posts: 476
Joined: Wed Jan 08, 2014 11:10 pm

Re: Worth refinancing?

Post by JLJL » Fri May 15, 2020 9:26 am

In any regard this doesn't seem like the best rate and cost right now. You are rolling $5k in on top of a $165k loan and paying 3.65% in this quote... have you shopped around?

I just locked 3.25% with nothing rolled in on a larger loan through Northpointe, which has been all online and they have been good to work with.

Topic Author
jb1
Posts: 446
Joined: Sun Nov 27, 2016 8:33 am
Location: NC

Re: Worth refinancing?

Post by jb1 » Fri May 15, 2020 9:33 am

HomeStretch wrote:
Fri May 15, 2020 9:11 am
jb1 wrote:
Fri May 15, 2020 9:05 am
I do plan on owning it for 10+ years, in regards to living there, I want to get a new place 2021-2022
If by “get a new place 2021-2022” you mean that you will move out and turn your current home into a 100% rental, would you have to let your lender know and refinance it as a rental at that time?

If yes, the payback period on the refinance now doesn’t seem to make sense as it is 2.2 - 3.8 years.
I am unsure if I would have to let them know

Topic Author
jb1
Posts: 446
Joined: Sun Nov 27, 2016 8:33 am
Location: NC

Re: Worth refinancing?

Post by jb1 » Fri May 15, 2020 9:36 am

JLJL wrote:
Fri May 15, 2020 9:26 am
In any regard this doesn't seem like the best rate and cost right now. You are rolling $5k in on top of a $165k loan and paying 3.65% in this quote... have you shopped around?

I just locked 3.25% with nothing rolled in on a larger loan through Northpointe, which has been all online and they have been good to work with.
I havent to be honest. I tried loan depot before CV but they were very annoying with the approach so I stopped and went to my original lender.

JLJL
Posts: 476
Joined: Wed Jan 08, 2014 11:10 pm

Re: Worth refinancing?

Post by JLJL » Fri May 15, 2020 11:23 am

jb1 wrote:
Fri May 15, 2020 9:36 am
JLJL wrote:
Fri May 15, 2020 9:26 am
In any regard this doesn't seem like the best rate and cost right now. You are rolling $5k in on top of a $165k loan and paying 3.65% in this quote... have you shopped around?

I just locked 3.25% with nothing rolled in on a larger loan through Northpointe, which has been all online and they have been good to work with.
I havent to be honest. I tried loan depot before CV but they were very annoying with the approach so I stopped and went to my original lender.
Loan depot is annoying. I used them but they tried to soak me with $5k rolled in, were not very up front. They did give me a good faith estimate right away so I credit them for that. They called several times in the following 2 weeks and each time I said I went with someone else. Eventually they sent us a letter saying we were denied for a loan. Fine, they stopped calling.

I was able to get the same rate through Northpointe but nothing rolled in and they've been really easy to work with. We've had a single point of contact after completing the quote request, and he updated the rates on multiple products for me every day, with full details in spreadsheets. Online portal has been smooth. They also claim they intend to service the loan and not sell it but they reserve the right. Closing 2nd week in June I think.

JLJL
Posts: 476
Joined: Wed Jan 08, 2014 11:10 pm

Re: Worth refinancing?

Post by JLJL » Fri May 15, 2020 11:30 am

viewtopic.php?f=2&t=289559&start=1200

You might want to explore this thread if you haven't already.

Topic Author
jb1
Posts: 446
Joined: Sun Nov 27, 2016 8:33 am
Location: NC

Re: Worth refinancing?

Post by jb1 » Fri May 15, 2020 11:32 am

JLJL wrote:
Fri May 15, 2020 11:23 am
jb1 wrote:
Fri May 15, 2020 9:36 am
JLJL wrote:
Fri May 15, 2020 9:26 am
In any regard this doesn't seem like the best rate and cost right now. You are rolling $5k in on top of a $165k loan and paying 3.65% in this quote... have you shopped around?

I just locked 3.25% with nothing rolled in on a larger loan through Northpointe, which has been all online and they have been good to work with.
I havent to be honest. I tried loan depot before CV but they were very annoying with the approach so I stopped and went to my original lender.
Loan depot is annoying. I used them but they tried to soak me with $5k rolled in, were not very up front. They did give me a good faith estimate right away so I credit them for that. They called several times in the following 2 weeks and each time I said I went with someone else. Eventually they sent us a letter saying we were denied for a loan. Fine, they stopped calling.

