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We purchased our home in 2010 with 30 yrs terms and 4.875 interest rate. We were unable to remove PMI insurance, so I start looking into refinancing. After talking to two mortgage company I got interested in refinancing for 15 years. I start getting confused, because one company offered 3% and second 2.8%.
The one that is offering 2.8% interest rate is showing Total Loan Cost (under Loan Estimate) for $2,217.00 and the one with 3% is showing $3,033. However, the one with lower interest rate keeps calling me and requesting to make decision in 48 hrs, which makes me even more hesitant.
I was wondering if somebody could let me know is it worth to do this after 6 years owing our home. We have great credit and even better home equity and if it is what to look for when signing new refinancing loan?
Usually it's worth doing a refi from 30 years (technically 24 years for you) to 15 years. Youre still killing 9 years of mortgage. Well anytime you can lower your payment or shorten the length of loan even with a little higher payment it's a good idea. You're cutting out a lot of interest and payments. So usually it's worth refi'ing. Look at your total costs though. However any lender calling me and telling me I must make a decision in 48 hours I would walk away from. Those rates seem really low for some reason. Make sure they aren't some fly by night with a teaser rate.
What are the new loan costs? Do you know? Is the lender picking them up or tolling them n the loan?
Last edited by Electrician4you; 07-08-2016 at 05:37 AM..
Usually it's worth doing a refi from 30 years (technically 24 years for you) to 15 years. Youre still killing 9 years of mortgage. Well anytime you can lower your payment or shorten the length of loan even with a little higher payment it's a good idea. You're cutting out a lot of interest and payments. So usually it's worth refi'ing. Look at your total costs though. However any lender calling me and telling me I must make a decision in 48 hours I would walk away from. Those rates seem really low for some reason. Make sure they aren't some fly by night with a teaser rate.
What are the new loan costs? Do you know? Is the lender picking them up or tolling them n the loan?
2.8% is not low for a 15 year fixed. That's market at this time.
I'll also add that simply making extra principle payments can shorten the mortgage and reduce interest without going thru the expense and hassle of a refi - or taking on the potential risk of a 15 year note.
I'll also add that simply making extra principle payments can shorten the mortgage and reduce interest without going thru the expense and hassle of a refi - or taking on the potential risk of a 15 year note.
And if op can swing it they can do the same on a 15. It may or may not be worth it depending on the costs of the refi, the monthly payment difference, their ability to pay the loan and their idea of risk. They can also add the difference in payment yo their current paymrnt or like you said make additional payments to principal of the 30 year.
2.8% is not low for a 15 year fixed. That's market at this time.
I am actually seriously considering refinancing from a 30 to a 15 (I'm already paying what the 15-year payment would be, since I pay extra every month) and the interest rate on the 15 is 2.625%. That's the lowest I've seen for a 15. (Closing costs are just over $2,000, but still, I think I am going to go for it since I plan to be in the house for AT LEAST 15-20 more years.)
Quote:
Originally Posted by Jkgourmet
I'll also add that simply making extra principle payments can shorten the mortgage and reduce interest without going thru the expense and hassle of a refi - or taking on the potential risk of a 15 year note.
Making extra principal payments is great, yes, BUT there's a pretty big difference between the OP's current 30-year rate of 4.875% and his potential 15-year rate of 2.8%. That 2-plus-percentage-point difference is HUGE!
I am actually seriously considering refinancing from a 30 to a 15 (I'm already paying what the 15-year payment would be, since I pay extra every month) and the interest rate on the 15 is 2.625%. That's the lowest I've seen for a 15. (Closing costs are just over $2,000, but still, I think I am going to go for it since I plan to be in the house for AT LEAST 15-20 more years.)
Making extra principal payments is great, yes, BUT there's a pretty big difference between the OP's current 30-year rate of 4.875% and his potential 15-year rate of 2.8%. That 2-plus-percentage-point difference is HUGE!
Actually, it's only "huge" if there's a large balance on the current mortgage. The OP needs to do the math.
Since the Brexit vote the number of refis has jumped 14% according to the Mortgage Bankers Association (via NPR). Money flowed from the stock market to the bond market which lowered interest rates. No one has a crystal ball, but today's stock market has recouped the losses from Brexit and the interest rates may rise moderately. But they'd still be low. I wouldn't hesitate to refi now.
Actually, it's only "huge" if there's a large balance on the current mortgage. The OP needs to do the math.
Good point, of course. The OP, though, got his 30-year mortgage 6 years ago, so he still has 24 years left on it. For him a 2-percentage-point reduction in interest rate likely WOULD be huge.
Take a look at the 10-year rates, while you are at it... those may be even better. Back in 2012 I was looking to refinance from a 20-year to a 15-year, but ended up going with 10. It sure is nice to watch the balance drop so much more quickly and I cut my interest rate by almost 2% at the time. Well worth it.
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(Closing costs are just over $2,000, but still, I think I am going to go for it since I plan to be in the house for AT LEAST 15-20 more years.)
