refinance the home? (funds, Wells Fargo, pay, taxes)
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
I'm hearing a lot about lower interest rates. I see it in the FIRE communities online and our assigned "mortgage consultant" has messaged us several times.
We bought our townhome last September with a ~$420k loan, 30 year, at 5%.
Our principal is currently $285k.
I've talked a little bit about our mortgage payoff plan in a recent thread about car ownership.. there I said we'd be in mortgage payoff territory starting in 16 months or October 2020. I'm still hopeful we can get there, but not all the variables are in my control and if our spending keeps up like this (God, Lord, please no!) when we are on a different plan... I mapped that one out too... and it's about 26 months, or around August 2021.
So somewhere between October 2020 and August 2021 we will pay off our mortgage.
In addition there will be two or three big drops in principal: October 2019, April 2020, October 2020, and, possibly, April 2021. This is when stock bonuses vest.
Our "mortgage consultant" said he could offer us a "no cost" option, but when I looked at it I immediately noticed a $1300 fee. Doesn't mention anything like closing costs, points, appraisal, etc.. and I asked him how Wells Fargo makes their cut of a "no cost" option, but he didn't respond to that question. It seems that it could reduce our payments by something like $350 a month, which sounds good.. except we might only have 16 months left. That's about a $5700 difference... or we could have $9100 if it takes us the full 26 months..
So I don't know. I've never done a refinance before. I don't know what it would cost.
I'm hearing a lot about lower interest rates. I see it in the FIRE communities online and our assigned "mortgage consultant" has messaged us several times.
We bought our townhome last September with a ~$420k loan, 30 year, at 5%.
Our principal is currently $285k.
I've talked a little bit about our mortgage payoff plan in a recent thread about car ownership.. there I said we'd be in mortgage payoff territory starting in 16 months or October 2020. I'm still hopeful we can get there, but not all the variables are in my control and if our spending keeps up like this (God, Lord, please no!) when we are on a different plan... I mapped that one out too... and it's about 26 months, or around August 2021.
So somewhere between October 2020 and August 2021 we will pay off our mortgage.
In addition there will be two or three big drops in principal: October 2019, April 2020, October 2020, and, possibly, April 2021. This is when stock bonuses vest.
Our "mortgage consultant" said he could offer us a "no cost" option, but when I looked at it I immediately noticed a $1300 fee. Doesn't mention anything like closing costs, points, appraisal, etc.. and I asked him how Wells Fargo makes their cut of a "no cost" option, but he didn't respond to that question. It seems that it could reduce our payments by something like $350 a month, which sounds good.. except we might only have 16 months left. That's about a $5700 difference... or we could have $9100 if it takes us the full 26 months..
So I don't know. I've never done a refinance before. I don't know what it would cost.
What do you guys think?
Yeah I am curious too. We just bought a home at 4.375% and if it dropped to 3.75% I would be really interested in a Re-FI. It was a $500k mortgage and we plan on paying an additional $25k in principal every year.
My friend got quoted 3.25% for FHA recently. For his first home. Unfortunately the home won't be ready until November and you can't rate lock more than 90 days out. I think it came with points though because he mentioned a 3.75% conventional loan wouldn't be much difference from the 3.25% with the lower loan costs and lower PMI.
I've never bought a home so all the various points and fees and PMI rates are a little confusing to me. So interest rate isn't always the end all be all?
Since you are very close to the end I think I would keep on your payoff schedule.
An option would be to go to your current lender and ask to have the interest rate reset (lowered). Since you did so well on paying down the mortgage they may want to keep you as a customer. Costs should be minimal. Probably a modification paragraph to your current mortgage so you will have some filling fees and maybe legal.
By the way sometime in the past resetting the interest rate was rather common. Don't know about now. Using you current lender avoids new closing costs etc.
I would refi because you are counting on income in the future. Anything could happen. We did a no cost refi at a slightly higher rate than available years ago, it was a no brainer. The breakeven point was five years which we are at but had we not refi'd we'd been out way more money.
Location: Was Midvalley Oregon; Now Eastside Seattle area
13,073 posts, read 7,511,991 times
Reputation: 9798
You need to run amortization comparisons.
Current loans interest rates are much lower than your fixed 5%/30yr.
This really a cashflow, rate issue and alternative of choices.
If your intent is to pay off the house, you might as well look at variable mortgage.
Wells Fargo will get paid by selling the loan to Fannie Mae or FreddyMac or to someone else.
The other fees are recording fees and transaction taxes. The broker/salesperson will be paid by WF and possible fees in the transaction.
JMO, I'd investigate further.
Yeah why have a 30 year mortgage if you’re paying it off soon?! People are so opposed to better solutions and I don’t know why. I went with a 10/1 ARM at 2.95%. There’s absolutely zero chance I’ll have that mortgage by the time the rate could change as I have way more than the mortgage amount available in cash. I just can’t resist money that cheap, so no reason not to take it!
Generally it takes about 12 to 18 months after you refinance to reach a break even point where you recouped the costs of refinancing and see a benefit, but this is based on making normal payments, not putting an extra 5k a month towards paying off a mortgage. Since your going to have the house paid off in 2 years or so anyway, I really don't think it's worth the cost and hassle to refinance. You might see a small benefit, but at the rate your paying off the loan, I wouldn't think it be very much.
To answer your question about refinancing, generally it costs 5 to 10k, depending on the size of the mortgage.
After i pay off my credit card debt and finish the windows on my house, I'm considering doing the same. I can put an extra $1,500 towards principal a month, given its a 15 year loan, $500 a month is going towards principal every payment, adding extra, I can pay knock the balance down around 25k a year, that would give me a 5 year pay-off date. I may just pay extra for a year or two, I really want to max out my 401k at work, I was saving around 20k a year before, but I reallocated funds after purchasing my house. Now I'm only saving 7k a year, I'm 52, the clock is ticking for retirement.
How are the rates for 15yr? I did that several years ago and the rate was 2.75%.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
It seems that it could reduce our payments by something like $350 a month, which sounds good.. except we might only have 16 months left. That's about a $5700 difference... or we could have $9100 if it takes us the full 26 months.. 
