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Old 04-09-2015, 10:08 AM
 
Location: Plano, TX
240 posts, read 275,458 times
Reputation: 179

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All,

I closed my house in Plano on Jan -2014 and had the mortgage (CON Loan) locked at 4.37%. Since then the interest rates have fallen and I was wondering if I should get my mortgage refinanced. Is there a particular percentage I should be aiming for when refinancing to see a noticeable deduction in the monthly payment considering I will need to pay closing and title fee again when refinancing. I have heard some say when refinancing it makes no sense if the interest percentage don't fall by a whole 1%. Any advises?

Thanks

Jacob
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Old 04-09-2015, 11:07 AM
 
Location: plano
5,980 posts, read 7,540,224 times
Reputation: 5037
Quote:
Originally Posted by jacobr View Post
All,

I closed my house in Plano on Jan -2014 and had the mortgage (CON Loan) locked at 4.37%. Since then the interest rates have fallen and I was wondering if I should get my mortgage refinanced. Is there a particular percentage I should be aiming for when refinancing to see a noticeable deduction in the monthly payment considering I will need to pay closing and title fee again when refinancing. I have heard some say when refinancing it makes no sense if the interest percentage don't fall by a whole 1%. Any advises?

Thanks

Jacob
Determine the fee payback period from refinancing, its the most meaningful measure. If the lower payment pays back the fees over a much shorter period than you plan to stay in the house, you might consider it. Remember also the lower payment is because you are financing a lower amount than you did with the orginal loan and financing the new amount over 30 years if that is your mortgage term choice. So if you have 28.75 years left on your current mortgage, remembe you are going to pay for 30 years on the new one. The ideal way to do it is determine the IRR on the fees from lower payments which go longer if you plan on staying in the home forever... an IRR voer 5% would be attractive to me in these low intereest rate ion fixed nvestment period.


FYI I looked at refinancing a 2010 loan at 4.5% for 30 years with a 2015 one at 3.5% for 30 years. It paid back the fees in about a year which is very attractiv given my intent to stay in the home for a long time. (Im retired with no plans or need to move)
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Old 04-09-2015, 11:20 AM
 
3,818 posts, read 3,734,396 times
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Quote:
I should be aiming for when refinancing to see a noticeable deduction in the monthly payment considering I will need to pay closing and title fee again when refinancing.
I think the mods should move this to economics/finance area, but generally, you should look at the total amount you will be out ie, interest + principal + closing costs for each scenario, and if the difference is big enough for you, then it makes sense to refinance.

It can be at less than a 1% change, but you'd have to run the numbers. You can't actually look at the payment though, because it might make sense to refi to a shorter timeperiod and the total payment might be equal or higher.
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Old 04-09-2015, 12:33 PM
 
Location: Frisco, TX
1,081 posts, read 1,171,821 times
Reputation: 1275
Quote:
Originally Posted by TheOverdog View Post
I think the mods should move this to economics/finance area, but generally, you should look at the total amount you will be out ie, interest + principal + closing costs for each scenario, and if the difference is big enough for you, then it makes sense to refinance.

It can be at less than a 1% change, but you'd have to run the numbers. You can't actually look at the payment though, because it might make sense to refi to a shorter timeperiod and the total payment might be equal or higher.
Pretty much all of this. Our original rate from 2009 was 5.25 and we refinanced a couple of years ago to 3.6. We also dropped our term from 30 years to 25 and our payment was still cheaper. You just need to figure out your break even point and see if you will still be in the home or not on that date.
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Old 04-11-2015, 05:39 PM
 
11 posts, read 8,438 times
Reputation: 13
As othes have said, you should consider how long you will own the house. Also look at refinancing to a shorter term because if the interest rates dropped on a 30 year then you may be able to get a 15 year at a even lower rate that may provide you with a payment near a current 30 year payment.
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