Refinancing Home

I'd wait about 6 months and look at it again. Pres Obama just passed some laws that should make that refinance rate go down. I don't think they're fully in effect yet, though. I think lenders are trying to push refinaning before that "real" lower rate is in effect. Don't do anything that's an ARM.

I'm sorry I don't have more specifics for you.

OK this may sound off, but here is my suggestion and I know of many friends (with both perfect and not so perfect credit) that have done what I'm going to suggest to you. The only reason I haven't done this is that I own my house outright, so it wouldn't work for me (obviously).

I would suggest going to the bank or lender that currently holds your mortgage. Ask them to lower the principal and the monthly payment. If you have read up on the news, the banks have received billions from the government to help with the falling market prices. Your home is probably not worth what it was even 6 months ago and I can guarantee that it is still going down. Most mortgage companies are offering these services free of charge to those who ask...so ask and see what they can do for you before you jump into a refinance.

So yes if it is NOT an arm then it might be worth it, but what are the closing costs? I would recommend wrapping it into the rate (not the loan) you will actually pay less overall. But first find out if your current mortgage company will do it with not cost to you.

The only other advise is...ask/shop around, and make sure that you get all the facts, having done mortgages myself, I see how easy it is to get ripped off without even knowing it.

I just wanted to say that my husband is a mortgage banker and like the PP have said, refinancing isn't free. Also, to get that intrest rate you may have to buy it down to that depending on your credit. Your FICO score is critical to getting a great rate. Check out Good Faith Estimates and Truth in Lending documents first. My husband's policy is that he is willing to take a smaller paycheck and give his clients a great deal and great service in hopes they will refer friends and family. He has not had to advertise for almost a year and has stayed busy even through the slow times when other people weren't. He charges a 1% origination fee and gives you the par rate which means you get the lowest rate you qualify for based on your credit. Most people do it for a smaller origination fee and then make more money from the bank on the back end which means you don't get the lowest rate possible. He does this so that you are able to write off his fee since the origination fee is tax deductable and other fees aren't. If you are interested in perusing his website, it is www.tonydoesloans.com and he is licensed in most states.

Hi J., your request cought my eyes since I am in the financial industry I tought may be I can help you as much as I can. First thing that you have to ask your self is are you willing to repeat 8 years of payments that you have already applied on your home. I am sure that you understand this but, refinancing means that you are going to be put back on a 30 year term and I have seen some lenders put people to 40 year terms. Also, what I have seen in my experience is that with these loans usually with FHA or VA loans that are out there you pay a lot $$$ in up front fees.There is even a fee for that discount that they are giving you from a 5% to a 4%. Also, they charge a big fee in what they call Private Mortgage Insurance(PMI) which for the most part they ask you up front plus appraisal fees and application fees that you have to pay before you even sign the docs. So ask yourself this, do I want to pay a lot $$ in fees? What is the main reason that I am refinancing?? If the reason is to pay less interest and pay off your home sooner, I specialise in helping families get out debt and become financially independant. I just met with a client the other day and I am saving them $106,000 in interest that they were to pay someone else on their credit cards and mortgages they are in. I am taking them from 29 years that they scheduled to pay off their primary home to 9 years. That is 20 years that they do not have to make a mortgage payment. In my opinion do not do it, because you will be back to 30 yr term and there are fees that you will have to pay. I hope that I was able to help you.

Before you go and refinance make sure you look at the closing costs. My husband and I were thinking about doing a refi and the closing was $5,000. With that ridiculus close cost we would not save any mony by going down to the lower intrest rate. Sometimes if you are a good negotiater you can get them to wave the closing costs. But I dont know how true that is if you are buying down interests rate points. However, if you are simply looking to lower your monthly payment to give you more wiggle room with bills then go for it.

