Posted on: 07th Mar, 2011 08:54 am
hello,
i am new here. i have a question regarding our current mortgage and cahing out. we recentl paid off a very large credit card debt. we are trying to get to a debt free life! too many years caught in the cc cycle that never ends. anyway, we have refinanced in the past on our 30 yr mortgage to pay off debts. i dont feel this is always a wise decision but we felt trapped and sinking.we have never had bad credit nor have we filed for bankruptcy. we have always paid on time responsibly, rarely late on a payment and never missed them. but it is a vicious cycle and paying min. payments on some means they never go away!
this time we were able to pay off our debts without a refi/cash out.we put ourselves on a credit diet and we pay as much as possible or all of the amount each month on the cards we do use for points or cash back bonuses.
now our eldest daughter is getting married. we have drained our savings to pay for a small wedding. which is not easy to do in the northeast area btw! : )
we are also now paying an extra 200 a month toward the principle on our mortgage.
we would like to know what is the best option for us now? our bank holding our mortgage (chase) offered us a streamlined mort refi to a lower interest rate that will pay off the loan 3 yrs earlier, or we have been offered by wells fargo refinance a cash out loan. however we are not sure it is worth the upfront costs. so we have been condidering a heloc.
we need some repairs/improvements to our house exterior in the spring. we also need to pay for the remaining wedding costs that we do not wish to put on credt cards.
so here is our situation now: loan remaining 359 payments at 1356. mo. balance is approx 199300. @ 5.865% appraisal of home is estimated at 300,000 +/-. (original cost of loan in 1995 128,000 @ 7% refinance loan 8 yrs ago @ 5.865)
aprox 3000 revolving cc debt which we will have paid off. very good to excellent credit scores. we are making 200 toward principal since feb. we would like to start a savings plan. i hear we should have at least 8 months reserve ( uhoh)
i forgot, we plan to stay in house at least another 5-7 yrs. is worth the closing costs? in ny they can be very high! should i consider a shorter term refinance at a higher monthly rate? and should i cash out with it?
so should we refinance? get a heloc? they make these things so attractive dont they? : )
thank you for all of your advice. i look forwrd to your replies
i am new here. i have a question regarding our current mortgage and cahing out. we recentl paid off a very large credit card debt. we are trying to get to a debt free life! too many years caught in the cc cycle that never ends. anyway, we have refinanced in the past on our 30 yr mortgage to pay off debts. i dont feel this is always a wise decision but we felt trapped and sinking.we have never had bad credit nor have we filed for bankruptcy. we have always paid on time responsibly, rarely late on a payment and never missed them. but it is a vicious cycle and paying min. payments on some means they never go away!
this time we were able to pay off our debts without a refi/cash out.we put ourselves on a credit diet and we pay as much as possible or all of the amount each month on the cards we do use for points or cash back bonuses.
now our eldest daughter is getting married. we have drained our savings to pay for a small wedding. which is not easy to do in the northeast area btw! : )
we are also now paying an extra 200 a month toward the principle on our mortgage.
we would like to know what is the best option for us now? our bank holding our mortgage (chase) offered us a streamlined mort refi to a lower interest rate that will pay off the loan 3 yrs earlier, or we have been offered by wells fargo refinance a cash out loan. however we are not sure it is worth the upfront costs. so we have been condidering a heloc.
we need some repairs/improvements to our house exterior in the spring. we also need to pay for the remaining wedding costs that we do not wish to put on credt cards.
so here is our situation now: loan remaining 359 payments at 1356. mo. balance is approx 199300. @ 5.865% appraisal of home is estimated at 300,000 +/-. (original cost of loan in 1995 128,000 @ 7% refinance loan 8 yrs ago @ 5.865)
aprox 3000 revolving cc debt which we will have paid off. very good to excellent credit scores. we are making 200 toward principal since feb. we would like to start a savings plan. i hear we should have at least 8 months reserve ( uhoh)
i forgot, we plan to stay in house at least another 5-7 yrs. is worth the closing costs? in ny they can be very high! should i consider a shorter term refinance at a higher monthly rate? and should i cash out with it?
so should we refinance? get a heloc? they make these things so attractive dont they? : )
thank you for all of your advice. i look forwrd to your replies
Lampone5, As is always the case, you need to provide more information before you can get a sound answer to your question.
