Posted on: 31st Mar, 2009 04:22 pm
i have a 30 year loan @ 6 percent. I'm being offered a 4.75 with no points or 4.5 with 1 point. How would i know if it's in my best interest to refi? the outstanding loan is @ 314,000. I only had 4 years into my loan.. by sept 2009, will be 5 years into the loan. i'm looking @ about 3k in fees to refi. how do I know if i would be better off refi? I thought the interest rate has to be 2 percent or more than what i have now. I plan on staying for the remainder of the mortgage and don't plan on selling or moving. Please let me know what other info you need make a good determination.
Hi NSDQ, How much are you paying per month currently? How much of a difference would it make to your monthly payment? Are you currently able to afford the mortgage payment right now? If you plan on living in this place for a long time and if the refi does not change the monthly payment alot, In my opinion i would not refi.
The general rule of thumb is if it goes down a point or more. If you want to help pay off debt, car loans, etc, then it is also smart as this will probably be the lowest interest rate you will have. I would DEF. recommend at least looking at a GFE to compare costs. Let me know if I can be of any assistance.
The general rule of thumb is if it goes down a point or more. If you want to help pay off debt, car loans, etc, then it is also smart as this will probably be the lowest interest rate you will have. I would DEF. recommend at least looking at a GFE to compare costs. Let me know if I can be of any assistance.
Hi
Generally, if you get a refinance offer at a rate 2% less than what you have currently been paying, it is considered to be good deal for you.
But before you take a decision you should check the mortgage good faith estimate to compare the various loan offers. This covers all the costs associated with the loan like escrow, attorney, appraisal fees and so on. You should also take into consideration the APR(average percentage rate) to compare loan offers with same interest rate. The lower the APR, the better the deal would be for you.
Generally, if you get a refinance offer at a rate 2% less than what you have currently been paying, it is considered to be good deal for you.
But before you take a decision you should check the mortgage good faith estimate to compare the various loan offers. This covers all the costs associated with the loan like escrow, attorney, appraisal fees and so on. You should also take into consideration the APR(average percentage rate) to compare loan offers with same interest rate. The lower the APR, the better the deal would be for you.
Beware--many home values have dropped in the last few years. If your mortgage to value is less than 80%, you'll end up paying PMI--a useless monthly expense for the homeowner (it benefits the mortgage holder in case you default).
calculate how long it will take you to recoup your costs by the reduction in your monthly payment. if you are spending $3000 and your payment drops by $60, for example; then it will take you 50 months to recover that. and so on and so on and so on...
A key component will also be how long you plan to stay in the home.
Sounds like a deal. GIT 'ER DONE!!!
Hi NSDQ,
Since a refinance involves a considerable amount of costs, one must consider the break even period. It is the time taken to recover the costs of refinancing with the help of the monthly savings that you make due to a refinance. Thus, you actually start saving money only after the break even period is over and staying on the property for a longer period of time thus helps you in saving money.
Since a refinance involves a considerable amount of costs, one must consider the break even period. It is the time taken to recover the costs of refinancing with the help of the monthly savings that you make due to a refinance. Thus, you actually start saving money only after the break even period is over and staying on the property for a longer period of time thus helps you in saving money.
If you are going to stay in the home only a couple of years and sell it, it might be worth doing the refi now since you could essentially by-pass two payments and depending on LTV stop the stupid escrow payments for tax and insurance and pay it yourself. I plan to refi from a 5.5 to 4.75 as it will save me money even if I sell my house in a year from now as it the extra cash it will generate will leveravge other investments.
i owe 101,000.00 I am 6.5% to 4.5% i i refi and my monthly payment will go down 100$ but its going to add 6000.00 to my mortgage which will come out to 107,000.00 because of closing cost etc on 30 yrs mtgrate..it seems worth it, on the other hand it seems like wasted years of trying to pay it off
Hi Esau,
It looks like a good deal. A reduction of 2% in interest rate is really good. But whether you should refinance or not, depends on how long you plan to stay in the property. If you're planning to stay in the property for a long period of time, spending money on closing costs for the refinance could be worthwhile. You'll then be able to recoup the closing costs over a certain period of time with your monthly savings due to reduction in interest rates.
It looks like a good deal. A reduction of 2% in interest rate is really good. But whether you should refinance or not, depends on how long you plan to stay in the property. If you're planning to stay in the property for a long period of time, spending money on closing costs for the refinance could be worthwhile. You'll then be able to recoup the closing costs over a certain period of time with your monthly savings due to reduction in interest rates.