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refi or continue on current course

Posted: Mon Jun 22, 2020 12:27 pm
by afr
I took out a 30 yr fixed mortgage in 2013 for 233k@4%. We've been paying an extra $500/mo. principal and the current payoff balance is $149,500. With rates for a 15 yr fixed in the 3% range would it be smart to refi? Or just wait to see if they dip to 2% or possibly lower?

Re: refi or continue on current course

Posted: Mon Jun 22, 2020 12:28 pm
by delamer
Have you figured out your new payment with 15 years/3%?

Re: refi or continue on current course

Posted: Mon Jun 22, 2020 1:10 pm
by BrandonBogle
If you can get a low/no-cost refi for either a 15 or 30 year loan around 3% or less, then YES, refi.

Re: refi or continue on current course

Posted: Mon Jun 22, 2020 1:27 pm
by afr
FWIW, if I stay with current note and extra 500/mo payment, it should be paid off in 8 yrs.

Re: refi or continue on current course

Posted: Mon Jun 22, 2020 1:29 pm
by BrandonBogle
afr wrote: Mon Jun 22, 2020 1:27 pm FWIW, if I stay with current note and extra 500/mo payment, it should be paid off in 8 yrs.
And if you get a no-cost refi and pay the same amount, you pay off even sooner. So I’m failing to see the point of this statement.

Re: refi or continue on current course

Posted: Mon Jun 22, 2020 1:43 pm
by Ron Ronnerson
Refinance. 4% is relatively high in this day and age.

Re: refi or continue on current course

Posted: Mon Jun 22, 2020 1:48 pm
by afr
Shouldn't I wait and see if I can get a no cost 15 yr note 1 1/2-2 % less than my current 4%? I always thought that was the rule to follow.

Re: refi or continue on current course

Posted: Mon Jun 22, 2020 1:50 pm
by ChiKid24
afr wrote: Mon Jun 22, 2020 1:48 pm Shouldn't I wait and see if I can get a no cost 15 yr note 1 1/2-2 % less than my current 4%? I always thought that was the rule to follow.
If it's truly no cost then any drop from your current rate is helpful as you are paying less interest. I'd get pricing to do it now, and since it's no cost, you can always do it later if things continue to fall.

Re: refi or continue on current course

Posted: Mon Jun 22, 2020 1:56 pm
by afr
How can I verify with the potential lender that it will be a truly no cost event? I have as much trust in the banking industry as I do politicians and insurance sales people.

Re: refi or continue on current course

Posted: Mon Jun 22, 2020 1:57 pm
by ChiKid24
afr wrote: Mon Jun 22, 2020 1:56 pm How can I verify with the potential lender that it will be a truly no cost event?
Any loan can be no cost if you are willing to take a higher rate to get a credit to cover the closing costs. Get a loan estimate and look at the costs in Sections A, B, C and E. Total those up and see what kind of credit the lender is offering. If it doesn't cover the costs, you can ask for a higher rate for a higher credit, or you can shop their estimate to someone else.

Re: refi or continue on current course

Posted: Mon Jun 22, 2020 2:00 pm
by 02nz
afr wrote: Mon Jun 22, 2020 1:48 pm Shouldn't I wait and see if I can get a no cost 15 yr note 1 1/2-2 % less than my current 4%? I always thought that was the rule to follow.
Throw the old rules out the door. With a no-cost refinance, you ALWAYS come out ahead, even if you sell or refi in a month, as long as 1) your refi rate is lower than your current mortgage, even if it's just by 0.125%; and 2) you pay at least as much as you were with the old loan, i.e. extra to principal. If rates drop again, just do another no-cost refi.

Note: A true no-cost refi is one where the lender provides a credit to cover closing costs in exchange for a slightly higher rate (think of it as negative points), NOT where the costs are wrapped into the principal.

Re: refi or continue on current course

Posted: Mon Jun 22, 2020 2:27 pm
by dandinsac
In February, I refinanced my loan balance of about $320,000 from 3.75% to 3.25% with a no cost refinance. My payment went up by about $60 since I did a 20-year term, which shortened the payoff by 2 years. The interest savings are substantial. For my next payment in July, I would have paid $990 in interest with my old loan. With the new loan having a lower rate, my payment in July will include have $862 of interest.

The process was straightforward and an appraisal wasn’t required. It probably took 8 hours or so of my time. I’m looking to do another no cost refinance in a few months if the rates drop a bit more.

Re: refi or continue on current course

Posted: Mon Jun 22, 2020 2:36 pm
by HomeStretch
+1 on refinancing now if the payback, if any, makes sense. Try for a no-cost refi so you can refinance again if rates drop further.

The most recent posts from the BH refinancing mega thread may be helpful in identifying good online lenders, etc.:
viewtopic.php?f=2&t=289559