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hi everyone....
i bought my house in Dec. 2008 (3 years ago exactly) and i've refinanced twice since then.
initial rate on a 30 year was 5.25%
refinanced to the same 5.25% after 6 months and eliminated my PMI
then after one year or so, i refinanced again and went down to 4% 15 year loan (that was October of 2010)
now, i'm thinking of refinancing AGAIN with the same lender....going down to 3.25% on a 10 year loan.
The guy is giving me $3842 credit that covers or exceeds my closing costs. (if i find a cheaper title company, i still get the same 3800 bucks as credit)
Am i missing something though? I don't know why but i'm very nervous about refinancing this time around... (even though the numbers make sense). The loan costs me 'nothing', and my payment goes up naturally but my interest is down by about 160 a month. no brainer...right?
As long as you aren't adding to your principal or term, I don't know why not.
no, the principle is staying the same. i made sure to check.
why would they do this though? this seems to be against their interests......(unless they're thinking that if they don't refinance me, i'll just refinance with someone else)
The drivers for refinancing are really multiple layers of people and institutional structures.
Originators are the first line employees that benefit, as are their bosses and the whole "consumer sell side" of banking / financing.
The "wheels of commerce" must be spun by all kinds of actions. The benefits to the world wide investment community to have credit extended for shorter periods of time, to borrowers of low risk, and at a historically low rates are such that the "offset" of reduced yields is sufficient...
The drivers for refinancing are really multiple layers of people and institutional structures.
Originators are the first line employees that benefit, as are their bosses and the whole "consumer sell side" of banking / financing.
The "wheels of commerce" must be spun by all kinds of actions. The benefits to the world wide investment community to have credit extended for shorter periods of time, to borrowers of low risk, and at a historically low rates are such that the "offset" of reduced yields is sufficient...
interesting.
thanks.
any thoughts of the situation i described in my original post?
The analysis ought to include some variable for "opportunity cost"...
If your income is sufficient to handle the accelerated payments AND fully fund your retirement needs AND put aside investments for educational cost / healthcare/ home maintenance / mad money then you fall into a pretty small group of Americans that are in the enviable position of barely needing to borrow any money at all.
It is great to be able to have enough options to take advantage of low rates.
The lender is happy to have a customer with good credit.
Quote:
Originally Posted by Thinking-man
Thanks for the reply.
i don't agree with your statement above (in bold). even if i pay the 'extra' on my current loan, to match the 'increase' caused from the new loan, there's still something to be said about the .75% interest rate different (4% vs. 3.25%). i will be paying .75% more interest annually 'even if' i continue making extra payments on the current loan.
Now, here's the situation.....my current loan amount is about 270k. i'm paying extra every month and my current 15 year loan that was refinanced last year now has less than 12 years left on it. at the current rate, i will be done with the full loan in 6 years.
if i refinance into the 10 year loan, i will still be paying extra monthly and i suspect i'll be done in around the same 6 year time frame....however i'll be paying a lot less in interest because of that .75% difference in rate.
If your income is sufficient to handle the accelerated payments AND fully fund your retirement needs AND put aside investments for educational cost / healthcare/ home maintenance / mad money then you fall into a pretty small group of Americans that are in the enviable position of barely needing to borrow any money at all.
It is great to be able to have enough options to take advantage of low rates.
The lender is happy to have a customer with good credit.
thanks Chet.
i'm in the DC area. here, what you described doesn't seem to be that uncommon.
we're lucky in that we live in this area; are educated; have a company that pays for all of our healthcare costs;and we're pretty frugal.
we know that good times don't always last...so we try to put aside as much as possible in addition to the 401k max.
The biggest risk I see is if your home has dropped in value to where you no longer have 20% equity. Then you have paid for an appraisal but can't get a loan without PMI. Otherwise, you just do the math - 3.25% sounds pretty good. We just did a 15-year refi at that rate and couldn't be happier.
hi everyone....
i bought my house in Dec. 2008 (3 years ago exactly) and i've refinanced twice since then.
initial rate on a 30 year was 5.25%
refinanced to the same 5.25% after 6 months and eliminated my PMI
then after one year or so, i refinanced again and went down to 4% 15 year loan (that was October of 2010)
now, i'm thinking of refinancing AGAIN with the same lender....going down to 3.25% on a 10 year loan.
The guy is giving me $3842 credit that covers or exceeds my closing costs. (if i find a cheaper title company, i still get the same 3800 bucks as credit)
Am i missing something though? I don't know why but i'm very nervous about refinancing this time around... (even though the numbers make sense). The loan costs me 'nothing', and my payment goes up naturally but my interest is down by about 160 a month. no brainer...right?
it just seems a bit too good to be true.
any thoughts?
I've lived by this simple idea when it comes to money.........."If in doubt, don't"
I've lived by this simple idea when it comes to money.........."If in doubt, don't"
Kept me from many mistakes.............
Doesn't make sense. It should instead be 'When in doubt, investigate further.'
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The analysis ought to include some variable for "opportunity cost"...
