Compare Mortgage Quotes

mariecdaniels · Joined: 16 Nov 2009 Posts: 1 1.31 Dollars($)

Is it worth it for me to refinance. I have a 30yr loan with 24 yrs. left. It was a 200,000 loan and now have 188,000 left. My rate is 5.375 and can get a 4.875 30yr. fixed 0 pts. Should I do it? Would I save anything? Single family home we plan to live in for 10 more years.

gmakerley · Posted: Mon Nov 16, 2009 8:14 pm Post subject:

marie if you can see that whatever closing costs you'll have would be paid for by your savings over the next 24 to 30 months, then it's worth it. if recouping those costs takes longer than that, then it's probably not worth the trouble.

adonis · Posted: Mon Nov 16, 2009 8:43 pm Post subject:

Hi mariecdaniels,

As you're planning to stay in the property 10 years, I think it's a good idea to refinance. However, you should note that you will have to pay the closing costs while you refinance the mortgage. As you're planning to stay in the property for 10 more years, I think it would help you in offsetting the closing costs and you would be able to save your money.

Posted: Tue Nov 17, 2009 6:15 pm Post subject:

You don’t compute “so good” and you should sit down with your LO to go over the figures. If, in fact, you’ve paid 72 months on your $200K mortgage, your balance would be $181K. Something’s wrong. A 40-year term with out curtailments; maybe. Get real data.

Once you obtain data, walk down the decision tree. First question would be are you a refi junkie? If yes, any reduction in monthly payment will appeal to you. If you’re a more rationale being, I’d suggest I’d suggest comparing “savings” on a equal remain term basis. At a balance of $188K, you have a remaining term of 312 months. Use this when looking at relative P&Is. $2,000 is what I’d consider normal closing costs but this will vary with your location. I prefer looking at the situation with your paying closing cost in cash but most don’t and individuals typically don’t have a cue to their “cost of capital”. Alternative is to ignore CofC and go to a shorter recapture period to minimize effect. Given these assumptions you’re between a 26 and 29 month payback. Bear in mind the pay back is part cash (difference in relative P&Is at same remaining term) and outstanding balance differences (lower rates amortize more rapidly in the initial years).

I prefer 24-month payback periods but I don’t yell “stupid” at folks up to 36 months. Generally I think the refi is worth considering but if closing cost stray above $2K review the numbers. All LOs have there own method of reviewing refi applications. I favor the above method but review the number with your LO. This is not rocket science but I'd be interested in methods other LOs use to advice applicants.

Company	Loan Type	APR	Est. Pmt.
				Go
				Go
				Go
				Go
				Go
				Go

Property State:
Property Type:
Credit Rating:

All times are GMT - 7 Hours

Page 1 of 1

Compare Mortgage Quotes

Refinance question