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I was hoping someone could advise me on refinancing. Thanks in advance for any assistance you can provide.
We currently own a home, purchased Feb 11 with a VA loan, 30 year conventional mortgage. Current loan value $232K financed with a 4.75 interest rate. Our house appraised for $246K(w/appraiser missing one of the bathrooms)
We are considering refinancing in an attempt to get a lower interest rate. I contacted our current mortgage company (Wells Fargo) to get advice on our options for refinancing through them, prior to researching other lenders. The Mortgage person that assisted me stated 5 seconds into the conversation that it was not a good idea and not really worth it, it was so quick and abrupt, I was expecting calculations and questioning, but there were none..
I just want to get some additional view points on our options, we both have excellent credit and he did say the interest rates were low, just want to make sure his advice was sound.
Once again, Thank you in advance for any assistance you can provide, hopefully I provided enough information. Also thanks for sharing your knowledge with everyone in this forum, I have been reading threads and am amazed at how helpful and knowledgeable everyone is.
You want a better rate than 4.75? You may get it down to 4.5 if you pay $8000 or so in points, plus $2,000 in lender fees. He didnt want to talk to you because it doesn't make much sense.
If you want to continue to peruse, call a mortgage broker instead of a bank.
You want a better rate than 4.75? You may get it down to 4.5 if you pay $8000 or so in points, plus $2,000 in lender fees. He didnt want to talk to you because it doesn't make much sense.
If you want to continue to peruse, call a mortgage broker instead of a bank.
Agree, check with other brokers. I know a local Phoenix broker offering rates down to 4.25 today with no points - they even kick in some closing costs, 4.29% APR. $825 lender fees, $527 appraisal/credit fee.
Edit to add: Their VA refi is at 4.375 with about $5800 towards closing costs, no points. 4.602% APR. Don't know if anything similar where the OP is located.
BIG question: how long are you planning on staying in this house? The break-even point on the refinance is what you should be calculating. I'm betting the refi isn't worth it.
May I make a suggestion? you are smart by trying to save money by paying less interest. But you can Do that by making extra payments on the mortgage you have, or adding a bit to each payment. You'll pay less in interest over the term of the mortgage, build equity faster, and potentially pay off the house sooner. Though, truthfully, with an interest rate that low, I'd be taking my Extra money and putting it in a 401k (up to the employer match) and/or Roth IRA.
There are some great calculators and articles that can help you accurately sort this out at www.mtgprofessor.com
You said you have a VA loan? Thank you and your family for your service.
By returning to WF you are saving (in most states) a recordation tax. Your question to WF is, "if I were to refinance with you some day, how much would I save by returning to WF?" Sometimes it's not worth it to run across the street to pay $1000 to save $800. However, I do suspect the WF rep was correct in assessing the refinance at a quick glance. Someone that's been doing this a while doesn't need to run the numbers to know the math and that it doesn't make sense right now. However, that's where WF fell short. They should have shown you the math. Get someone to run the numbers, but don't let everyone run your credit. With the S&P downgrade, some are predicting even further drops in rates (into the 3's, if you can believe that). Find your sweet spot for a refi (the rate where it pays to move forward).
Since this post a WF rep has contacted me (They are really active when you check the pay off rate on their site). His advise corresponds to pretty much everything each of you said. Thank you all for your assistance, you guys rock.
@Jkgourmet, I attempted paying extra, WF does not seem to like that, I will have to contact them and see what's going on, they keep sending me messages pertaining to applying the extra funds.
Since this post a WF rep has contacted me (They are really active when you check the pay off rate on their site). His advise corresponds to pretty much everything each of you said. Thank you all for your assistance, you guys rock.
@Jkgourmet, I attempted paying extra, WF does not seem to like that, I will have to contact them and see what's going on, they keep sending me messages pertaining to applying the extra funds.
As a general rule to refinancing unless you are doing cash-out, or changing the term you need to come down to close to 1% in rate for the refinance to make sense once you account for closing costs.
tichatte, you mentioned it is a VA loan. Ask the lender about the VA streamline. It saves quite a bit of money in that you will not need an appraisal. Also, if the military member is retired and has a disability rating, the funding fee will not apply. We pay twice a month and pay extra on our mortgage, which is cutting the length on our mortgage. Ask them for an amortization schedule so you can see how long it will take to payoff with the extra money per month. Just a couple of suggestions of things that have worked for us.
@Jkgourmet, I attempted paying extra, WF does not seem to like that, I will have to contact them and see what's going on, they keep sending me messages pertaining to applying the extra funds.
You have to be very specific when paying extra that you want the extra to be applied to principle. Otherwise, they consider it a prepayment against the next payment and they hold your money for you (interest still accruing on the principle).
And bi-weekly payments are a rip-off. You pay early but the bank holds the money until the end of the month...they do not apply the payment to the principle when it's collected. The only "savings" is that you end up paying an extra month's mortgage every year and that does reduce your principle and interest for that amount of extra money - but not until the end of the year. Paying a little extra every month is a better idea.
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Thanks for all the information
