Should I refinance?

toriano_c · Joined: 09 Sep 2008 Posts: 1 1.44 Dollars($)

Long question but here goes...

I have a home with a value of about 235k - 240k. I paid 225k (portland, OR)
I currently owe approx. 205k.
I have a first mortgage of 5.75 (30 year fixed)
& a second mortgage which is, I think, 7.25 (30 year fixed)
Would I be able to get just one loan now, a first mortgage only? Would that bring my payment down?
Both my wife & I have credit scores in the 730's - 760's

adonis · Posted: Wed Sep 10, 2008 12:46 am Post subject:

Welcome Toriano_c,

This will depend more upon your home value, affordability, debt-to-income ratio. Your scores are good enough to help you qualify for mortgage at favorable rate of interest.

gmakerley · Posted: Wed Sep 10, 2008 7:00 am Post subject:

with the current rate you have at 5.75%, you're not likely to benefit from a refinance.

rates apparently dropped yesterday, but the average rate i just spied in the newspaper this morning was 5.8% or so...that's no better than what you've got on your first mortgage. not only that, but you'd pay a fair amount of closing costs, and i suspect that would negate the benefit you might derive from paying off the second mortgage and including that amount in the new first mortgage.

you'd truly have to do the math, as it were, to determine what benefit, if any, you'd receive.

Guest

Thank you both for taking time out to answer. I appreciate your advice. gmakerley, I will take your advice and just hold off on the refi. I'll just have to concentrate on paying off my 2nd mortgage as fast as I can (i really hate paying interest).

Thanks again.

vegas_storms · Joined: 12 Sep 2008 Posts: 67 3.54 Dollars($)

Hi toriano_c ,
Both the above answers are good, but one would also need to know the amount of the second mortgage loan versus the amount on the first to make an accurate decision as to whether refinancing makes sense.

I would assume that you have a fairly small second like the gentlemen above did, but you never know. It is possible for someone who owes 205K to have a 80K first and a 125K second, under this scenario it would make financial sense to refinance.

lisascherzer · Joined: 04 Jan 2008 Posts: 755 1.11 Dollars($)

You could combine the first and second into one loan but then you would have PMI since the loan would be over 80% of the appraised value. So it doesn't make sense to refinance as of now. However, if rates drop a bit more you may want to revisit this option since you may be able to buy out PMI with a slighly higher rate. For example, a 30 year fixed rate at 95% LTV would be 6.125 with no PMI. Now if rates go down buy another .25% then your looking at 5.875 and that could make sense.

Rates that you see quoted will always include PMI to be added if applicable and you would most likely want to buy out the PMI which would add about 1/2% to the current interest rate. Hope this info allows you to watch the market to determine if and when it makes sense to refinance.

lisaswoboda · Joined: 25 Mar 2009 Posts: 4 3.04 Dollars($)

Don't know if you ever did anything about the refinance you were asking about- but rates are indeed low enough to jump on the refi wagon. Depending on the area up here that you puhased in, values have been holding pretty steady. Some areas, however, have not. If you haven't done a refi, you can combine the 1st and 2nd mortgages and net a 4.625% mortgaeg tody with a few fees, no discount points- we have even had lower in the past week! Let me know if you would like a quick, painless and free review. I work out of the Clackamas, Oregon area, so we are in the same part of the world. I am a licensed mortgage broker and have worked here for over 23 years. I would be more than happy to do a quick review for you. The best of luck to you!

ashleyblanton · Posted: Wed Mar 25, 2009 5:44 pm Post subject:

Toriano Couture,

I would contact a broker to provide you with a GFE. They can take the #'s you have and provide you with an interest rate you qualify for as well as show you a payment.

I would DEF. look into doing a refi. Rates are at a 37 year low, regardless of if they are up a little higher today. I can still get par rates in the 4% range.

Let me know if I can be of any assistance. Otherwise, good luck!!

lisaswoboda · Joined: 25 Mar 2009 Posts: 4 3.04 Dollars($)

Ashley is exactly right. The time is now. Rumor has it that rates are going lower- but who knows if that will be true. If you contact ANY broker- they can provide you with your options- the different loans that you may take advantage of. Any lender worth their salt will be more than happy to answer any questions.

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