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My 1BR apt current value is about $210,000 or above.
I have only $64000 left to pay as mortgage with 5.75 fixed interest rate... My monthly payment is $584.
I'm seeing the mortgage rate is getting lower and lower.
Even though my mortgage is only $64000 left, I'd like to consider the refinance because 5.75 interest rate is not attractive anymore...
I asked a several banks for the refinancing, then it is the best deal I got so far.
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4.5 interest rate for 15 yrs fixed. Monthly mayment is $509. I have to pay $ 3000 - 4000 as closing cost.
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Yes, It is not really worth to take. I don't want to pay $ 3000 - 4000 as closing cost to reduce the monthly payment only $75.
OK, now it is my question.
How about I take Cash-out refinance?
For example I refinance $64000 with $20000 cash-out( total $84000), then use this all $20000 as extra principal payment.
Is it a good idea or stupid idea?
I may be able to take lower interest rate than 4.5 to take extra $20000 cash-out? maybe.
I don't see any people to do this so, it must be not work, but I wanted to ask here.
There's no reason to do a cash-out if you are just going to immediately pay it back. You will just spend extra money on interest for that extra money for a couple months, and you are still paying closing costs.
If you don't want to pay closing costs, it can usually be rolled into the loan amount (so your loan is 3-4 thousand higher) and you don't pay out of pocket, but you are still paying it over the long term with interest
If you have good credit, shop around for a better deal, that one is not very good for today's rates. If your credit isn't so good, that might be the best you can get, and it might not be worth it.
... 5.75 interest rate is not attractive anymore...
Yes it is. By historical standards, it is extremely attractive.
It might not be competitive, but I'm guessing that you used
that word because I'm guessing that English is not your first
language. 5.75% is a very good rate and many people would
kill to have that rate right now
Quote:
Originally Posted by brien51
... deduction on your income taxes ...
For many, if not most people, the $3,500 interest deduction
is probably not useful ( and therefore not deductible ).
There is no reason to refinance a $64k balance unless
you had some 8-9% rate.
Yes it is. By historical standards, it is extremely attractive.
It might not be competitive, but I'm guessing that you used
that word because I'm guessing that English is not your first
language. 5.75% is a very good rate and many people would kill to have that rate right now
For many, if not most people, the $3,500 interest deduction
is probably not useful ( and therefore not deductible ).
There is no reason to refinance a $64k balance unless you had some 8-9% rate.
5.75% is not attractive when the going rate is 4%. Also, to refi-or not is based on cost of refi versus how long it will take to break even that basically shows how long one wants to stay put in the place. Statements like "There is no reason to refinnance a 64K..unless you had some 8-9% rate" are not just true and please don't give such advise to people.
To the OP I think you need to understand the process of refinance and run the number to see if it make sense to you or not. Based on the cash out option that you mentioned above you don't seem to fully understood what you have at hand. Research a little bit and you will know what's best for you.
I'd say talk to a good broker who can give you several options. I just did today and he gave me basically two options - a lower rate with a higher loan cost or a slightly higher rate with low closing costs. Then he gave me both 15 and 20 year loans to compare. If you do go with a low closing cost loan, your rate will be higher. Cash-out rates are generally higher than straight loans or balance pay off, so I don't think you'd be better off with a cash out necessarily. It also depends on the maturity and terms of your existing loan. You'll save more in interest in you go from a 30 yr to a 15 or if you are in the first few years of the loan (where you pay more interest).
5.75% is not attractive when the going rate is 4%.
I said it was not competitive. There is a subtle difference.
The going rate is not 4%. 5.75% is and always will be an attractive rate.
Quote:
Originally Posted by MeInDenudinFL
Statements like "There is no reason to refinnance a 64K..unless you had
some 8-9% rate" are not just true and please don't give such advise to people.
Ok, I won't give such advise to people.
I will, however, continue to give the advice that it is not worth it. It is not worth it
to refinance a $64k note. If you have the money to pay for a refinance, plop it
down on the note and further reduce your balance and subsequent interest rate.
It's a $64k note. The difference in payment between a 5.75% rate and a
( more realistic ) 4.5% rate is less than $50/month.It gets lower with a
smaller period. If it costs you $2,000 to refinance, your payback is more
than four years. A $64k note should be paid back in four years.
Anyone refinancing $64k out for a maximum period
has no business having a mortgage in the first place.
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