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It comes around once a year. My mortgage rate will change in February based on an index on a day in December. My adjustable rate mortgage is at 4.25% now. I expect it will go to 5% in February.
I received one of those refi solicitation letters in the mail. I called a mortgage company and checked it out. Not the one in the letter, but the letter said you can refi without an appraisal. I don't want an appraiser going through my house.
So here's the deal:
I can refi for 15y fixed 4.5% rate at a cost of $4600. The $4600 is rolled into the loan, so now I've increased my debt by the $4600. Payment will be about the same as it is now. And they still want an appraisal. I'll owe about 105k. These numbers are off a little cus they used a slightly higher amount for the existing payoff amount or there's some more fees in there. I get: (90.6k balance + 4600) =$95.2k
I don't want my payment to increase.
Paying down my existing ARM by $4200 to $4600 will keep my payment from increasing when the rate adjusts up to 5% or 5.25%. The rate is increased but the balance is reduced. I'll owe about 86k, If done this month, there are 165 payments left.
$4600 paid for refi costs is gone/spent. $4600 paid down on my balance is only moved.
I think I'm gonna just pay down the balance again. I've done that the last 2 or 3 years since rates started rising.
The $4xxx can come from my RMD, if needed, but I don't want to start needing money from the RMD for monthly expenses.
I think the time to re-cast that ARM was about 2 years ago. The rate was hovering around 3.6% in 2016.
You have to add up all these extra Fees & Costs to re-fi. Are you spending $9K to solve a $50 per month problem ??
The 7 year fixed period was at 5%. When it first adjusted, 2008, it went near 3%, one year at 2.875%, than started creeping up. It would have been nice to have locked in 3%. Still, the fees were always off putting.
Refi appraisals usually do not "go through" the house. My experiences were a walk around the outside perimeter of the house. Then a comp look at the neighbors.
Just an update 4 years later. I did finally a refi, March 2022, with a low cost home equity loan at 2.74%. Just a drive by appraisal. The 15y term extended the payoff 5 years but the 10y rate was higher. Can pay it off any time but I just didn't want to give up the cash. Payment decreased $170. It's a trivial expense.
An appraiser won’t come in your house. They’ll likely just ride by it. At worst they will walk around outside and measure it. They will sold comps in your area to come up with an appraised figure.
Just an update 4 years later. I did finally a refi, March 2022, with a low cost home equity loan at 2.74%. Just a drive by appraisal. The 15y term extended the payoff 5 years but the 10y rate was higher. Can pay it off any time but I just didn't want to give up the cash. Payment decreased $170. It's a trivial expense.
Good move on your part
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