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Old 08-15-2012, 09:40 PM
3 posts, read 5,658 times
Reputation: 10


I bought a home on Jan 2010 with a 30 years (4.5 % interest rate / 5% APR) mortgage. I now have a remaining 196,000 balance and 329 months left to to pay off. As I was not put initial down 20% for the property, I need to pay $90 monthly PMI.

When I shopped around for refinancing recently, I got the following offer from a local credit union(CU) -

15 years (2.85% interest rate / 3.05 % APR) & Zero points
Total Fees - 5,000 = (Loan Origination Fee - 2400 + Other fees(appraisal/title insurance etc) - 2600)
But, the CU will refinance only up to 90% of appraised value.

Home originally costs $211,000 when I bought. Considering the home is only appraised for 200,000 now, they will refi only 180,000. I have to close the gap from my pocket (i.e 196,000-180,000 = 16,000).
One thing is I don't need to buy PMI like my current bank (i.e savings of $90/month).

I know I could save a little over 163,000 in interest if I live here until it is pay off. I can pay monthly increase in mortgage as term is changed from 30 years to 15 years.

But, is it a good idea to refinance at this institution and current senario?

Thank you for your help!
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Old 08-15-2012, 10:05 PM
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Wait - can you come up with the $21,000?

Also, you're saying you wouldn't have to pay PMI even though you'd only have put 10% down essentially?

I would of course shop around multiple places and get quotes, but if the above were your only option, w/ or w/o PMI, it sounds like a good decision assuming you can come up with the 21 grand and pay the approx $300 monthly increase.
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Old 08-15-2012, 10:14 PM
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Yes, I can do 21,000 (but it will take a good bite from my saving account) and willing pay $300 extra monthly.
I met the LO today and she confirmed that I don't need to buy PMI/MIP at all.

Last edited by mgcho; 08-15-2012 at 10:29 PM.. Reason: revision
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Old 08-20-2012, 11:56 AM
Location: Atlanta, GA
504 posts, read 1,337,292 times
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You can plug your current loan numbers in and then compare those to how much you'll save over the term of the loan with a refinance calculator. The main point of this is to see how much in interest you'll save over the life of the loan. Of course a lower rate and paying more per month towards the principle (on the shorter term loan) will probably save you a lot on interest.

Refinance | Savings from Refinancing Calculator by Bankrate.com
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Old 08-27-2012, 12:31 AM
33 posts, read 172,328 times
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Besides doing the math to see if it makes financial sense, it's also a personal decision. Is it worth having the extra money in savings? That would be a huge question for me that would require a lot of thought.
2400.00 origination fee on 180K mortgage is high. Do the costs of your loan include your prepaid charges - or do you have to come to closing with that money as well?
Have you already had an appraisal done? Do you know that your home will appraise at 200K for sure?

Will you truly live in your home until you pay it off? don't know if you are self - supporting etc., but if you lost your job etc. would this be the best move? Because of the state of things, I've started asking myself these kinds of questions before all decisions are made.
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Old 08-27-2012, 05:00 PM
Location: Long Island, NY
1,756 posts, read 3,148,110 times
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Nothing will happen until you get an appraisal. When I tried to refinance 2 yrs ago, I was shocked to discover how low my apt appraised for ($150K vs the $ 215K I bought it for in 2006). I could not refinance until a year later when it appraised for 160K and I had paid down my mortgage to almost $190K balance. I was able to refi with a 130% LTV under HARP 2.0.

The appraisal determines EVERYTHING. Pay the $300-500 it costs and the bank will let you know if they will underwrite the loan. I think going to a 15 yr fixed is a great idea if you can swing the payments.
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Old 08-29-2012, 09:48 PM
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Yesterday, I got a copy of appraisal report and home is appraised as 209000. It was a bit of the relief that it was not underappraised. So, CU will refi the mortgage up to maximum of 188,000.
I will have to come up with 17200 ( Fees origination/title/appraised $4500 + closing the gap $8200<196,000-188,000> + $4500 escrow for 2013 property tax/hazard insurance ).
My monthly mortgage payment will be increased by $150.

I also checked with a local mortgage broker whom notified me that the best interest for me will be 3.00 (3.4%APR) and 9500 closing cost(including 4500 escrow). Their origination cost is much lower($888). Although closing cost 9500 will be lower than CU, I will of course have to start the principal with 196,000 as I don't need to close the gap on mortgage like CU.

Last edited by mgcho; 08-29-2012 at 09:49 PM.. Reason: incorrect calculation
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