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Old 04-26-2009, 02:56 PM
 
Location: Eastern NC
20,871 posts, read 19,388,655 times
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I currently owe 83,000 on my house on 30 year loan, only have 23 years left, apr was 6.125% and I have excellent credit.
I called my mortgage company and was quoted 4.75% for 15 years with 1/2 point with a grand total of $2300 closing cost. This would raise my mortgage $100. Now would it be wise to refinace or just put that $100 towards the principle every payment? Or should I go and do bi-weekly instead. I am not sure what to do. Thanks for any help.
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Old 04-26-2009, 03:13 PM
 
Location: Looking East and hoping!
28,227 posts, read 20,154,881 times
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TRL-an extra $100 a month would be a beter bet, you'll be taking money off the back end plus leaving yourself a "comfort zone" if you can't do it that month. If you had started at the beginning of your loan your mortgage would be paid in 19 3/4 years.
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Old 04-27-2009, 08:41 AM
 
995 posts, read 3,675,710 times
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I agree with Lacey.

I crunched some numbers for you. Assuming you have exactly 23 years left with $83000 balance, your monthly payment is $561.36.

If you apply $2300 (=closing cost for refinance) to principal and make additional $100 payment per month, then your loan will retire in exactly 16 years. The benefit of refinancing for you is the last 1 year worth of payments. But this is assuming you strictly you follow the amortization schedule and you will not move.
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Old 04-27-2009, 08:46 AM
 
1,627 posts, read 2,861,974 times
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IMHO, you are better off just adding to the principle every month, assuming you are motivated to do so.

Usually, refri's should not be done unless you can get a rate of 2% lower than what you have.
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Old 04-28-2009, 07:07 PM
 
Location: Plano, Texas
1,675 posts, read 6,615,596 times
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I would suggest that you contact another lender and refinance. Today several lenders will offering 4.25 to 4.375 for a 15 year mortgage. At that rate, i would suggest that you refinance as the lower interest rate would offset the upfront costs.

Smilinpretty, not sure where you got the 2% rule from, but that is inaccurate. Even a .25% lower rate would be worth while to refinance, assuming you are staying in the home for a very long time.
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Old 04-29-2009, 07:57 AM
 
28,461 posts, read 75,149,554 times
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I completely agree with VB -- the quote the OP got from their current lender is pathetic! Think about it, these bozos have a GIANT telemarketing operation that costs them a FORTOOOOOON. The call basically ALL their borrowers on the off chance that one idiot in a hundred says "yep sounds a good to a me".

Other lenders, or even a less "marketing" oriented office / division OF THE SAME LENDER are likely to have a whole different philosophy on what sort of deals make sense for an excellent credit risk with the ability to buy down a significant loan.

The best course of action is almost certainly to get the best RATE on a loan for as long as possible and THEN decide to accelerate payments as much as possible. Right now there is not much discount at all for 15 year loan vs a 20 or 30 year loan. (And last I looked 10 year loans were actually at a higher rate than 15, imagine who would go that?)

As VB suggests, each and every opportunity to refinance needs to have the numbers run -- with LARGER loan amounts and LONGER projected time in the property there is NEVER a refinance that does not make sense, the question is always about where the BREAK EVEN point is vs the current loan.
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Old 04-29-2009, 04:51 PM
 
Location: Eastern NC
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Thanks for the advice everyone. I decided to shop around as recommended as I am now locked in at 4.25% for 15 years with no points.
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Old 04-29-2009, 05:02 PM
 
28,461 posts, read 75,149,554 times
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Default Ataboy!!!!

Quote:
Originally Posted by trlhiker View Post
Thanks for the advice everyone. I decided to shop around as recommended as I am now locked in at 4.25% for 15 years with no points.
NICE RATE! I'm jealous!

Don't forget the GFE should have pretty standard amounts for the closing costs /fees. No points is very good, but the TOTAL PRICE is still coming out of your pocket one way or another!

Lenders do need to pay for an appraisal and the various services involved in recording the new lien, so it is unrealistic to expand a truly "no cost" loan -- if you talk /shop several lenders you need to determine who will "stick you for every last dime" and who has a lower total cost.
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Old 04-29-2009, 05:26 PM
 
Location: Eastern NC
20,871 posts, read 19,388,655 times
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I understand, I do have closing costs which will amout to $2800 which is in line with the other places I checked.
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