I agree with the other moms. The other thing you need to look at is whether the loan is a 30-year fixed mortgage or a 3 or 5 year arm. If it's an arm, then you'll be paying interest-only for the first 3 to 5 years then your rate will adjust to the current interest rate PLUS your principal payment, which is how many homeowners got into trouble recently. If you're getting a 30-year fixed, you plan on staying in the home for a considerable amount of time, and you can afford the closing costs, then you can save a little bit of money. Watch out for hidden fees and requirements to pay down points to get that rate.

There is not a black & white answer to this one. You have to get all of the facts and do some analysis to see whether or not it is worth it. What is the term of your current loan? What is the term of the new loan? What refinancing fees are you going to have to pay? Ask for an amortization schedule for your current loan and one for the new loan and for all fees for the new loan. Do an analysis to see if you will be saving any money in interest & fees over the term of the loan vs. the interest on your current loan. If it is a fixed-term, fixed-interest loan, if it lowers your interest rate & saves you money in interest in the long run, it's not a bad idea to refinance & cut your fixed costs in this economy. If the fees of refinancing don't offset the savings in interest over the life of the loan, and if you're currently on a fixed-interest loan, I wouldn't refinance. If none of this makes sense, get a second opinion from someone you trust with some financial expertise. Good luck!

Hi J. - The first thing to review is a Good Faith Estimate and Truth-In-Lending statement that will show you fees associated with getting your mortgage and the total APR. Don't include your escrow reserves in your loan since you will receive an escrow refund from your current servicer and it will only inflate your loan balance.

You may have to pay upfront points to buy down the rate to 4.875%. Also, you might consider refinancing to a 20 yr loan rather than a new 30 yr loan since you have already been paying on your mortgage for 8 yrs. A shorter term will also qualify you for a lower rate although your payment may increase depending on the term you choose.

As far as refinancing in the current markets - my recommendation especially if you plan to stay in your home for a very long time, is to only pursue a fixed rate loan. Dont try any special financing (if you can still find it) such as an adjustable rate, a balloon or a fixed payment option adjustable rate product.

Calculate how much your refinance will cost you in fees, and then divide that amount into your current expenses. This will give you the number of months it will take to repay your loan. 24-36mos is generally acceptable if you plan on staying in your home.

My question to the lender would be what are the points to buy down the rate to 4.88? I had one tell me that I could get my rate down to 4.5% but it would cost me around 2 points (meaning 2% of my loan amount) to get the rate. It wasn't worth my time.

I wouldn't trust everyone, some of these lenders are so desperate for work, they will say anything. We have a wonderful who is so honest. We have a fixed rate that's right at 6% and she says there's nothing we can do right now, but that she would let us know when there is a good option that would save us some money.
The biggest problem right now is the value of all our homes has dropped tremendously so that messes with refinancing a loan. I'd check around to find some honest lenders, because some are hurting for business and will tell you anything, and then sneak in a bunch of hidden fees.

I don't know weather this is a good idea or not. However, I've been listening to Dave Ramsey on the radio for a while now and he seems to have some good ideas on the matter. He used to work in realastate and helps people with there debt. We are working his baby steps for getting out of debt and it's been really helpful in creating a budget and sticking with it. check out www.daveramsey.com

First, it really matters if it is a fixed or variable rate. If you're in a fixed and the new one is varible, forget it! If its the other way around it could be worth looking into. (Even those that start fixed for 2 years and then go variable - they're not good deals either). In fact, I would say avoid a variable rate altogether.

Second, look at the time. If you can lower your payments (or keep them near the same, not going up a lot) and make it a 15 or 20 year mortgage rather than the traditional 30 year, you could save a lot in interest over the life of the loan.

Finally do not, I repeat, DO NOT consolodate other bills into your home, unless the monthly payment stay well within your ability to pay and you get rid of the credit cards and have the self control to not build up debt again. We made that mistake - consolidated, the mortgage payment was higher than what was really comfortable, and then we charged up cards again. When we hit job loss and illness and the real estate market dropped we were forced to sell our home at a loss (called a short sale) or be foreclosed on. Big mess, big headache, and the "canceled debt" is taxable if it is anything other than the actual price you paid for the home and home improvements. Big Ouch!!

