Refinance? Bought home 6 months ago in CA (loan, interest rate, fees)

[zapatero3]

Bought a home this past summer 2008 (first time home buyer), with interest rate of 6.5%. With rates going down planning to Refinance. Question is.. how do I go about to refinance? Are there extra fees to pay? Will I have to pay closing costs? Should I even refinance.

[ufcrules1]

Yes, there are extra fee's. It's a pain the a s s. The lender charges you an application fee etc. Then if you want to buy down the rate you would pay around 1% of the loan amount. Then you have to get a title company and they charge you out the wazoo too. They will all tell you they can wrap it right into the mortgage though. Yeah, you want to pay 4 or 5k over 30 years with interest? No thanks.

[JustJulia]

Yes, there are fees. You won't have to pay a realtor, so they won't be as high as when you purchased the house, but you might need an appraisal again. All the titles fees, filing fees, etc. have to be paid again, so it might add up to a few thousand dollars. Some lenders will roll some or all of these fees into your new loan, like ufcrules said, so you have to look at the long-term picture. Your monthly payments will probably be lower, but you might have to pony up some cash at the front end.

If you're planning on living in the house for a long time, I think refis can be a really good idea. You can save tens or even hundreds of thousands of dollars in interest over the life of the loan. That will definitely outweigh your higher balance (it's higher because they rolled some fees into it).

But if you're planning to move in a few years, then you might not want to do it. You have to calculate the breakeven point. Your payments might be lower, but that's offset by the chunk of cash you just paid out. If you had to pay $3000 out of pocket, and your monthly payments went down by $200, it will take 15 months just to recoup the $3000--and your mortgage balance might be a bit higher, too, not to mention it pushes your final payoff date back. These are all things to think about.

[Daddys///M3]

Originally Posted by zapatero3

Bought a home this past summer 2008 (first time home buyer), with interest rate of 6.5%. With rates going down planning to Refinance. Question is.. how do I go about to refinance? Are there extra fees to pay? Will I have to pay closing costs? Should I even refinance.

Without more information there is not a soul on this board that can give you a usable answer. First and most important question, is your original purchase loan an FHA or VA loan or is it a conventional?

[Daddys///M3]

Originally Posted by ufcrules1

Yes, there are extra fee's. It's a pain the a s s. The lender charges you an application fee etc. Then if you want to buy down the rate you would pay around 1% of the loan amount. Then you have to get a title company and they charge you out the wazoo too. They will all tell you they can wrap it right into the mortgage though. Yeah, you want to pay 4 or 5k over 30 years with interest? No thanks.

Not all lenders charge application fees. Discount points vary depending on daily pricing. title charges vary per title company. What's $4000 if your saving $250 a month (break even point of 16 month? Not to mention if it is a govvie loan then the OP can do a streamline, which may not cost anything and of course govvie or conventional there is always the option of a no cost loan.

[Sub-Urban Princess]

Originally Posted by Daddys///M3

Without more information there is not a soul on this board that can give you a usable answer. First and most important question, is your original purchase loan an FHA or VA loan or is it a conventional?

You nipped that pretty quickly didn't ya? Poster should also disclose:

Current Value
Current mortgage balance

In addition, banks are scrutinizing CA, FL, NV, AZ, MI loans...some other places too but my point is that sometimes they won't lend you as much money in some of these states.

Unless 10-20% was put down, I don't see it happening without bringing a substantial amount of cash to closing. What say you Daddys//M3??...I bet you 1 e-dollar.

[Daddys///M3]

Originally Posted by Sub-Urban Princess

You nipped that pretty quickly didn't ya? Poster should also disclose:

Current Value
Current mortgage balance

In addition, banks are scrutinizing CA, FL, NV, AZ, MI loans...some other places too but my point is that sometimes they won't lend you as much money in some of these states.

Unless 10-20% was put down, I don't see it happening without bringing a substantial amount of cash to closing. What say you Daddys//M3??...I bet you 1 e-dollar.

Again, it depends on what type of loan it is. If it is an FHA then a streamline should require nothing more than a mortgage payment at closing. A VA interest rate reduction loan would likely require nothing. And again there is always the option of a no cost loan, which as long as current value supports the loan to value requirements would require nothing out of pocket either. The rate won't be as good as if you were paying closing costs out of pocket or rolling them into the loan, but the option is still there.

EDIT: Also forgot to mention that if it is in fact a government loan then current value and loan to value will not need to be looked at for a streamline loan.

[zapatero3]

I have an FHA Loan. Yea.. concerned on the upfront cash may need to put when refinancing. Planning to keep home for at least 5 years. May move if I get another position with company (company buys home if I can't sell).

[Daddys///M3]

Originally Posted by zapatero3

I have an FHA Loan. Yea.. concerned on the upfront cash may need to put when refinancing. Planning to keep home for at least 5 years. May move if I get another position with company (company buys home if I can't sell).

You should be able to do a FHA streamline and come to the closing table with only a mortgage payment. I would seek out a trusted mortgage professional to put together an application package for you. I don't know what rates look like today, but you can likely about 1% lower.