Any point in Refinancing? (insurance, loan officer, fixed rate, interest)

[Lynn38]

We purchased a new home three months ago. We put down 20% and financed the rest at 6.7% for thirty years, fixed rate. Now I see mortgage rates almost a full percent lower. Would it make any sense to refinance? We have excellent credit and plan to stay in our home for at least 5+ years.

Any advice? Does anyone think rates are headed down even further?

[renriq02]

what's your loan amount?

if it's higher than 200k you should get 5.625% ..30yr fixed

[Lynn38]

Originally Posted by banker0679

what's your loan amount?

if it's higher than 200k you should get 5.625% ..30yr fixed

The cost of the home was $226k and we financed 180k. We are in North Carolina.

Thanks...

[renriq02]

You should still get 5.625-5.75% for 30yr fixed.

You will need to remember that a lender will charge
1% origination fee
appraisal fee - 350
tax cert 70-100
underwriting 500
processing 500
broker 395 (if applicable)

then the title fees which can lead to around 1100
for title insurance, title fees, etc.

that's around 3500...

what is your current mortgage payment?
subtract that from your new mortgage payment.....divide it by 3500....then by 12. This will show you how many months/years you will regain the 3500

[Lynn38]

Thanks for the figures. Looks like our new mortgage payment would be about $150 less per month and it would take about 24 months to break even after paying the closing costs. So, if we did stay in our home 5+ years, I guess it would be worth it.

We had an appraisal done just over 2 1/2 months ago - is there any chance a new lender might considering using that?

[renriq02]

I doubt it....because of the market going down, and a lender will always want to do their own valuation on your home.

The rate 5.625 is par rate. Most banks/lenders will offer 5.875% or 6% to make the money.

A broker may offer it at 5.625-5.75% just to win your business.

Originally Posted by Lynn38

Thanks for the figures. Looks like our new mortgage payment would be about $150 less per month and it would take about 24 months to break even after paying the closing costs. So, if we did stay in our home 5+ years, I guess it would be worth it.

We had an appraisal done just over 2 1/2 months ago - is there any chance a new lender might considering using that?

[LoraK]

Also lowering your interest a full point or more, you will be applying more to principal than you are now, in addition to the monthly savings.

[belovenow]

I wouldn't refinance - the long term gain isn't worth the short term costs of closing on another mortgage. I'd wait for the interest rates to drop between .5 and 1% further before revisiting this idea. Sure a loan officer or broker will be excited about you wanting to refinance with them.. but the math doesn't add up to be in your favor short-term - you'll spend 3 or more thousand for what... a hundred or so of savings per month? That doesn't make sense to me. I suspect we'll see rates drop lower as the market crashes even more over the next year... if you have some patience that could work out for you.

All that said - I don't have a crystal ball, this is just an opinion of someone who likewise recently looked into refinancing a mortgage.

[renriq02]

hoping that the rates are at 5.625% is a miracle.....saying to wait till it's at 5% is just unbelievable!

as the OP mentioned....they will recoup the costs in 24months...so if they plan on staying for 5yrs....that's 3yrs of savings.

if it's 150 lower per month that's 5400.00 in savings.

Either way....they will be saving money.

If the rates were 6.25%-6.375% I wouldnt do it.....but if it's 1% lower....who wouldnt do it.

but then again...the rates may drop to 5% or just go back up to 6.25%

[dee2south]

Originally Posted by Lynn38

We purchased a new home three months ago. We put down 20% and financed the rest at 6.7% for thirty years, fixed rate. Now I see mortgage rates almost a full percent lower. Would it make any sense to refinance? We have excellent credit and plan to stay in our home for at least 5+ years.

Any advice? Does anyone think rates are headed down even further?

Yes rates have dropped yet again. I don't know who you have a mortgage with but before you consider refinancing consider the following:

• Do you have a prepayment penalty? What is the percentage?
• NC allows Co's to charge prepayment penalties, for mortgages above $150,000.
• Do you know what the closing costs will be if you do refinance? Is is worth it?
• Then there are all those credit inquiries, which will reduce your credit score?

I don't know what to tell you, but from talking to mortgage brokers lately, I'd stay put, let your mortgage "season", build up some equity, then pursue. But then again that's just from what i have been hearing, best to talk to your mortgage co., and see if they have options that won't cost you an arm and a leg, which I doubt they won't. Consider ourselves lucky you got a mortgage and congrats.