Mortgage & refinance - Does this make sense?

[WarhammerUC]

Original loan 405k @ 15 yr @ 5.75

Monthly payment is 3800, already paid down 2 years. - 91k
13 Years left @ 3800 = 592,800

-

New loan 390k (pay off amount) @ 15 Year @ 4.75

Monthly payment is 3400 (400 lower) but back to 15 years
15 year @ 3400 = 612,000

Does this make sense ? Its 400 lower but it'll cost me 19,200 more and I have extra 2 years.

 

[SunnyD]

Yeah, longer term + more interest (even though it's a lesser rate).

 

[dabuddha]

Originally posted by: SunnyD
Yeah, longer term + more interest (even though it's a lesser rate).

this

 

[JS80]

Couldn't you refi at lower rate and take the $400 and send it in towards principle? Someone calculate how fast the mortgage will get paid if he does that.

 

[alkemyst]

http://khovmortgage.com/main/Calcs.asp

various calculators.

 

[WarhammerUC]

Originally posted by: JS80
Couldn't you refi at lower rate and take the $400 and send it in towards principle? Someone calculate how fast the mortgage will get paid if he does that.

Crap thats a better idea.. wheres a calculator for that.. hahahah

 

[dullard]

There is no way that your numbers are all correct.

1) If your original mortgage was at $405k, at 5.75%, with a 15 year term, and with a monthly payment of $3800, then that included a $437/month escrow account. $437 seems awfully low for a house that expensive.

2) Assuming $437/month is correct, then after 24 months, your balance would be $369K not $390k. Somewhere there is a missing $21k.

3) Assuming that $21k is acutally an up-front refinance charge (and not part of the payoff amount as specified), then the payment for the refinanced loan would be $3470, not $3400.

4) Assuming a $3800/month continued payment and a $21k refinance charge, then you'll pay it off in 156 months (or 13 years). Meaning that you'd break even.

Of course, that is a lot of assumptions based upon possibly faulty numbers.

 

[Exterous]

Originally posted by: SunnyD
Yeah, longer term + more interest (even though it's a lesser rate).

You refinanced the 13 years left with a 15 year mortgage. Just put your monthly savings back into your mortgage - or invest the difference

 

[Jadow]

knocking off 1% on a balance that high is HUGE!

You could keep your payment the same and more of it would go to principal which will greatly LOWER your loan term.

 

[WarhammerUC]

Originally posted by: dullard
There is no way that your numbers are all correct.

1) If your original mortgage was at $405k, at 5.75%, with a 15 year term, and with a monthly payment of $3800, then that included a $437/month escrow account. $437 seems awfully low for a house that expensive.

2) Assuming $437/month is correct, then after 24 months, your balance would be $369K not $390k. Somewhere there is a missing $21k.

3) Assuming that $21k is acutally an up-front refinance charge (and not part of the payoff amount as specified), then the payment for the refinanced loan would be $3470, not $3400.

4) Assuming a $3800/month continued payment and a $21k refinance charge, then you'll pay it off in 156 months (or 13 years). Meaning that you'd break even.

Of course, that is a lot of assumptions based upon possibly faulty numbers.

#1 - 3800 is payment, tax, insurance
#2 - the payoff amount to the original bank is balance + fees - 369 + fees, around 38x, i round up to 390

A lot of the numbers are all estimate because they dont know what the monthly fee may be.. but they estimate around 3400..


From Wamu:

Last payment amount
Principal: $1,580.29
Interest: $1,782.87
Escrow: $381.70
Optional Insurance: $0.00
Other/Fees: $0.00
Extra Principal Payment: $0.00
Total Last Payment: $3,744.86

 

[dullard]

Originally posted by: WarhammerUC
#2 - the payoff amount to the original bank is balance + fees - 369 + fees, around 38x, i round up to 390

If you have to really pay that much in fees, then you basically break even. Although without the rounding, you MIGHT be a bit better off financially with the refinance.

If you pay all these massive refinance fees and then move, you'll never recoup those fees. In that case, don't refinance since you'll lose money.

If you do refinance, it'll only make financial sense if you (a) stay there for at least the next decade and (b) roll the $400/month savings back into the house or invest it otherwise. You do gain the small intangible flexibility of using that $400 a month for other purposes, but then you lose the financial gain by refinancing and you lose the ability to invest those fees that you wouldn't have to pay otherwise.

Since it is such a close call (you could lose or you could gain), I'd say skip the refinance for now. Do it later when you have lower fees or an even lower interest rate. A general rule of thumb is not to refinance unless you get greater than 1% difference. You seem to be right at the border. I wouldn't bother.

 

[dullard]

I just checked bankrate.com for that type of mortgage in New York City. It looks like you should be able to get a 4.625% mortgage with almost no fees and a $3000 monthly payment if you have good credit. That would be enough to make me switch. But not the deal you found at 4.75% with massive fees and a $3400 payment.

 

[Gooberlx2]

Edit: Wait...no that's not right (used original loan length/amount instead of today)...well anyway, use this calculator to help.

 

[sactoking]

Due to the exorbitant fees, you should not refinance. The Net Present Value of the income stream at 6% discount rate is ($35,954.95). It will cost you more in lost income on the investment than it will save you in interest. This is assuming you hold the loan to term. Paying it off early makes the NPV worse.

Note:

Based on your input I used a loan value at purchase of $405,000 interest rate of 5.75%, 180 month term. Computed P+I payment was $3363.16/month. With 150 months left, you SHOULD have a principal balance of $359,221.82. If you need $390,000 to refi, the difference (or $30,778.18) is what I computed as "fees".

 

[Chunkee]

the damn fess are outrageous and rates are going back up...people should still not do this...there may be small incentives for those on the ARM rope, but for the middle class guy wanting to refi...they are raping you on the fees...buying a low rate...fuggem.

 

[alkemyst]

The company I work for is not raping anyone.

It's a real deal with nothing but the true third party fees applied...you can pay points if you want or not...real rate as such it can't be quoted until the account manager knows you the true picture.

https://mortgageapp.khov.com use chris feeny as the referrer. It's through K. Hovnanian. Normally we only do loans/refi on the home we build...being things are slow we are offering our deals to friends and family.

I'd love to take advantage...at the time I bought my house our homes were out of my price range even with the discount. Now I am $100k upside down so a refi is not an option for me.

Applying is free, you are only charged anything if you decide to do the deal with us. There's really no way you can lose.