J.,

I think the best thing you can do is talk to a trusted REALTOR (not just a real estate agent) about your personal situation. If you do no know a realtor, contact the South Metro Denver Realtor Association for a recommendation. Good luck!

E.

I think you need to run the numbers and read the fine print. Does the refinancing come with no cost or will you have to pay points and/or fees? Is there going to be a pre-payment penalty if for some reason you pay it off before it comes due? If there are no hidden fees, then yes, obviously a 4.88% rate will lower your monthly payment from the 5.85% rate and you should go for it, but please, please make sure you understand if there are any points or fees or anything hidden in the refi. It's not always as black/white as it seems.

My husband and I actually just refinanced our home last week. You need to look at any fees that could be charged to make sure it is worth it. Also, make sure that this is a fixed rate and that there are no fees related to paying the loan off early. Also, take into account with the current housing conditions and market that your home will likely appraise for less. When we purchased our home, we were able to put 20% down and have no PMI. However, now we only have 10% equity and pay PMI. It was still worth it in our situation since we are paying more to principal now than with our prior loan and still have less PMI and interest than with our old loan. Just make sure it is worth it first and good luck!

No you will lose the equity through closing cost.

I am not a financial expert, but we have been through this process a few times. A good rule of thumb is that if you can lower your interest rate by a point or more, then it is a good thing. For example, given your current interest rate, your principal & interest payment should be around $590 per $100k borrowed (this excludes any insurance and taxes as that will not change with a refi). If you were to refinance to 4.88$, the P&I payments would drop to around $530 per every 100k borrowed. So, basically you would save $60 per every $100k of loan amount you have on your mortgage. This can really add up to big savings.

But, there is a catch you must consider. Refinancing is not free. It should cost around $2000 in closing costs (which I believe a part is tax deductible). So, you need to calculate how long you think you will be in the house to make refinancing worth it. For example, if it costs $2000 in closing costs and you are saving $200 a month with refinancing, then you need to be in your house more than 10 months before it becomes a "good deal". But after that you would be saving a lot for perhaps many years.

Lastly, be very wary of mortgage brokers trying to hide a good interest rate with making you pay down points. If you are not familiar with this, then just make sure you always ask about this. Paying down points is paying down your interest rate in cash. Any point percentage is basically mulitiplied by the value of your home and paid in cash upon closing of the refi. Sometimes this is a good thing as a little cash up front cash really lower the interest rate. But, lenders like the hide this and call it an "origination" fee to make you think you're getting a good interest rate. For example, your current mortgage could be disguised as 4.85& with 1 point down. So, you could end up paying to refi for the same exact mortgage you have! I would run for the hills of any lender wanting me to pay for than 1/8th of a point for anything above 4.75%. But, if your interest rate is 4.88% with no points down, you could consider paying down your interest rate more if it makes financial sense. All you have to do is ask and then crunch the numbers!

Hope I didn't confuse you! I still think that if you can get 4.88% with no points down, or like 4.75% with 1/8 of a point down it would be worth it. I think rates will be low for a while, but this is a golden time to lock in a historically low interest rate. My folks remember paying 12% interest of one of their homes when rates were really, high. Basically, anything under 5% is just a litte more than a standard inflation rate. In time, it will feel like the bank is paying you to have a mortgage :) So,good luck!

H.

AS the PP's have said: do your due diligence in regards to fees, repayment penalties, point, etc. Remember points are deductible and fees are not. Its best to go through your current lender as most have some fast track programs with minimal fees.

The big thing to figure is how much you'll be saving vs how long you intend on staying in the home. If you're planning on only staying a year maybe two then check to make sure your savings will recoup your fees within that time. If you are staying more than a couple years most likely you'll recoup the fees to take advantage of the savings. (ex, if your fees are $2000 to refi, and your savings are $100/mo then it will take 20 mos for you to see the savings.) GL!!

