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Old 09-06-2016, 08:55 PM
 
50 posts, read 52,029 times
Reputation: 20

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Hello, I'm really considering a refinance and just want to hear you guys opinion on it. I'm already putting an extra $520 each month into the principle. BTW I live in Northern Virginia.

My current debt: $230 on a car note that will be paid off next February and CC balances that I paid off each month.
My current mortgage with Wells Fargo: $270k at 4% fixed 30yrs (I'm at the 5th year). My monthly payment with interest is $1503 and with escrow is $2010. My salary is $97k a year but I work extra hours each month so I make roughly $107k a year when all is calculated.

Wells Fargo send me an mail offer recently:
3.757% APR (interest rate 3.75%) with a 30 year term. Est monthly payment of $1298.37 w/o escrow.
or
3.5% APR (interest rate 3.5%) with a 20 year term. Est monthly payment of $1625.94 w/o escrow.

Another company gave me another good faith estimate which is 15 year fixed at 2.875%. With a new monthly payment of $2421.84 with escrow
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Old 09-06-2016, 10:07 PM
 
Location: NOVA
4,521 posts, read 5,215,281 times
Reputation: 1926
There isn't enough information to recommend either way. Big missing is the refinance costs and that requires more than a postcard for them to calculate but shouldn't be that much more difficult, just will let them know you're more than a casual shopper.

If closings costs are $10,000, and they offer to roll that into new loan, it would take nearly a decade to break even. A quarter or half percent drop normally isn't worth it financially. You could still calculate the break even point( in years) to see if your plans will still to own by then.

For someone already paying extra each month, wouldn't want that to go all back into covering the new closing costs.
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Old 09-06-2016, 10:14 PM
 
1,784 posts, read 2,983,056 times
Reputation: 1270
Can you get a better rate than 3.5 % on a 20-year? 3.25% seems more reasonable unless rates have spiked in the past month or have you bad credit or bad LTV or DTI. I would definitely begin the process by contacting a mortgage broker rather than just take an unsolicited offer from a major bank. They generally don't have the most competitive rates.

OTOH, it also depends on how much of the Closing Costs the lender is going to be rolling into their rate. So you have to be careful when doing comparisons. Closing costs consist of several thousand in pre-paid items that is really just moving money around (but that you might have to come up with at closing until you get your refund checks for old escrow, etc.), and several thousand of sunk costs (appraisal, title company fees, title insurance, transfer taxes, govt. recording charge, etc.).

If you want to show up with a smaller (or non-existent) check at closing, expect a worse rate.

Either way, I am showing $1565 monthly payment (not 1625) on a 20-year @ 3.5% for 270K loan. $1531 for 3.25%.

That's only marginally more than what you're paying now (I'm assuming your original balance was $315K if you have a monthly P+I payment of $1503), and you'll be done 5 years faster. Plus, you're already putting all that extra into principle, so it sounds like you have the budget. So seems like a good choice.



Also, you probably know this, but if that car note has an interest rate that's more than 4%, you should definitely be putting that $520 a month straight to the car, not the house!
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Old 09-07-2016, 02:46 AM
 
50 posts, read 52,029 times
Reputation: 20
Sorry, the closing cost for the 15 year is $3944 and I'll have to call Wells Fargo later today for their closing cost. Thanks, I'll look into some mortgage broker. Are there any that someone can recommend? In regard to my car note is at 0% interest rate.
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Old 09-07-2016, 06:25 AM
 
29 posts, read 35,738 times
Reputation: 33
PM'ed you some information so it doesnt look like I am marketing for my bank
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Old 09-07-2016, 06:39 AM
 
945 posts, read 664,206 times
Reputation: 955
I second getting another quote from a non big bank. We did Wells Fargo for our original loan but have found much better numbers from smaller institutions this time around.
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Old 09-07-2016, 06:43 AM
 
9,738 posts, read 8,034,279 times
Reputation: 6343
Quote:
Originally Posted by johnsonkk View Post
There isn't enough information to recommend either way. Big missing is the refinance costs and that requires more than a postcard for them to calculate but shouldn't be that much more difficult, just will let them know you're more than a casual shopper.

If closings costs are $10,000, and they offer to roll that into new loan, it would take nearly a decade to break even. A quarter or half percent drop normally isn't worth it financially. You could still calculate the break even point( in years) to see if your plans will still to own by then.

For someone already paying extra each month, wouldn't want that to go all back into covering the new closing costs.

Many people here in Northern Virginia move every few years so refinancing is not a good option.
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Old 09-07-2016, 07:00 AM
 
2,185 posts, read 2,645,690 times
Reputation: 1616
The rates WF is quoting seem pretty crappy. You can do better than that. We got 3.675 2 months ago on a 30 year jumbo, and I think rates have dropped a bit since then. We used Mclean Mortgage.

Whether its worth it though, you just have to run the numbers and figure out your breakeven. And then figure out how long you'll be in the house. That is probably the biggest determining factor as to whether it's worth it and I didn't see you address that question anywhere.
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Old 09-07-2016, 08:02 AM
 
322 posts, read 391,678 times
Reputation: 666
Hi OP, I just signed my re-fin closing documents last night. My previous 30-year loan was 4.125%, and received quotes of 3.125% for 15 year, 3.25% for 20 years, and 3.625% for 30 years. All with enough credits from the bank to cover all the closing costs, except for escrows. Ended up going with the 20 years option which fitted into my current financial situation. Anyways, I did talk to WF and their rates are definitely higher than the above rates that I got from my mortgage broker.

Very simple process, I can PM to you my broker's info if you like. Our loan ended up being with U.S Bank.
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