To refinance mortgage or not

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newbie003
Posts: 275
Joined: Thu Feb 02, 2017 10:25 am

To refinance mortgage or not

Post by newbie003 » Fri Feb 07, 2020 8:41 am

Nothing out of the ordinary here, just trying to decide (like many people) if I should refinance. I'm 7.5 years into a 20 year fixed (at a decent 3.375%, so it's not a slam dunk decision). I've run numerous calculators, made a spreadsheet, etc... and keep coming up with different/mixed results. My goal is to save money overall (in interest). I would consider raising my monthly payment a little. Here is my scenario:

Loan started in August of 2012 for $325k (on a $525k home).
20 year fixed at 3.375%
Monthly payment of $1,864 (not include RE tax escrow)

Currently balance is $229k with about 12.5 years remaining

I can get a 10 year fixed at 2.75% from Easthampton Savings, or Sikorsky Credit Union has a 12 year at 2.706% (which I could just pay down over 10 years by adding, I believe, $316/month, roughly on par with the Easthampton, but a lower rate and I have the option of not paying extra if I don't want to). Sikorsky claims their fees are under $1k for this Advantage mortgage: https://www.sikorskycu.org/Borrow/Loans ... e-Mortgage vs. $3k to $4k for Easthampton and most others I've contacted.

The Sikorsky 12 year is, in a sense, perfect, as it simply continues where I am now (12.5 years to go), but saves me over a half point on the interest rate. Monthly payment I believe is the same.

In any case, can someone please confirm for me what the savings are under the scenarios below? Sorry for asking for help with the math but I just keep getting different results when I run different calculators and try to update my spreadsheet...
  • Keep existing loan but pay extra $100/month in Principal (easiest but least amount of savings)
  • 12 year Sikorsky at 2.706%
  • 12 year Sikorksy at 2.706% but paid down over 10 years which, I believe, requires an extra $316/month (slightly less than the Easthampton increase)
  • Keep existing loan but pay extra $316/month (same monthly increase as Sikorsky would be, but I save on refi fees (which, again, aren't that high, but also saves me the hassles)
I'm also open to other suggestions that perhaps I haven't though of.

Thank you!

Topic Author
newbie003
Posts: 275
Joined: Thu Feb 02, 2017 10:25 am

Re: To refinance mortgage or not

Post by newbie003 » Fri Feb 07, 2020 3:06 pm

So I did a little more double and triple checking, and I believe I can save about $12k by refinancing with the 12 year Sikorsky. It would be the same monthly payment and cuts 6 months off the mortgage (as I currently have 12.5 yrs to go). The fees are incredibly low at $750.

My question to you guys is; is there any kind of hidden catch with their 'Advantage Mortgage' that you can think of/figure out?

https://www.sikorskycu.org/Borrow/Loans ... e-Mortgage

I contacted Sikorsky and they said:
  • 15 year is a conventional mortgage and the fees are: Fees are $650 origination, $440 Appraisal ( single family),$26/$41 for credit report, $15 flood cert, $83 tax serv fee,Also Attorney fees and recording
  • 12 year Advantage Mortgage fees are: $349 Application fee, $400 origination fee, $749 total fees (that you pay for) . No attorney fees. There are other fees on the 12 year, we just pay them, you would see them on the disclosure, but us giving a credit for them. Depending on loan amount you may need a full appraisal, but we pay for that as well.
The (lack of) fees seem too good to be true, but they said that's what they are (after I asked several follow-up questions concerning them).

I then specifically asked if there was any 'catch' with the Advantage and they said "It is an “equity product” so does not have to have an Atty close it, not subject to other fees. We do an HVE ( automated appraisal for value , these are 880% LTV or less and then send someone bye to make sure it’s a real house and fill out a condition report."

Should I care that it's an "equity product"? They confirmed that the interest is still tax deductible just like a regular mortgage.

dandinsac
Posts: 155
Joined: Sat Jul 30, 2016 8:34 am

Re: To refinance mortgage or not

Post by dandinsac » Fri Feb 14, 2020 12:39 am

You may want to look at the payback for each loan. In other words, how many months does it take for the interest savings to “pay back” the fees. I expect you’ll find that the lower closing cost loan from Sikorsky will be a better option.

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