Refinancing

[nisryus]

Now that Britain had exceeded EU and mortgage rate fell, I am thinking of refinancing my 30 year fix rate to a 15 year fix. The thing is, I have just started paying my current mortgage for 3 months, is it too early to refinance? Anyone has experience on refinancing their mortgages in such early stage?

I thought about going through my current mortgage holder (Flagstar Bank), but my friends said they might not give me the best rate or closing cost. I tried Quicken in my last search but all I got was rate quote not as good as BoA, and tons of spam emails....

 

[dbcooper1]

Have you considered just making the 15 year payments on your current 30 year loan? Just make sure to specify extra principal. You may not get much lower rates anyway and this gives you the flexibility to make the increased payments or not each month.

 

[nisryus]

I do pay extra principal, but wife and in-laws are solidly sold on getting a shorter term loan due to lower rate. =/

 

[boomerang]

Mortgage Refinance Calculator

Personally, I'd get the wife or the in-laws to do the leg work but if the burden falls on you, maybe this will help you get started.

 

[RearAdmiral]

I recently went down to a 15 year from a 30 year. Doing this I got rid of PMI and dropped my rate. As a result I pay essentially what I did when I first started my mortgage about 4 years ago. 3 months might not yield a huge difference but you didn't post any #s. Just use the below link for research

http://www.mtgprofessor.com/

This is a great calculator / analysis tool:

http://www.mtgprofessor.com/ext/partners/ShopYourLoan.aspx?dv=refi&s=1011&a=1

 

[Exterous]

Whats the rate difference and cost to refinance? I did mine 6 months after I bought. Cost me $1,032 out of pocket including the appraisal but will save me $103 a month.

Keep in mind you can shop around and negotiate refi prices. My original company wanted to charge more for the refi but (basically) matched a quote for $1000 I got in writing.

 

[nisryus]

Thanks guys.

My 30 yr has a 3.5% fixed rate, and the lowest 15 yr fixed rate I could find is 2.35%. Currently paying 1037 a month (principal and interest). With escrow the total becomes 1595 a month.

Based on MTGProfessor's calculator, with a 2.35% to 2.5% (15 yr fixed), the monthly payment before adding on escrow would be between 1300 to 1410 if I pay the closing and 5%. (anyone knows if aimloan or erates mortgage are any good? most sites have totally opposite ratings.)

Going to show wife these to see what she thinks. It will be close to 2k a month, so things will be tight.

My current lender hasn't return my call yet, so going to call them again tomorrow.

 

[RearAdmiral]

Thanks guys.

My 30 yr has a 3.5% fixed rate, and the lowest 15 yr fixed rate I could find is 2.35%. Currently paying 1037 a month (principal and interest). With escrow the total becomes 1595 a month.

Based on MTGProfessor's calculator, with a 2.35% to 2.5% (15 yr fixed), the monthly payment before adding on escrow would be between 1300 to 1410 if I pay the closing and 5%. (anyone knows if aimloan or erates mortgage are any good? most sites have totally opposite ratings.)

Going to show wife these to see what she thinks. It will be close to 2k a month, so things will be tight.

My current lender hasn't return my call yet, so going to call them again tomorrow.

I didn't use one of those two but I went through the whole process using the professor's site and quoting system. I didn't have an issue. Anyone on his site should be "known good"(or at least won't try to rip you off) but who knows.

Sounds like things depend on your comfort level with the payment. 3.5 on a 30 year is pretty good. I have 3.25 on my 15 year.

 

[Binky]

Think of it in terms of payback period. If your total costs are $1,000 to refinance, and it saves you $100 per month (interest only), then your payback period is 10 months. After that, you're actually "saving" something.

Remember that comparing 15 year payments to 30 year payments isn't really the same thing. That's why I'm suggesting to look at interest costs only. That is your only true cost. Principal repayments on the 15 year are higher but you should not think of that as a cost.

If the 15 year payments are tight, you should reconsider. A lower rate is good, but the 30 year leaves you the flexibility of not paying more per month if things get tighter.

 

[edro]

The messy part is refilling your escrow account (property tax and insurance).
Your closing costs could very well be $4-5k initially.
After closing, you will be sent a check for your previous escrow balance.

You have to pay that somehow. Either from savings, or roll it back into the loan.

 

[Capt Caveman]

I'm also looking into refinancing from a 30yr to 15yr fixed rate mortgage. I've looked at bankrate and zillow for rates/lenders. I see high rated reviews for companies like eRates Mortgage and Consumer Direct Mortgage that have rates of 2.65% with zero fees.

Anybody have experience with companies like these? I'm assuming they're packaging their fees into their interest rates but their rates are still excellent.

 

[nisryus]

The few places I spoke to - like a few credit unions and local banks - all have low rates, but they dump fees on you. So the monthly payment before escrow is actually a bit more than some other places with higher rate.

What was weird was that two places I called, and the loan originator who did my current mortgage, told me that I shouldn't refinance within 6 months of the new mortgage.. They were vague on why it is bad.. so anyone has any idea if there is any no-no to not refinance within 6 months of a mortgage?

 

[Thump553]

I do pay extra principal, but wife and in-laws are solidly sold on getting a shorter term loan due to lower rate. =/

Frankly, your wife and in-laws are locked into the conventional but stupid mindset, albeit one that makes the mortgage industry so very profitable. Do what you are doing now (long term loan, partial prepayments based on your schedule) for the win. You lose a job, have both cars crap out at once, etc. then skip prepayments for a while. Can't do that with a 15 year loan-plus you won't incur all the costs of a refinance-which are usually rolled into the loan via an increased principal balance.

 

[Scarpozzi]

The cost of refinancing will likely be high enough that it's not worth the risk of refinancing. I only say risk because there are fees you can't recover. You're 3 months into your current mortgage...did you pay closing costs out of pocket or did you have them tacked onto the loan?

I ask because there are court fees to identify lien holders, there are appraisal fees, lawyer fees, etc...most usually run $1500-5000 depending on home value and any points you may have paid. (paying up front to get a lower interest rate)

If your refinance, not only will you have to pay all that again, but what you already paid will be a loss. If you do simply double up your payments, you may end up saving a lot if you factor in both sets of closing costs.

If you are serious about refinancing still, try finding a credit union that does in-house loans. In the mortgage industry, a lot of companies will offer low rates and then sell your loan. I've got friends who have had 3-4 different companies for their mortgage in the past 12 years. I've been with the same credit union for the past 12, for whatever that's worth.

 

[dbcooper1]

And the interest, unlike many of the fees, is tax deductible. There are a lot of moving parts to this process unless you're dealing with a 'streamline' refi that I've only seen in connection with a V.A. loan but might apply to others. I'm not in the business; just have years of experience as a consumer ..

 

[nisryus]

Wife decided to go for the refinance. This time they will paid for most of the cost, like 75% of closing cost. Survey and appraisal fees all waived. So I was kind of surprised.