SAT 1/15 QUESTION: Thoughts on mortgage refis?

[Deleted]

I did a refi 2 mos ago – the only time I have ever done a refi. Historically low interest rates and my existing loan having been sold to a mega bank motivated me to refi w/a local bank.

The short term-savings was worth the move – I also believe the economic hand-writing is on the wall that interest rates will continue to increase – and a low interest fixed rate mortgage is a long-term benefit in that you will be paying off your mortgage with less valuable “future” dollars. In other words – inflation benefits those who hold low interest loans.

I also have no intention of moving in the next 10 years. If you plan on moving in a couple years – other factors kick in that make a refi less appealing. In addition to less time recovering loan fees – creditors become more “suspicious” about your finances if you apply for another loan.

Also keep focus on what you plan to do with monthly savings – do not fall into the trap of feeling that you are increasing your income and spend the difference or worse – make a purchase like a car where you take on another loan.

BTW – I do hold a Real Estate license – my livelihood is commercial real estate. So I’m sprinkling some professional perspective w/my personal experience.

[❤ mollymouser ❤]

Years ago (before I got married), I refi'd my condo for a lower interest rate, but I shortened the terms (I had 21 years left on 30 year fixed, went down to lower rate @ 15 year fixed) .... so my payments actually were about $75 more per month .... but it saved me a ton of money in interest. I was with Wells Fargo and refi'd with Wells Fargo ... so it was pretty simple, really ... just signed a gazillion papers at the Title Company.

We never refi'd our home mortgage (We started with a 15-year-fixed at 4.875% in 2003) ... because we paid off the mortgage in 2005 before I quit my job.

I do think that some refi's are a good deal.

[Apple]

Depends on the reason for the re-fi. If you're going to take out a bunch of equity and blow it, I think it's a bad idea. If you leave the equity and just lower the payment, assuming you'll be in the house long enough to make the cost worth it, great idea.

I've re-fied twice. My first time was on the house I bought with my then-husband. When he bailed, I signed the house over to him, but he wouldn't re-fi it or make any payments so I ended up with the mortgage or I'd ruin my credit. I finally got him to sign it back over to me and got it re-fied myself. Saved a ton of money! Did it with the same mortgage holder so it was just paperwork.

The second time was on my current house. I'm one of the lucky ones who has seen an increase in value since I bought it. I needed money down for property I bought for the new house, so I took the most of the equity out of this one (but left 20% to avoid PMI) and put it on the land. My payments also went down by $200 a month. I'm not a fan of 15 year mortgages since I tend to pay so much extra on the house that I knock it below 15 years anyway, and actually save more money. With the lower payments I can also use that money elsewhere if I'm tight one month or have unexpected expenses. I put the difference in what I paid before and what I pay now toward the new house and the property so I don't feel bad about cashing out the equity at all.

[tiredboomer]

We refinanced our home twice. The first time was to go from a variable rate mortgage to a fixed rate. That was very worth it because the payments went way down and we kept paying the higher payment; putting the difference towards principle. We did it again because we received an inheritance which enabled us to buy the mortgage down enough to get a 15 year mortgage. Once again we paid more towards the principle each month. Eventually we were able to pay off the home in 8 years. We can now retire mortgage-free; a wonderful feeling!

[motherto2]

I've refi'd my house more times than I care to think about First time was because of lowering the interest rate significantly (can't remember the rates but remember that was why). Had to add onto the house due to my DS and ex SS who couldn't share a room and needed another room for the kids to play in. Then we took out a home eq to pay off a bunch of bills (sadly, most were his ). As you can guess, we didn't pay it off with the extra money like we said we would, and guess again, ran up some more cc's. Then when we split 3 years ago, I had to refi again and combine both because at the time I had a 15 year plus the home eq. I couldn't afford at the time to pay both and had to take it back to a 30 year loan. This last August, I did it again for the last time. I took a 15 year at 4%. It increased the loan I had about $200 more a month, but I am aggressively paying it down so it will be paid off by the time I'm eligible to retire in 7 1/2 years. House must be paid for before I retire so I don't have to worry about that expense. Alot of lessons learned over the last 10 years.

[upstatemom]

I would advice running a comparison of the current rate and terms to the new rate and terms to see what the interest savings would be. Make sure that the savings cover the expected closing costs and any points you would pay.
I would also go with a lender who does not sell the servicing of the mortgage note. Check with your local the community banks and credit unions and ask them if they retain the servicing if they sell the mortgage. This means you will send the payment to them not a constantly changing investor bank.
If you you can keep the same title insurance company that you have with your existing lender, call the title insurance company and request that they give you a discount. They did all the leg work last time you closed. This should save you some money on the closing costs.

[Deleted]

I refied about a year or a 1.5 years after I bought my house. We went from 6.125% to 5%. It was worth it for us.

[Sharon]

I have re-fied multiple times for various reasons. The last time I lowered my interest rate to 4% and rolled in a HELOC with the refi. I will pay the house off in the same amount of time but it lowered my payments by $280.00 a month. DD starts college next year so it give me a little extra to help her out. It also makes the budget less tight in general.

Besides the above reasons I wanted to move my loan from mega national bank to local bank where I have banked for years. They service there own mortgages. I am tired of dealing with the mega financial institutions.

[Gardening Grandma]

We've refi'ed twice. The first time was our former house. We purchased it in 1992 with a 9% 30 yr fixed mortgage. A couple of years later we refinanced the balance at 7% for 15 yrs fixed. We did not take out any equity; simply refinanced the balance. Even with the shorter time, the payment went down several hundred dollars.

Two years ago we refinanced our current home. The previous rate was about 6% (15 yr fixed)and we refinanced the balance of the loan at 4.375% (15 yr fixed). Even with the points we paid, we are ahead because we plan to stay here the rest of our lives and want this paid off!

Personally I would not refi unless you plan to stay long enough to recoup the costs of the refinance and I would absolutely not take out the equity.

[kristi28]

We did a refi last fall on our house to bring the rate down from 5.875 to 4.5 on a 30 year fixed. We did it as we will end up paying less overall under the new mortgage even after you figure that we stretched the payment out four more years.

[Artemis Windsong]

My DS/DIL just refinanced and he said it made a big difference in monthly payment with lower interest rate.

We refi'd in late 80s because of high interest rate and balloon payment. We accelerated pay off as much as we could. Screw those mortgages.

[telephus44]

We re-fi'd our house 6 months after we bought it. We bought in Sept 2008, right when mortgage rates plunged from mid 6's to 4's and 5's. Our interest rate went from 6.5% to 5% when we refinanced in March 2009. We never planned on taking anything out (actually, we were hoping the appraisal came back at what we paid for it, and it did), we just wanted to lower the rate.

One thing that I hadn't considered before, is that all PMI costs aren't the same. Our first mortgage lender charged us $66 a month for PMI (we had 10% down). Our current lender charges $113.85 a month for PMI. I ran the math and we are still making out by a lot in the long run, but it was a suprise when we got the closing.

[kansasflower]

Refinancing to a 15-year loan from a 30-year loan when rates drop is a great idea ~ if the rates drop enough, you'll barely notice the monthly change in payments, but will save a ton in interest charges over the life of the loan. I've refi'd into a 15-year from a 30-year two times now. First time was to go from a 7% 30-year to a 5.25% 15-year with about a $100/month increase. Second time was on a newer house, went from a 6.875% 30-year to a 4.25% 15-year with a $150/month increase.