to refinance or not? (loan, interest rate, fees, rate)

[parisby]

i just bought a house at 30 yr fixed for 6%, been living here for a little over a year now. should i refinance or not? ive been hearing a lot about this subject lately.

I don't know anything about this process, so if somebody here can give me some good advice, tips on whether or not i should make the move.

Thank you

[sbhubbell]

Quite possibly yes, you need to get some quotes from various mortgage brokers, especially the one your mortgage is currently with. It's all about the closing costs and how soon your refinancing savings will pay for them. I'm in the same boat and thinking about moving to a 15 year note...undoubtedly will have a slightly higher payment but could still afford it and would save TONS of money in the long run.

[newhomebuyer80]

I dont think its a right place to post. Post it on Mortgages -- you will get more answers and suggestions...

Depends upon your loan amount & Refinance charge, how fast you want to finish the loan : Rates are down this week ( actually yesterday) - check with the banks for rates - call them and find it...compare it with Closing cost...
If you are paying $5000 for refinance charge - and new apr will be 5% -- how long it will take to get your $5000 back. do math then jump on it...my friends are already did it..

[City Love]

I would say wait a few months. Rates should go lower. We locked on a rate the first week of January. At the super low rate of 4.25% for 15 years, it was a refinance. That first week of January was the lowest it was in the past few years. Rates are now higher, but should go lower in the long run.

Check Amegy Bank for your refinance.

[houstoner]

Originally Posted by newhomebuyer80

[b]I dont think its a right place to post. Post it on Mortgages -- you will get more answers and suggestions...

I agree! Thread moved to Mortgages.

[NJ987654]

yes, you probably should so long as you plan on staying in the home.

[aneftp]

The general rule of thumb is if you plan on staying for more than 3 years and if the interest rates are at least 100 basis points (1%) less than your current interest rates, than it may be in your best interests in consider a re-finance.

[Daddys///M3]

Originally Posted by aneftp

The general rule of thumb is if you plan on staying for more than 3 years and if the interest rates are at least 100 basis points (1%) less than your current interest rates, than it may be in your best interests in consider a re-finance.

With all due respect, rules of thumb do not always apply simply because of the many ways that a mortgage can be structured. The only real way to examine if it is in your best interest to refinance is to take the total closing costs and divide it by the total monthly savings realized by a refinance. This will provide you with the break even point, in number of months. If you plan on staying in the home longer than the break even point then it makes sense to refi.

If it costs you nothing to refi and you save $20 a month it makes sense. If it costs you $5000, and your rate drops 1% and you are saving $32.52 a month (based on a $100,000 loan amount) then your break even point is 153,75 months, or almost 13 years, then it does not make sense.

[aneftp]

Originally Posted by Daddys///M3

With all due respect, rules of thumb do not always apply simply because of the many ways that a mortgage can be structured. The only real way to examine if it is in your best interest to refinance is to take the total closing costs and divide it by the total monthly savings realized by a refinance. This will provide you with the break even point, in number of months. If you plan on staying in the home longer than the break even point then it makes sense to refi.

If it costs you nothing to refi and you save $20 a month it makes sense. If it costs you $5000, and your rate drops 1% and you are saving $32.52 a month (based on a $100,000 loan amount) then your break even point is 153,75 months, or almost 13 years, then it does not make sense.

That is very true.

I'm so use to talking with my friends who have 500K and up mortgages so their break even points are usually 3 years because their savings per month start adding up very quickly to make up the refinance cost.

I suppose for lower price homes in the 100-200K range it will take much longer to recapture your refinance costs.

[Daddys///M3]

Originally Posted by aneftp

That is very true.

I'm so use to talking with my friends who have 500K and up mortgages so their break even points are usually 3 years because their savings per month start adding up very quickly to make up the refinance cost.

I suppose for lower price homes in the 100-200K range it will take much longer to recapture your refinance costs.

Well, in all fairness a refinance on a $100,000 home is likely not going to cost $5000 either. I have to admit I exaggerated a bit to make my point. But the fact remains that there are simply too many variables that go into a refinance transaction (some lenders charge more, some title companies charge more, some areas have higher recording fees, some states have mortgage tax, etc.) not to mention the many ways the cost of a refinance can be structured. But you are correct in that higher loan amounts will almost always yield a shorter break even period.