Should I refinace???? (PMI, loan, fixed rate, interest)

[darrell2525]

[SIZE=2]I have been living my 1st home we purchase about 6 months ago.
Today my mortage broker calls me and ask if I want to refinace @ 5%. My current interest rate is 6.125%. I could save $112 a month. Fixed rate, of course.
I really do not feel like going through the process of signing and reading documents again. Plus, I like the way Chase operates and good customer services. Plus I do not want my credit report run nomore.

What do you think? Why is the broker calling me with this?
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[chet everett]

I would definitely get out my pen and reading glasses to see an extra $1344 of my money stay in my savings every year. Frankly I would bet that you could reduce the rate even more by paying points, maybe even at your current lender. Call 'em up, the worst they can say is "not yet".

What is the pay back time in terms of upfront costs being offset by total reduced outlay? Do you plan on being in the home for the long haul? How much faster would your home be paid off if yo directed that extra $122 toward principal reduction???

[darrell2525]

Originally Posted by chet everett

I would definitely get out my pen and reading glasses to see an extra $1344 of my money stay in my savings every year. Frankly I would bet that you could reduce the rate even more by paying points, maybe even at your current lender. Call 'em up, the worst they can say is "not yet".

What is the pay back time in terms of upfront costs being offset by total reduced outlay? Do you plan on being in the home for the long haul? How much faster would your home be paid off if yo directed that extra $122 toward principal reduction???

thank you for replying. I am just a regular Texas guy and do not really understand alot what you said above. I just calculated that I can save about $112 a month. The thing is Chase told me a few weeks ago I can not refinace until some loan to value is reduce. Don't understand.

I dunno. I think i will just leave it alone as is and not worry about it. It took alot of work and stress to get in the house and I do not want to sign nothing that will screw me up and I get a bad deal. I think its a scam to screw me over anyway.

[NCyank]

what makes you think it is a scam?? What are the fees to refi?

With the math you posted (on a 30 year note) you would save about $50,000 in interest and you don't want to look it over? I would be on the phone with the guy until I understood and then decide what to do, don't dismiss it outright.

And why 5%? You might be able to get better.

[chet everett]

If your current lender (Chase) mentioned something about "loan-to-value" it is was probably either a concern about your home declining {not as common in Texas} or more likely that you financed more than current limits would allow. How big was you downpayment, if any?

Ideally your payment towards principal and appreciation have pushed your equity over 80%, but you MIGHT still be able to refi wither with PMI (which would almost certainly offset most / all savings from lower rate) or be structuring additional loan to get to 80% on first mortgage.

You can get out the details of your current loan and have the lender walk you through the various sitautions or do it yourself online, or maybe read up / share here...

[darrell2525]

Originally Posted by NCyank

what makes you think it is a scam?? What are the fees to refi?

With the math you posted (on a 30 year note) you would save about $50,000 in interest and you don't want to look it over? I would be on the phone with the guy until I understood and then decide what to do, don't dismiss it outright.

And why 5%? You might be able to get better.

I would like the 5% rate but, I just do not trust the system nomore. Seriously, I am at the point where I think everything is a rip off. I mean, with this refinace, will have to pay anything or just sign paper work? Or there any fees asscoiated with this?

Thank you all. And provide input

[wankel7]

I believe with the refi you will have to get an appraisal, new tittle insurance, and other closing costs associated with getting a new mortgage.

But with you saving almost $1400 per year your break even point could be less than three years. It is really a question of how long you plan on staying in this property. Less than three years? Don't do it...longer? It is a no brainer.

It is a fixed mortgage...how could it be a rip off? Is Chase the same lender you got the mortgage through? They called you because they will make money from the deal. AND you will save money through the deal.

[chet everett]

There is pretty much no such thing as a "no cost" re-finance. When values were rising the lender would merely "cash out" the costs by increasing the amount of the loan and most folks did not care. That is not very common now.

A re-fi typically DOES have out of pocket costs, and if you also buy down to lower rate that can add up.

If you don't understand these things read up on 'em, if you don't care to do that you can go on with the loan you have. As long as it is a fixed rate with standard 30 yr amortizion you don't even have to change the spark plugs at 100,000 miles...

[darrell2525]

Originally Posted by chet everett

If your current lender (Chase) mentioned something about "loan-to-value" it is was probably either a concern about your home declining {not as common in Texas} or more likely that you financed more than current limits would allow. How big was you downpayment, if any?

Ideally your payment towards principal and appreciation have pushed your equity over 80%, but you MIGHT still be able to refi wither with PMI (which would almost certainly offset most / all savings from lower rate) or be structuring additional loan to get to 80% on first mortgage.

You can get out the details of your current loan and have the lender walk you through the various sitautions or do it yourself online, or maybe read up / share here...

I plan on staying the home forever until I die. I got the loan through FHA and put down 1.75% on a 159k loan. Altogether my closing cost including downpayment was like $2400. A good deal for me. The county just appraised the house at 160k.

Also, I do not want to pay a dime to refinace the mortage. Will i have to pay?

Thank you all

[wankel7]

The odds are you will have to pay something. Nothing for free. If you could afford it the smartest thing to do would refi to a 15 year fixed. That's if you can afford to give up the maybe 200 a month to pay your debt down sooner.

If you don't understand the major benefit of refinancing a percentage point lower on a place you plan on never selling that is really too bad. But in the future if you understand what we are all telling you...you will kick yourself.

But in the mean time I am sure the investor that is making money on your interest payment is very happy that you don't see why this is a good idea.