But first, I am curious about your current loan. You say you have 359 payments left at $1356 a month on a balance of approx. $199,300 and an interest rate of 5.865%. I entered $199500 at 5.865% for a 30 year (360 payments) loan into any amortization calc and the monthly payments come out to be $1178.84 - not $1356. So this means you can't have 359 payments remaining on your current loan with the numbers you provided.
Could you clarify what the actual balance and remaining term on your current loan is?
But first, I am curious about your current loan. You say you have 359 payments left at $1356 a month on a balance of approx. $199,300 and an interest rate of 5.865%. I entered $199500 at 5.865% for a 30 year (360 payments) loan into any amortization calc and the monthly payments come out to be $1178.84 - not $1356. So this means you can't have 359 payments remaining on your current loan with the numbers you provided.
Could you clarify what the actual balance and remaining term on your current loan is?
Hi Lampone!
Welcome to forums!
If you're planning to stay in the property for a long period of time, then it is a good option to refinance your existing home loan. The offer given to you by your existing mortgage lender is quite good. As far as closing costs are concerned, if you stay in the property for a longer period of time, then you'll be able to offset the closing costs.
Thanks,
Jerry
Welcome to forums!
If you're planning to stay in the property for a long period of time, then it is a good option to refinance your existing home loan. The offer given to you by your existing mortgage lender is quite good. As far as closing costs are concerned, if you stay in the property for a longer period of time, then you'll be able to offset the closing costs.
Thanks,
Jerry
jimgilly my post read current mortgage balance is around 199,500 after this months payment because i have paid it down with extra payments. The original loan was higher 8 yrs ago when we refinanced at 5.865%. There is remaining 359 payments left at 1356.00 based on the original amount financed (220 smthn) not the above remaining balance.
My real dilemma now is whether I should refinance with some cash out on equity to pay for repairs and wedding, or just refinance at 1 point lower to shave off 2- 3 yrs on my mortgage? will i offset closing $ over 5 yrs if i refinance w/cash out? They seem quite high around 10000+ and then there are the originaion fees etc.
I am paying xtra 200 to principal now each month which in my line of thinking will shave off a cpla yrs anyway.
I dont want another 30 yrs again so i would like to refinance at 20 yrs.
Is it wise to cash out? refinance at all? pay extra to principal rather than ira or savings if we dont plan on living here more than 5-7 yrs? :?
I am also considering an arm???
My real dilemma now is whether I should refinance with some cash out on equity to pay for repairs and wedding, or just refinance at 1 point lower to shave off 2- 3 yrs on my mortgage? will i offset closing $ over 5 yrs if i refinance w/cash out? They seem quite high around 10000+ and then there are the originaion fees etc.
I am paying xtra 200 to principal now each month which in my line of thinking will shave off a cpla yrs anyway.
I dont want another 30 yrs again so i would like to refinance at 20 yrs.
Is it wise to cash out? refinance at all? pay extra to principal rather than ira or savings if we dont plan on living here more than 5-7 yrs? :?
I am also considering an arm???
Lampone5, Sorry to say but I am still thoroughly confused on the details about your current loan as the numbers don't make any sense to me.
When exactly did you get your current loan and what was the loan amount, loan term and interest rate? Your posts make it sound like you refinanced 8 years ago and if it was the typical 30 year fixed rate loan you couldn't possibly still have 359 payments left.
I would say that if you don't have any reserve funds that you can have immediate access to then you should stop making the $200 a month extra payments on the mortgage until you do. Six to eight months is usually a minimum that is recommended but it depends on your own personal situation.
There are two key questions that need to be answered. First, are you definitely going to be needing to get some cash out of the home for some upcoming expenses? If yes, how much are you going to need?
The other question I have is how certain are you that you will be moving within the next 5 to 7 years?
All this information is needed to better advise you on what to do.
When exactly did you get your current loan and what was the loan amount, loan term and interest rate? Your posts make it sound like you refinanced 8 years ago and if it was the typical 30 year fixed rate loan you couldn't possibly still have 359 payments left.
I would say that if you don't have any reserve funds that you can have immediate access to then you should stop making the $200 a month extra payments on the mortgage until you do. Six to eight months is usually a minimum that is recommended but it depends on your own personal situation.
There are two key questions that need to be answered. First, are you definitely going to be needing to get some cash out of the home for some upcoming expenses? If yes, how much are you going to need?
The other question I have is how certain are you that you will be moving within the next 5 to 7 years?
All this information is needed to better advise you on what to do.
