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Old 08-23-2013, 11:46 AM
 
2,779 posts, read 4,495,487 times
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Hi all, I would love your thoughts in whether it makes sense to refinance. We are working on paying off our house in the next 5-7 years so our aim isn't to lower our payment but to free up more cash to pay down the mortgage.

A year and a half ago we refinanced with HARP 2.0 because our value had plummeted since we bought our house in 2008. We are currently at a 30yr 4.25% with $60 a month in PMI and $600 a month in escrow payments.

Purchased house in 2008 for 395k
Value in May 2012 300k

Current balance 270k
Current value according to multiple sales in the area around 400-430k

Total current payment with escrow $2100 we pay $4000 to work on paying it off.

If we refinance down to a 15yr and pay property taxes and insurance separately our payment would be around $2000 a month plus we would need to save $500 a month for escrow. So it nearly breaks even.

Does it make any sense to refinance to get rid of that $60 a month and to pull out our escrow accounts? At what rate and cost would it no longer make sense?

We have excellent credit and a healthy household income so qualifying wont be an issue.

Thank you!!
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Old 08-23-2013, 01:01 PM
 
405 posts, read 476,266 times
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I can't see any point in doing another refi. You have a great rate with very low amount of PMI that is also tax deductible...just don't see much upside and you are already well on your way to paying this thing off
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Old 08-23-2013, 03:02 PM
 
Location: New York
2,251 posts, read 4,161,023 times
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.

I disagree - it would benefit you!!!!

now $270,000 x 4.25% x 30 = P/I $1327 x 300 (25 years left) = $398100
compare to $270000 x 3.5% x 15 = P/I $1928.29 x 180 = $347,092
Savings $51000 by restructuring to a 15 year mortgage.

I would be wise to talk to your current lender about doing an in-house 15 year refinance, thing way there is little to no closing costs.

It would be unwise refinancing to another lender because you would incur title and legals charges, origination and junk fees, eating away at your equity.

First find out what you can qualify for talking with another mortgage banks. It is important not to commit to any thing.

This will give you information you can use to negotiate a better deal with your existing bank. Get them talking about the lowest rate, then go one step further ask if you could buy the interest rate lower.... (that's what I would do in your case)



Good Luck......
.

Last edited by Modification Specialist; 08-23-2013 at 03:26 PM..
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Old 08-23-2013, 05:08 PM
 
426 posts, read 1,632,374 times
Reputation: 129
Quote:
Originally Posted by hml1976 View Post
Hi all, I would love your thoughts in whether it makes sense to refinance. We are working on paying off our house in the next 5-7 years so our aim isn't to lower our payment but to free up more cash to pay down the mortgage.

A year and a half ago we refinanced with HARP 2.0 because our value had plummeted since we bought our house in 2008. We are currently at a 30yr 4.25% with $60 a month in PMI and $600 a month in escrow payments.

Purchased house in 2008 for 395k
Value in May 2012 300k

Current balance 270k
Current value according to multiple sales in the area around 400-430k

Total current payment with escrow $2100 we pay $4000 to work on paying it off.

If we refinance down to a 15yr and pay property taxes and insurance separately our payment would be around $2000 a month plus we would need to save $500 a month for escrow. So it nearly breaks even.

Does it make any sense to refinance to get rid of that $60 a month and to pull out our escrow accounts? At what rate and cost would it no longer make sense?

We have excellent credit and a healthy household income so qualifying wont be an issue.

Thank you!!
Hi.

That 60 bucks per month on a loan you plan to pay off in 5 to 7 years would be as follows. 7 years =84 months x 60 = $5040 thrown out the window.

You would need a 10yr loan. Today I can get you a 10 year refinance of 3.5% with no points.

Normal closing costs would apply . It depends what state you are in. If you are in a medium to low cost state , then there is no doubt you will save to refinance.

Cheers

Tom Davie MLS #960141
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Old 08-26-2013, 11:42 AM
 
2,682 posts, read 4,214,036 times
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If you have the equity as you claim, just ask to remove the PMI through an appraisal without refinance.
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Old 08-27-2013, 06:57 AM
 
405 posts, read 476,266 times
Reputation: 265
MS - you are adding up 15-25 years of interest savings on a house the poster stated will be paid off in ~5 years, that doesn't make sense
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Old 08-27-2013, 12:21 PM
 
2,779 posts, read 4,495,487 times
Reputation: 5024
Quote:
Originally Posted by MeInDenudinFL View Post
If you have the equity as you claim, just ask to remove the PMI through an appraisal without refinance.
I tried this already. They're saying we don't have a long enough payment history to remove the pmi. Its BS while we've only had this loan for 18mths we've had a mortgage with them for 5 years.
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