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When to refinance a mortgage along with Heloc

I have 190k at 5.75% 30 yr fixed on my first mortgage and 42k on my second HELOC. I've already made monthly payments on these loans for 5 years. My house is worth about 250k now. I'd like to refinance, but don't know when is good time to do it and what kind, rate should I get. Thanks in advance.

smith.sussane's picture
smith.sussane | Joined: September 18, 2008 09:57 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi duduong!

Welcome to forums!

Before deciding to refinance the mortgage, I would suggest you to do some mortgage shopping. This will help you to know the rates prevailing in the mortgage market. You can also check out the mortgage rates in the given link:
http://www.mortgagefit.com/rates/

You can refinance with your current lender but if you do not find the rates and terms affordable, you can also contact other lenders as well. But before refinancing the loan, you should also remember that you will have to pay the closing costs.

You can also speak to the lenders of this community and seek a no obligation free mortgage consultation from them. This will help you in comparing the market rates. Then you can decide what type of mortgage will be affordable for you.

Feel free to ask if you have further queries.

Sussane

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banker0679's picture
banker0679 | Joined: November 15, 2007 10:05 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Good Morning Duduong and Welcome to Mortgagefit!

You may need to do a refinance with an FHA loan. Conventional loans only go up to 90%, and FHA allows up to 95%. Your current LTV would be around 93%. FHA has really good rates, and low PMI payments. PMI would be another thing that you may need to take in consideration since you're getting out of the 80/20 option into 1 loan.

Please let us know how things turn out!
Thank you
Robert

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gmakerley's picture
gmakerley | Joined: November 9, 2007 07:36 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

from reading your post, duduong, i would think it's not necessarily in your favor to refinance. your loan to value ratio is high (93%) now, and unless you pay your closing costs out of pocket, it will become higher - thereby making fha pretty much your only option. those rates are in the same vicinity as your current rate, so the refinancing wouldn't necessarily make much difference.

i would think you're probably not being hurt with the equity line, either; as rates on those have dropped and may very well be dropping again quite soon.

what you'll need to do is discuss this with a lender you can truly have trust in, to see if it would truly benefit you to refinance.

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jveenstra's picture
jveenstra | Joined: November 10, 2008 09:03 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

If you refinance, the rate you should refinance should be at 5.000% or lower and you should keep and subordinate the existing HELOIC.
If your rate now is 5.75% and the balance is $190,000 and you have been paying for 5 years, that means your mortgage started at $205,000 and your present principal and interest is about $1,196 monthly.
I do not know what state you are in and I do not know your typical taxes and closing costs.
A good guide for refinancing is if you can lower payment enoygh so you break even on the costs in about 2 years (24 months). To me that means your new principal and ineterst payment should be about $1,196 monthly principal and interest. If you raise mortgage to cover prepaids and closing costs. a new mortgage of $197,000 with a monthly payment of $1,058 would requite an interest rate of 5.00%. Lower, of course, is better.
If you have 300 payments left at $1,196 you will pay $358,800.
If you have a new mortgage at $1,058 for 360 months you will pay $380,880 which is $22,080 more. But, if you save the difference between your current payment and the new lower payment for 300 months at $138 a month you save $41,400 and that is if you save at no interest at all.
So, you save more than you pay over the long haul.
If, instead of saving monthly, you continue to pay on the new mortgage what you now pay on the present mortgage, $1,196, in other words, voluntarily pay $1,196 when you are only required to pay $1,058, you will pay off the new $197,.000 mortgage in 279 months which is 21 months less than the payments you have left now and you save $25,116.
Most people do not save monthly and most do not pay extra, however, the average life of a 30 year loan is 7 years or less and the average time anyone lives in the same house is 14 years so you save montjhly with lower payments and never pay for 30 years on the same mortgage anyone.
Right now a 15 day lock is better than 30 day lock and your mortgage lender needs time to subordinate.
My suggestion: Pay for an apprasial now, get tyhe subordination and the processing all done and ready to close, and, based on what the fed says they will do, lock for 15 days and close below 5.00%.
At risk is the appraisal. If you pay for an appraisal and rates go up you lose. No guarantee, but, right now it is a good bet to pay for the appraisal.
You DO NOT want to refinance and pay off the HELOC because that looks like it puts you over 80% of value and you do not want to do that. You would need Private Mortgage Insurance and that monthly payment would eat up your basic savings monthly.

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

my 1994 1700sq ft double wide and 3/4 acre lot is paid for, Iam have a credit score of 680 to 700, and I'am in debt for around $60,000 in credit cards, vehicles, college. My monthly payments is around $3,300. My wife and i make around $4,000 month take home ( the rest goes towards food and electric, etc). We live in a double wide community several similar homes around are area sell for around $80,000 to $100,000 plus. Would it be wise to refinace our home to pay off our depts and lower are monthly bills. We just feel like we live pay check to pay check.

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gmakerley's picture
gmakerley | Joined: November 9, 2007 07:36 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

I'm sure you are living pay check to pay check, in fact. If you are astute enough to calculate a new budget and pay your bills without issue, barring unforeseen circumstances, then a refinance might make a great deal of sense. You'll eliminate that debt by doing so, and I hope you'd be tearing up a lot of credit cards, etc. Sit down with a lender to get a once-over on what it'd cost you to do what you're thinking of, and be sure that you don't go creating more debt for yourselves after the fact.

It's not for me to say "yea or nay" but I think it might be worth your while.

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rugbymad's picture
rugbymad | Joined: October 20, 2011 05:49 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

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While refinancing isn't for everyone, especially if you only recently took out the loan or have very bad credit, it's well worth a look for most.

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helpfuljohn's picture
helpfuljohn | Joined: October 20, 2011 03:43 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Is there any penalty in refinancing more than one loan at a time[url=http://www.equityloanfinder.com/illinois-home-equity-loan.php][color=Bla... If I refinanced a heloc and my main mortgage into just one mortgage would this cost me more than just refinancing my main home mortgage?

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smith.sussane's picture
smith.sussane | Joined: September 18, 2008 09:57 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi helpfuljohn!

Welcome to forums!

I haven't heard of any penalty for refinancing more than one loan at a time. You can refinance both the loans into one. If you do so, you will have to pay the closing costs for only once. The closing costs may vary from state to state.

Feel free to ask if you've further queries.

Sussane

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

I recently signed a refinance with PNC in which they forced me into having them pay off my HELOC and then dividing the balance between rolling half of it into my mortgage and then having me take out a personal loan for the balance at 4.99. Because they were giving me a 3.99 rate on the first mortgage with no closing costs on either loan I accepted, even though my HELOC rate was lower. Is this legal for them to do this? Both my loans were with two different banks, not PNC.

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adonis's picture
adonis | Joined: October 22, 2005 05:04 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Welcome Rose,

They shouldn't have forced you to pay off the HELOC and then again take out a personal loan. You should contact a real estate attorney and he will help you further in this regard.

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jveenstra's picture
jveenstra | Joined: November 10, 2008 09:03 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

It is legal because they set the terms of your doing a loan with them.

You accepted the terms because you did it.

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creditthreesixtyconsultin1's picture
creditthreesixt... | Joined: August 23, 2012 02:42 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Yeah, I agree with jveenstra that is legal, once you've signed, you are responsible to pay for it.

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