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Old 05-24-2010, 11:04 PM
 
Location: NJ
17,574 posts, read 46,060,080 times
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I have literally made one payment on my mortgage. It's a 30 year fixed at 5.25%. Rates seem to be dropping fast. Should I even consider a refi at this point? I have a good credit score (about 800).
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Old 05-25-2010, 05:58 AM
 
Location: Plano, Texas
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Yes, you should consider it. Did you pay closing costs the last time you refinanced?
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Old 05-25-2010, 08:15 AM
 
Location: NJ
17,574 posts, read 46,060,080 times
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Quote:
Originally Posted by VictorBurek View Post
Yes, you should consider it. Did you pay closing costs the last time you refinanced?
This is a new mortgage.
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Old 05-25-2010, 08:42 AM
 
28,455 posts, read 85,157,040 times
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VB:

I generally like your advice, but without seeing how much the OP paid for all the mortgage related stuff and how much another lender would also charge for these very duplicative expenses and what sort of time the OP has to own this property / what sort of break even the lower rate might present I thing it is important to stress the difference betweeen "yes consider it" and "Yes, SLAM DUNK, do it" -- too often responsible mortgage brokers SAY the former and eager / inattentive borrowers seem to hear the latter...
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Old 05-25-2010, 09:05 AM
 
Location: NJ
17,574 posts, read 46,060,080 times
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It's a $200K mortgage. I paid no origination charges with my initial mortgage. I paid about $2,500 in closing costs for appraisal, title insurance and a few other misc. items.

Not really sure what my closing costs would be to refi. I'm guessing aroun 3K based on some things I have read. I plan on being in this house at least 5 years.
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Old 05-25-2010, 01:06 PM
 
Location: Plano, Texas
1,673 posts, read 7,008,907 times
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Quote:
Originally Posted by chet everett View Post
VB:

I generally like your advice, but without seeing how much the OP paid for all the mortgage related stuff and how much another lender would also charge for these very duplicative expenses and what sort of time the OP has to own this property / what sort of break even the lower rate might present I thing it is important to stress the difference betweeen "yes consider it" and "Yes, SLAM DUNK, do it" -- too often responsible mortgage brokers SAY the former and eager / inattentive borrowers seem to hear the latter...

I agree Chet... thus the reason i said you should consider it.. and not definitely do it.
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Old 05-25-2010, 01:13 PM
 
Location: Plano, Texas
1,673 posts, read 7,008,907 times
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Quote:
Originally Posted by manderly6 View Post
It's a $200K mortgage. I paid no origination charges with my initial mortgage. I paid about $2,500 in closing costs for appraisal, title insurance and a few other misc. items.

Not really sure what my closing costs would be to refi. I'm guessing aroun 3K based on some things I have read. I plan on being in this house at least 5 years.

$200,000 mortgage at 5.25% 30 year fixed is a principle and interest payment of $1104. Paying just the closing costs and no points would probably get you to 4.75% today. Assuming you roll the $3000 in costs into the new mortgage, you would now have a $203,000 loan at 4.75% making payment $1058. A refinance would save you about $50 per month but cost you an additional $3000. You could figure break even on $3000 divided by the $50 per month savings which comes to 60 month break even... way to long in my opinion unless you know for certain you will be there longer.
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Old 05-25-2010, 01:52 PM
 
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Too soon to refi?

Empirical studies show that people who refi'ed are more hesitant to refi again. Theoretically, when you closed shouldn't affect your next refi decision.
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Old 05-25-2010, 02:02 PM
 
Location: Sacramento
2,568 posts, read 6,740,529 times
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A few years back we refinanced before we made any payments. It was during the boom and there were no closing costs to get a lower rate. Only about $500 transfer tax which we made up for in 6 months. It is all about the math. There are many online calculators that will do the math for you. Look for a break even point of less than 12 months.
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Old 05-25-2010, 02:20 PM
 
28,455 posts, read 85,157,040 times
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I agree that during the "hey day" there was BRUTAL competition and originators were capable of swallowing the upfront costs due to incentives that the wholesales were giving back, thus making true "no downside" refi far too easy. More than a few lenders were also more than willing to waive documentation for loans that were especially fresh, thus the risks soared.

Now I know of no lender that will truly look the other way when it comes to documentation nor are they able to be compensated by upstream parties.

Refi will not have break even points that are so short...
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