Posted on: 03rd Feb, 2009 09:43 am
we are planning on refinancing and the rate we got would save us $400 a month. however, our appraisal came in low by about $8000. we, of course, can bring that approx. 8k to the table when we close- paying equity into our house essentially. but, does it make sense to refinance at that point? do i consider that 8k when i figure out how long to recoup closing costs (29 months instead of 9 months)? or since it's equity essentially, should i only consider the closing costs themselves? thanks for any advice you can give!
What is your current interest rate and what would you be refinancing into? What state are you in? How long do you plan on being in the home?
current interest rate is 6.75, and we're getting 5 1/8 (I/O for 10-years on a 30-year fixed.) We plan on being in the house for 6-8 years.
You only consider the closing costs to calculate the break even time.
The $8,000 you bring to closing is not a cost. Neither are the tax and home insurance escrows nor the mortgage interest payment for the month.
I would suggest the "golden rule" to refinance is to break even on the costs in 36 months or less, highly preferable 24 months or less. Anything less is excellent.
So breaking even in 9 months or 29 months is OK in my book and you are really breaking even in 9 months
The $8,000 you bring to closing is not a cost. Neither are the tax and home insurance escrows nor the mortgage interest payment for the month.
I would suggest the "golden rule" to refinance is to break even on the costs in 36 months or less, highly preferable 24 months or less. Anything less is excellent.
So breaking even in 9 months or 29 months is OK in my book and you are really breaking even in 9 months
If you have the $8000 to spare and you would save $400 per month, then it sounds like a good deal.
NO ID WAITING TILL MARCH 4 GUIDELINED MAY CHANGE AN YOU MAY NEED TO BRING THOSE FUNDS I LL BE TO LET YOU KNOW AFTER THAT DATE
Professional Disclaimer
While I am a Mortgage Professional, this advice is generic in nature only.
DON TERRY
Professional Disclaimer
While I am a Mortgage Professional, this advice is generic in nature only.
DON TERRY