2% rule of thumb in refinance

gmakerley · Posted: Wed Aug 05, 2009 11:58 am Post subject:

but ashley, are you answering mamie? i don't think that's what she wants to know.

mamie - you mentioned you don't know how long you'll be in the home. if you're skeptical about making up the difference in costs by reducing your payments over time, then you might not want to bother with the refinance. you didn't mention any amount of closing costs, but you'd want to be certain that the savings you would reap in refinancing at the lower rate would compensate for the costs you would incur. if you can recover those costs in a 2-year period, for example, then it's usually worth it. if, on the other hand, you don't think you'll be there in 2 years, it's probably not worth the trouble.

Realgeni · Joined: 13 Apr 2009 Posts: 1434 99.77 Dollars($)

Mamie

With $204000 at 6.25% your monthly payment will be - $1256

Same loan at 5.2% will be $1120

AT 4.75% your monthly payemtn will be $1064/-

Exlcuding the closign cost you are for sure goign to save money monthly. But I am not sure what will be closing cost for refinancing.

If you can let us knwo that amount, we can absoultely tell you which one is a better option

Good luck and feel free to ask

Guest

First thanks to everyone for their suggestions. I'm still working on refinancing. One lender wants to charge me 2 points which amounts to 4568.00 and an upfront fee which is 3928.00.
In addition will pay off my 5th/3rd loan approximately 4000.00 and Visa card 6000.00. This brings my total loan to 228428.00. And my mortage payment is not lower. However, I won't have to pay debts each month. Any comments? Thanks again

Guest

Me again...what about a 5/1 arm? I am 70, in good health, and spry.

adonis · Posted: Mon Sep 28, 2009 12:07 am Post subject:

Hi Mamie,

I don't think it would be a good option to refinance if your monthly payments will not reduce. Moreover, you will have to pay an upfront fee as well as 2 points in order to refinance the loan. Thus, you will have to pay quite a large sum to the lender but your payments will not reduce. So in my opinion, it won't be good to refinance. However, the decision would be solely yours. If you feel that you would be comfortable paying the dues, then you can refinance the loan.

gmakerley · Posted: Mon Sep 28, 2009 8:17 am Post subject:

mamie, if you're eliminating debt and reducing your overall monthly payments, that's not a bad idea at all.

as for 5/1 arm, be sure you know what's going to take place on that fifth anniversary. they're not a bad deal, if you can get a better rate than currently offered on a fixed-rate loan. it depends on how much you'd be saving on a monthly basis and what you're willing to risk over the long term.

Guest

What are upfront fees ? The rate quoted to me is 5.%. My present rate is 6.25. Is there any way to reduce closing costs?
Thanks again....mamie

jameshogg · Posted: Tue Sep 29, 2009 11:47 pm Post subject:

Hi mamie,

It is a fee paid by a borrower to the lender for making a loan. As far as I know, the upfront fees will be structured as a percentage of the sum committed to the loan as well as a flat fee. As far as your closing costs are concerned, you can negotiate with your lender and check if he can lower the closing costs for you.

Thanks

Guest

I have 1st mortgage at 5.75% w/$141K balance and a 2nd home equity loan at 8.9% w/19K balance both at 30yr. Should I combine them and refinance at 4.75% for 30yr or 15yr. I plan on staying in the home minimum 5yrs, max 10 yrs. What should I do?

gmakerley · Posted: Sat Oct 03, 2009 1:58 pm Post subject:

if a 15 year loan fits your budget and you want to pay down your principal faster, then that's the plan for you. if you prefer the lower payments, however, 30 years would work and you still have opportunity (by prepaying) to reduce your balance faster. it's a highly individualized decision to make, so i'd dare not tell you which way to go without knowing all about you.

sunnyca2009 · Joined: 04 Aug 2009 Posts: 1737 36.13 Dollars($)

If you cna afford to make the payments then combine them and go for a 15 year payment and probably negotiate for lower interest rate. Normally 15 years is less then 30 years

greggwyburn · Joined: 13 Sep 2009 Posts: 60 0.03 Dollars($)

Joelle,
you can combine both the mortgages.

Tenure of mortgage will depend upon you. lower the duration, higher will be monthly payments. but you will save on total payments.

gmakerley · Posted: Mon Oct 05, 2009 7:46 am Post subject:

the confluence of baffled people and untintelligible commentary creates much consternation here. 15 vis a vis 30 - less is more?

the entertainment value of this website is much underrated, as well.

christinehynes · Posted: Mon Oct 05, 2009 5:41 pm Post subject: 2% rule of thumb

whomever told you that is so wrong and are scamming your for money, run as fast as you can as there is no refi or 2%; if you qualify for a loan mod the lowest is 2% but that is only if you qualify. our attorneys will qualify you up front for free based on dti.

gmakerley · Posted: Tue Oct 06, 2009 7:12 am Post subject:

Christine, you are way off base. the original post had nothing to do with a 2% interest rate; it was in regards to the savings being 2%; the rule of thumb that suggests that one has to check the savings of the refinancing transaction in comparison with the costs of the refinance.

there's nobody looking for a modification in this instance.

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