I was able to get the same rate through Northpointe but nothing rolled in and they've been really easy to work with. We've had a single point of contact after completing the quote request, and he updated the rates on multiple products for me every day, with full details in spreadsheets. Online portal has been smooth. They also claim they intend to service the loan and not sell it but they reserve the right. Closing 2nd week in June I think.
Thank you! I just contacted northpointe

User avatar
DiscoBunny1979
Posts: 2034
Joined: Sun Oct 21, 2007 10:59 am

Re: Worth refinancing?

Post by DiscoBunny1979 » Fri May 15, 2020 11:38 am

In my opinion if You have to rent out rooms to cover a mortgage then You can't afford the place. But that's my opinion.
What is Your yearly income?? Have You had to replace any major systems . . AC/Heat; Roof; Carpeting; Electrical Panel upgrades? Do you have an emergency fund for home repairs and what is the balance of it? While refinancing to a lower rate to save $$ is a good idea, what is the motivating factor - affordability? If so, then lowering rate is a band aid that doesn't solve the initial problem, which is renting rooms. Could you refinance and increase rent. Do You declare the 'rent' as income on Your income taxes and what are those taxes or have You made it a 'business' which might impact insurance coverage.'?

LuckBeALady
Posts: 70
Joined: Sun Mar 14, 2010 7:33 am

Re: Worth refinancing?

Post by LuckBeALady » Fri May 15, 2020 11:48 am

I just closed a refinance with Better.com. I found them to be organized and quick.

Rate: 3.25% 30 year loan on a condo (condo rates tend to be a bit higher)
Closing costs:
-$1564 loan costs
-$2485 prepaid interest and escrow
+$2008 credits
+$2500 Amex credit

So for about 2 hours of work gathering documents and responding to “tasks”, I lowered our rate from 3.9% to 3.25% and actually ended up with a credit.

It’s worth it to shop around. I checked with my original lender as well as 3-4 other loan providers.

We will pay it as a 15-year but wanted the flexibility of a lower 30-year payment in case of a change in circumstances.

Pablov
Posts: 13
Joined: Mon Feb 04, 2019 11:14 am

Re: Worth refinancing?

Post by Pablov » Fri May 15, 2020 5:57 pm

JLJL wrote:
Fri May 15, 2020 11:23 am
jb1 wrote:
Fri May 15, 2020 9:36 am
JLJL wrote:
Fri May 15, 2020 9:26 am
In any regard this doesn't seem like the best rate and cost right now. You are rolling $5k in on top of a $165k loan and paying 3.65% in this quote... have you shopped around?

I just locked 3.25% with nothing rolled in on a larger loan through Northpointe, which has been all online and they have been good to work with.
I havent to be honest. I tried loan depot before CV but they were very annoying with the approach so I stopped and went to my original lender.
Loan depot is annoying. I used them but they tried to soak me with $5k rolled in, were not very up front. They did give me a good faith estimate right away so I credit them for that. They called several times in the following 2 weeks and each time I said I went with someone else. Eventually they sent us a letter saying we were denied for a loan. Fine, they stopped calling.

I was able to get the same rate through Northpointe but nothing rolled in and they've been really easy to work with. We've had a single point of contact after completing the quote request, and he updated the rates on multiple products for me every day, with full details in spreadsheets. Online portal has been smooth. They also claim they intend to service the loan and not sell it but they reserve the right. Closing 2nd week in June I think.

I had a bad experience with Loan Depot. I spoke with them yesterday(5/14/20) for the first time and I felt like I was being sold a time share. Maybe that agent was not the right "fit" for or me but based on that 1st contact I probably would rather work with another lender. Today i received a call form them again saying rates were much better now than when we last talked. (the guy did not realized i had talked to them yesterday.) He was lower key but still tough to talk to. He kept telling me how, at the same rate, a 30 yr mortgage is the same as a 20 yr. And, as with the 1st guy, this guy kept repeating how he was looking out for me, had my interests above those of his employer, etc etc etc. As with the previous poster, the 2 guys I spoke with kept talking me into rolling 5K of fees to capital. Long story short, this second agent ended up hanging up on me as i kept telling him to not explain things to me and just give me the numbers so that i could write them down.

Loan Depot might/could have good rates but based on my experience i would not deal with this people. I truly felt like I was talking to one of the guys form the movie "Boiler Room." :?

go140point6
Posts: 137
Joined: Thu May 07, 2015 3:31 pm

Re: Worth refinancing?

