To refi or not to refi ...... That is the question (PMI, loan)

[Ultimatetruth]

Would you refinance if you had to pay 4000 in closing costs and 10000 towards principle (330k loan amount after the 10k) in exchange for 250 a month reduction in your monthly mortgage (30 year fixed)?
Or would you keep your 14k pay other debt (debt with 0 interest for 3 years) down?

[loweyecue]

What type of loan is your current mortgage? What would be the change in rate if you did the Re-Fi?

[Ultimatetruth]

Originally Posted by loweyecue

What type of loan is your current mortgage? What would be the change in rate if you did the Re-Fi?

current mort: 30 year.
monthly payment if i refi would be 250 less than what i pay now which is 2550.

[Guntersville Boomer]

You won't break even on the re-finance for 56 months or like 4.5 years so you need to be planning on staying in the home for some time beyond that for this to make financial sense IMO.

[Ultimatetruth]

Originally Posted by Guntersville Boomer

You won't break even on the re-finance for 56 months or like 4.5 years so you need to be planning on staying in the home for some time beyond that for this to make financial sense IMO.

that's incorrect.
10k of the money i will pay is going towards the principle....so in effect, i'm reducing the amount of money i owe. you should look at the break even point in regards to the money you're "wasting" which is the 4k i'm spending 'to' do the refinancing.

that 4k is being recoverd in 16 months.

(it is true that i will have 14k in 56 months, but at that point, i'll have 14k PLUS at least 10k less in my principle)

[loweyecue]

Originally Posted by Ultimatetruth

current mort: 30 year.
monthly payment if i refi would be 250 less than what i pay now which is 2550.

What I would consider in your situation are the following:

1. Why wouldn't you just pay the 10K down on your current loan? This will bring the total number of payments you make lower.

2. If you plan on staying in this house for a while and can afford the curent payments why gve the bank an extar $4000?

3. To refinance you would have to lock up another 10K in cash, consider that as well. No way to get it out if you suddenly need it a house is an extremly illiquid asset

[Bette]

How long will you be staying in the home?

When was your original loan started?

(I am a mortgage broker and I do this for a living. I'm an honest one and I have been in this position myself. I finally did refi when the rates hit the 4's back in 2003).

There is a way you may not have to put the $10K in - if your current loan is owned by Fannie Mae, you may be eligible for DU Refi Plus.

You can e-mail me if you want. I'm in Florida.

[Ultimatetruth]

Originally Posted by Bette

How long will you be staying in the home?

When was your original loan started?

(I am a mortgage broker and I do this for a living. I'm an honest one and I have been in this position myself. I finally did refi when the rates hit the 4's back in 2003).

There is a way you may not have to put the $10K in - if your current loan is owned by Fannie Mae, you may be eligible for DU Refi Plus.

You can e-mail me if you want. I'm in Florida.

Originally Posted by loweyecue

What I would consider in your situation are the following:

1. Why wouldn't you just pay the 10K down on your current loan? This will bring the total number of payments you make lower.

2. If you plan on staying in this house for a while and can afford the curent payments why gve the bank an extar $4000?

3. To refinance you would have to lock up another 10K in cash, consider that as well. No way to get it out if you suddenly need it a house is an extremly illiquid asset

by refinancing, i'm eliminating my PMI which is about 180 a month. aside from that, IF i'm able to get a lower rate, i will benefit from an additional 75 bucks that i will save in interest every month.

if i "just pay the 10k down on my current loan" and do NOT refi, my monthly payment would reduce by maybe 20 bucks (if that). this would be the worst case scenario since i'll simply just be out of my 10k!

The original loan was started in dec. 08 for 340k. since then, i've done major upgrades and my house was appraised for 440k. i am currently approved by the lender. everything is GO except the locked rate...my loan is currently with Wells fargo.

[rubytue]

Can't you pay down $10k, pay for a new appraisal, and then send the bank a request to have PMI dropped? Saves you about $3500. I thought that worked unless you were FHA.

[loweyecue]

I am not an expert on mortgages but I dont think you need to refinance in order to take advantage of your increased equity to wipe out your PMI. All you should need is the appraisal and you can go to the current loan holder and ask them to remove your PMI payments.

Secondly paying the 10K on your existing loan will not reduce the P&I part of your monthly payments by any amount not even 20 bucks, it will decrease the total number of payments you make over the term of the loan. If the extra 10K helps you wipe oute the PMI payment then that is a net gain to your monthly cash flow situation which does not require a re-fi.

If the new loan is at a higher rate and the only thing you gain is not having to pay PMI, I would just go to the bank with the appraisal and ask them to turn the PMI off.