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If you are in a cash crunch refinancing may not be an option
Depends how deep. Plenty of people have seen wage reductions. Added flexibility is huge.
Even if you don’t need the cash, if you are currently at 4% and can drop it to 3%, you should do that deal. Your minimum monthly payment drops and you have the freedom to continue to pay what you were before if you want to be on an even shorter term. There is no rule that says you have to pay the number on your statement. That’s a minimum.
This coming Monday 7/27 I will close on a 2.5% 15-year loan with no points. Closing costs (not including pre-paid escrows as I'd have to do them anywhere) are under $1,000 (they did an automated appraisal so that alone saved $575). My current loan is a 10-year ARM with not quite 2 years left at the 10-year rate of 3.125%, so I knew I was going to refinance in the next year or so but today's rates are crazy. I am actually staying with my lender (Bar Harbor Bank in Maine -- they only lend in 4 New England states) -- they keep and service their own loans so they have been a pleasure to deal with.
My 15-year payment is only $4/month more than my current loan (which was of course amortized over 30 years) due to lots of extra payments over the past 8 years. I did NOT do a cash-out -- I basically just refinanced the current balance. Will try to pay this off in 7-8 years.
I have a 15-year mortgage at 3.0% and just got an offer yesterday to refinance at 2.5%. I borrowed $100K and 5 years later I owe about $70,000. They're offering me $100K at 2.5% and the payment is a bit lower than my current payment- but now instead of being paid off in 10 years the clock is re-starting at 15 years.
Many of these great offers have lower payments not just because the interest rate decreased but also because you're borrowing less (having already paid off some principal) and the "finish line" has been extended.
Heck. I got one offer with cash out and a lower payment but a HIGHER interest rate. It was a 30-year mortgage instead of 15 years.
Scenario:
3.875% - balance around $340K - P & L around $2160
refinancing into a 15 year and yes, paying fees to get it
1.875% - balance around $345K now with the fees - P & L $2180 approx - 15 years
I have a 15-year mortgage at 3.0% and just got an offer yesterday to refinance at 2.5%. I borrowed $100K and 5 years later I owe about $70,000. They're offering me $100K at 2.5% and the payment is a bit lower than my current payment- but now instead of being paid off in 10 years the clock is re-starting at 15 years.
Many of these great offers have lower payments not just because the interest rate decreased but also because you're borrowing less (having already paid off some principal) and the "finish line" has been extended.
Heck. I got one offer with cash out and a lower payment but a HIGHER interest rate. It was a 30-year mortgage instead of 15 years.
I had a 4.75 15 yr mtg..........but was within 5 years of paying it off. I never refi'd, paid it off in 3
I'm within striking distance of my 2.625% 5 year ARM.
I was torn between paying it off by the end of this year or waiting for a post covid housing crash but then I realized the feds will do everything to make sure people don't lose their homes.
Quote:
Originally Posted by RationalExpectations
There's a lot to be said for crossing that finish line. It provides lots of strategic flexibility.
Just closed on a 2.6% rate 15 year refi with Northpointe. Total cost was $1200. Everything was very smooth and closing was done at my home in about 30 mins.
There are several people getting 2.1-2.3% loans right now. There is a very good 72 page thread on mortgage rates and refi’s on Bogleheads Personal finance forum.
One thing I learned is do not go by the web site for rates. You have to go thru the process and get loan disclosures for the cheapest rates. They are all competing and will barter back and forth. But you have the have a LD.
The lowest rates I see are from the following:
Northpointe
Loan Cabin
Quicken
Better
Lender Fi
Good luck.
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Some lenders are lower
