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I have some friends (a couple) who refinanced on one of their properties. They are saving about $150 a month. The cost to refinance was likely in excess of $5,000 knowing what I know about this couple's home and loan.
I have another friend who looked into the process and would have saved a couple hundred each month. His refinance closing costs would have been closer to $8,000 if I recall correctly.
If I refinanced on my condo in Hawaii, I would have been looking at closing costs on the higher end. Considering that I only plan to hold my property for another 5 years or so, I didn't think that the costs associated with refinancing would make things worthwhile for me; it would have essentially been a wash. Now, if I had plans to hold the property for a considerably amount of time, I would have more seriously considered it. Note, my current rate is 3.75%.
A lower interest rate and monthly payment do not necessarily translate into savings. There are other variables. You have to carefully calculate all variables to determine whether or not a refi is worth it.
Typically, you pay several thousand dollars up front in closing costs. You hope to make that money back and then some over the long run. If the break-even point is years away it is probably not worth it. If you plan on selling the home before then you will lose money.
Loan term is another major consideration. If you are 5 years into a 30 year mortgage and refi to a new 30 year mortgage, you are extending your payment period 5 more years. In that scenario you may wind up paying more $ overall even with a lower interest rate and monthly payment. It is probably best to refi to a 25 year mortgage or less in that scenario.
I'd like to refinance my mortgage, as my value has increased quite a bit since closing based on improvements I made, and my rate is on the higher side (5%). But I have also taken on some credit card debt since closing which caused my score to drop due to increased utilization so I don't think I'd qualify for the best rates right now. Hopefully I'll have it tackled in a year or so and rates are still low. I don't mind if my monthly payment goes up a little as it's still quite affordable for me. I'd love to refi to a 20 year as well.
We also looked into refinancing recently but found its not worth it for us. We currently have 3.75% on a 30 year fixed and are 5 years into our mortgage. On paper, we could refi to a 20 year fixed at around 3% and save some money on interest, but the increased out of pocket and monthly costs hardly make it worth it.
If interest rates fall another .50-1% from current levels we will revisit the idea. It may then be well worth it.
I refinanced and began the process the first week of March. Closing was supposed to be April 24 but was delayed until last week. I got 3.25% for 15 years, but some people are now able to get even lower rates. Previously I was at 5.25% on a 30-year, and just short of ten years into it. That was an FHA, and this one is a conventional.
My monthly payment only went down about $80 a month, but that wasn't really the point of refinancing for me. I already pay an extra $500 against the principal every month. I wanted the shorter term and lower interest rate to save me thousands over the long term. I expect to have the loan paid off in seven or eight years.
I'm currently going through a refinance process at 2.99%, fixed. I am on track to save $100-$150 a month. Closing costs would be approximately $1300-$1800.
I was talking to my pool contractor yesterday. He said that all of a sudden, credit has become very difficult to obtain.
The last 5 swimming pools he sold were turned down by financial institutions.
Sounds as if the banks/finance companies are getting very conservative now that their past due accounts are skyrocketing. That's the only thing they have to offer is making highest quality loans in combatting loan problems.
Getting ready to lock in a 2.375% refi for 15 years. Closing costs will be 15k and rolled into loan. Yes high but I ran the numbers with a 2.5% and 2.75% vs their closings costs and the 2.375% still wins over the 15 year term.
I’m currently 10 years in and at 4.5%.
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