Yes you are right i checked it is 264 payments left 96 payments made to date and the payment is 1351.66 the interest is 5.875.
I started making 200.00 extra payments this year after we paid all cc debts off last august. We had a sizable savings but the wedding took much of it. We do put away for savings but not enough.
We have a 15 yr old and a 9 yr old. Once the 15 yr old reaches 18- 20 we do not plan on stying in the house. It would be too large and we do not need it. Wed like to downsize or move out of state. So we hope not to be here after 5-7 yrs tops We all know "the best laid plans..." but that is our goal today.
We would want to take cash out out of at least 30000 for new driveway, pool and house repairs and to pay off remaining wedding expenses.We thought of a Heloc, but thats s unpredictable and the interest is higher.Maybe we can maisnstream loan with our curent bank and save the extra 2-3 yrs w/o additional payments then take out a HELOC?
I started making 200.00 extra payments this year after we paid all cc debts off last august. We had a sizable savings but the wedding took much of it. We do put away for savings but not enough.
We have a 15 yr old and a 9 yr old. Once the 15 yr old reaches 18- 20 we do not plan on stying in the house. It would be too large and we do not need it. Wed like to downsize or move out of state. So we hope not to be here after 5-7 yrs tops We all know "the best laid plans..." but that is our goal today.
We would want to take cash out out of at least 30000 for new driveway, pool and house repairs and to pay off remaining wedding expenses.We thought of a Heloc, but thats s unpredictable and the interest is higher.Maybe we can maisnstream loan with our curent bank and save the extra 2-3 yrs w/o additional payments then take out a HELOC?
OK, now the numbers add up and I know you refinanced $228,500 into a 30 year fixed rate loan at 5.875% 8 years ago. Now the question is back to what is the best way to get $30,000 out to do the things you are planning.
One option would be to do a cashout refinance but rates/fees to do this will highly depend on what the loan-to-value ratio would be after doing the refinance and what your credit scores are. This is because most loans today are sold to either Fannie Mae or Freddie Mac who both have what is called loan level pricing adjustments that take these factors into account.
To keep the loan-to-value ratio at 80% or less, the property would need to appraise at around $290,000 or higher and this would allow you to take out $30,000. But to get an estimate to know what rate/fees you would qualify for we also need to know what your credit scores are. Credit scores of 740 and higher are needed to get you the best deal. As your scores drop below 740 the fees start adding up.
A simpler approach would be to take out a HELOC which either have low or no closing costs. Right now it is possible to get a HELOC at rates of under 4.00%. A drawback is the rates are typically tied to and move with the prime rate. However, most HELOCs offer an interest only option so even if rates start to move higher the payments should not be that excessive if you are planning to sell within the next 5 to 7 years. Plus some HELOCs also have an option where you can convert to a fixed rate during the term of the contract to further protect you on the upside.
So I guess the important question is will you be moving or possibly staying in the home beyond the 5/7 year period? If the answer is probably yes, then I would want to see what a cashout refinance would cost and what rate I could get for a 20 year fixed rate loan. If you are pretty certain you will be moving in 5 to 7 years then the HELOC would likely be the better choice.
One option would be to do a cashout refinance but rates/fees to do this will highly depend on what the loan-to-value ratio would be after doing the refinance and what your credit scores are. This is because most loans today are sold to either Fannie Mae or Freddie Mac who both have what is called loan level pricing adjustments that take these factors into account.
To keep the loan-to-value ratio at 80% or less, the property would need to appraise at around $290,000 or higher and this would allow you to take out $30,000. But to get an estimate to know what rate/fees you would qualify for we also need to know what your credit scores are. Credit scores of 740 and higher are needed to get you the best deal. As your scores drop below 740 the fees start adding up.
A simpler approach would be to take out a HELOC which either have low or no closing costs. Right now it is possible to get a HELOC at rates of under 4.00%. A drawback is the rates are typically tied to and move with the prime rate. However, most HELOCs offer an interest only option so even if rates start to move higher the payments should not be that excessive if you are planning to sell within the next 5 to 7 years. Plus some HELOCs also have an option where you can convert to a fixed rate during the term of the contract to further protect you on the upside.
So I guess the important question is will you be moving or possibly staying in the home beyond the 5/7 year period? If the answer is probably yes, then I would want to see what a cashout refinance would cost and what rate I could get for a 20 year fixed rate loan. If you are pretty certain you will be moving in 5 to 7 years then the HELOC would likely be the better choice.