J.,
Hi, you betcha. I believe they recommend refi if it's more then a point which yours almost is. Be careful that you don't get into the "arm" loans which is part of why so many have lost their homes. Stay with a fixed loan. If you can afford it you may make it 15 years instead of 30 but do your math first. Whatever you do don't let your mortgage broker talk you into something you can't afford. God Bless, L.

It costs thousands of dollars to refinance (they will roll it into what you owe). It is only worth it if you don't have any plans to move in many years because it will take time to make up the money of refinancing thorugh the lower interest rate.

Hi J.,
Every person's situation is a little different and as the others have said should be looked at for their specific situation. My husband is a mortgage banker, has been for 15 years and owns his own company. He is able to work with your specific situation to determine what would be the best situation and if it isn't right to refinance, he will be HONEST with you and tell you. Please give him a call!! ###-###-#### Brian Crowder, Crowder Mortgage and let him help you sort through all of this.~Cindi

we looked into the same kind of terms you are talking about and it ended up not being as "pretty" of a deal as it looked. We've had 5 years in our home and would have to be starting over at the 30 again instead of 25 which sometimes doesn't feel like that much but I got out all our statements and went through to see how much less we are paying on interest, not a lot yet but I can see it starting to go down which isn't something I wanted to restart. When I talked to a mortgage broker who did a free consult he told me flat out that it wouldn't make any sense to refi our home. that we would probably end up in the same situation if not a little worse right now than we already are because of the fine print, the point fees etc. we are in a fixed rate at 5.65 the 4.88 was a variable with up to 11% above prime, so if prime goes up to 6% we could have ended up paying 17% if our lender decided to bump it. I'm not saying don't do it but really research it and talk to someone who isn't going to get money out of it. I got a couple of opinions and it was really refreshing to have someone say you know I ran your numbers and you are already in a great situation, stick with it.
another thing to think of is who are you with right now on your mortgage and who would you be refinancing through--if it is a company that could go under which is a lot of them right now I would really think hard before putting your home in their hands.
good luck with your decision, I know it took some hard looking for us but we are staying where we are.

Another good thing to know when refinancing is to look at your Good Faith Estimate and Truth In Lending forms and watch the difference in the note rate and APR. The bigger the difference the more "fees" are put and end up costing you over the life of the loan. It is best to keep the note rate and APR VERY close. Good Luck.

J.,
A few things to consider... how much will closing costs be? Do you have that to spend? How much lower your payments are if you do it? And see how much time it takes to break even. Planning on not moving is a plus, and lowering it is a plus if the payments are lower for you and Hopefully we are talking about a 30 year fixed!! If it works out that you pay less per month and have the money to spend doing this then yes it would be great to do during this economic time. Best of Luck,
A. Lovejoy

J.,

As other posters have said, regardless of what you do, stay with a fixed rate! That being said, you are 8 or 9 years into your loan. Look at what you will pay in interest over the rest of this loan, and what the interest will cost you over the life of this new loan, and see how they compare. If you could refi for a 20 year loan that has a lower payment than what you currently have, or a 15 year loan for about the same payment, I would consider it, as you would not be losing ground on paying off your loan. Otherwise, you might be better off staying with what you have as far as interest over the remaining life of the loan goes.

Hope that makes sense!

Good luck.

Ask your lender...

To write down ALL the fees associated with the re-finance...and I mean ALL...and hold him to it if you do the re-finance.

To write down what you have left to pay...including fees and interest...for the current 5.8...to compare what you would actually pay for the new 4.8...including fees and interest. Does the 4.8 save you any money over the years of the loan that is left to pay.

Always compare the length of time for both loans...does the 4.8 stretch it out in years? Do you WANT to stretch out your loan?

What kind of interst is the 4.8...variable or fixed? Is there a baloon payment?

It is YOUR money...ask the questions that are important to YOU not necessarily what he wants to answer.

G.