Post by go140point6 » Fri May 15, 2020 6:34 pm

800 FICO and that rate seems off, unless debt-to-income or something else is going on... i know it might be very location dependent and weird underwriting factors, but I am almost closing on a refi from 30 year 3.875 to 15 year 2.875 with $160 out of pocket when all is said and done... probably could have got 2.75 if i would have accepted an escrow account, but it's worth it to me not to... we went with ally home loans... my wife and I each have over 800 fico... to be honest, if rates drop significantly in the near future, we'll do it again if it's roughly the same out of pocket cost... why not just keep doing it if the out of pocket costs are next to nil?

i have some friends who are working on a 2.99% 30 year refi at roughly no cost out of pocket... not sure the specifics, but they are using owning.com...

Topic Author
jb1
Posts: 446
Joined: Sun Nov 27, 2016 8:33 am
Location: NC

Re: Worth refinancing?

Post by jb1 » Sat May 16, 2020 12:12 pm

go140point6 wrote:
Fri May 15, 2020 6:34 pm
800 FICO and that rate seems off, unless debt-to-income or something else is going on... i know it might be very location dependent and weird underwriting factors, but I am almost closing on a refi from 30 year 3.875 to 15 year 2.875 with $160 out of pocket when all is said and done... probably could have got 2.75 if i would have accepted an escrow account, but it's worth it to me not to... we went with ally home loans... my wife and I each have over 800 fico... to be honest, if rates drop significantly in the near future, we'll do it again if it's roughly the same out of pocket cost... why not just keep doing it if the out of pocket costs are next to nil?

i have some friends who are working on a 2.99% 30 year refi at roughly no cost out of pocket... not sure the specifics, but they are using owning.com...
That is what I do not get either.. I had a friend get a loan for a house he bought with 3.125% 5% down on a 200k loan.

I just dont get why I am getting these high interest rate amounts.

mervinj7
Posts: 1466
Joined: Thu Mar 27, 2014 3:10 pm

Re: Worth refinancing?

Post by mervinj7 » Sat May 16, 2020 12:39 pm

jb1 wrote:
Sat May 16, 2020 12:12 pm
go140point6 wrote:
Fri May 15, 2020 6:34 pm
800 FICO and that rate seems off, unless debt-to-income or something else is going on... i know it might be very location dependent and weird underwriting factors, but I am almost closing on a refi from 30 year 3.875 to 15 year 2.875 with $160 out of pocket when all is said and done... probably could have got 2.75 if i would have accepted an escrow account, but it's worth it to me not to... we went with ally home loans... my wife and I each have over 800 fico... to be honest, if rates drop significantly in the near future, we'll do it again if it's roughly the same out of pocket cost... why not just keep doing it if the out of pocket costs are next to nil?

i have some friends who are working on a 2.99% 30 year refi at roughly no cost out of pocket... not sure the specifics, but they are using owning.com...
That is what I do not get either.. I had a friend get a loan for a house he bought with 3.125% 5% down on a 200k loan.

I just dont get why I am getting these high interest rate amounts.
Are you financing the home as an owner occupied SFH? Or are you financing it as a rental property? Could you afford the mortgage without renting out the rooms?

Topic Author
jb1
Posts: 446
Joined: Sun Nov 27, 2016 8:33 am
Location: NC

Re: Worth refinancing?

Post by jb1 » Sat May 16, 2020 2:04 pm

mervinj7 wrote:
Sat May 16, 2020 12:39 pm
jb1 wrote:
Sat May 16, 2020 12:12 pm
go140point6 wrote:
Fri May 15, 2020 6:34 pm
800 FICO and that rate seems off, unless debt-to-income or something else is going on... i know it might be very location dependent and weird underwriting factors, but I am almost closing on a refi from 30 year 3.875 to 15 year 2.875 with $160 out of pocket when all is said and done... probably could have got 2.75 if i would have accepted an escrow account, but it's worth it to me not to... we went with ally home loans... my wife and I each have over 800 fico... to be honest, if rates drop significantly in the near future, we'll do it again if it's roughly the same out of pocket cost... why not just keep doing it if the out of pocket costs are next to nil?

i have some friends who are working on a 2.99% 30 year refi at roughly no cost out of pocket... not sure the specifics, but they are using owning.com...
That is what I do not get either.. I had a friend get a loan for a house he bought with 3.125% 5% down on a 200k loan.

I just dont get why I am getting these high interest rate amounts.
Are you financing the home as an owner occupied SFH? Or are you financing it as a rental property? Could you afford the mortgage without renting out the rooms?
Owner occupied. I could afford it without roommates, but its nice having someone else assist in paying it.

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