Refinancing My House.... Advice

[Dr. Jones]

Hey folks.... After 2 years in my home, my wife and I are planning on re-financing. Our main goal is to reduce our payments from roughly $1500 to around $1300 per month.

We paid $214,000 originally. We would be refinancing at around $206,000

Since we have only been in our home 2 1/2 years it really isn't adding a ton of time onto the end of our mortgage.

My main question is this. Do you think the rates will go even lower this summer?

Is it worth my time to wait longer than I already have??

 

[conraddobler]

Hey folks.... After 2 years in my home, my wife and I are planning on re-financing. Our main goal is to reduce our payments from roughly $1500 to around $1300 per month.

We paid $214,000 originally. We would be refinancing at around $206,000

Since we have only been in our home 2 1/2 years it really isn't adding a ton of time onto the end of our mortgage.

My main question is this. Do you think the rates will go even lower this summer?

Is it worth my time to wait longer than I already have??

Rates are historically very low now, sure they could go lower, they could go higher but if it saves you money now I wouldn't play the waiting game forever.

A lot has to do with what kind of loan you have now.

FHA? Conventional? VA?

 

[Dr. Jones]

I have a VA loan...

We financed $214,000 in 2007 at 6.375%. We did not pay for the points. Seller paid them.

We are looking at 4.875% and .375 points right now.

 

[jw7]

I have a VA loan...

We financed $214,000 in 2007 at 6.375%. We did not pay for the points. Seller paid them.

We are looking at 4.875% and .375 points right now.

Hell yes you refinance now - and look for more options without points or closing costs - do it tomorrow.

Waiting makes no sense. If interest rates drop significantly, you just re-finance again. If they go up, who cares? You are locked at a low rate. And get a fixed - none of this ARM bullcrap.

I've re-fi'd twice on my mortgage with nothing out of my pocket - from 7.75 down to 5.5. It makes a difference.

 

[conraddobler]

I have a VA loan...

We financed $214,000 in 2007 at 6.375%. We did not pay for the points. Seller paid them.

We are looking at 4.875% and .375 points right now.

Well that's a pretty much no brainer IMO you can do what you want but I'd take that in a shot.

You don't need an appraisal or anything just an IRRL.

Make sure you stay in a VA loan and like Shane said if it gets a lot cheaper than that you can do it again but I doubt you ever will.

 

[Brian in Mesa]

Hell yes you refinance now - and look for more options without points or closing costs - do it tomorrow.

Waiting makes no sense. If interest rates drop significantly, you just re-finance again. If they go up, who cares? You are locked at a low rate. And get a fixed - none of this ARM bullcrap.

I've re-fi'd twice on my mortgage with nothing out of my pocket - from 7.75 down to 5.5. It makes a difference.

Are you adding years to your current mortgage or getting to keep or reduce the remaining years left? The fewer the better. Lower payments are not worth taking a mortgage with 17 years left and making it 30 again, but people do it and say they'll pay it down...and rarely ever do.

 

[jw7]

Make sure you stay in a VA loan and like Shane said if it gets a lot cheaper than that you can do it again but I doubt you ever will.

Umm, Conrad, Shane has not posted in this thread.

I know it is an easy mistake to make since he is about 6'4 and 200+ and I'm about 5'11 and a buck-sixty after steak night. He has a shaved dome and I have brown hair. Completely understandable how we were twins separated at birth. Everyone confuses us, so no problem, very common mistake.

Actually pretty funny

 

[jefftheshark]

I felt a lot more comfortable with the advice being dispensed in this thread back when Shane was involved.

JTS

 

[Brian in Mesa]

I felt a lot more comfortable with the advice being dispensed in this thread back when Shane was involved.

JTS

 

[Dr. Jones]

Are you adding years to your current mortgage or getting to keep or reduce the remaining years left? The fewer the better. Lower payments are not worth taking a mortgage with 17 years left and making it 30t again, but people do it and say they'll pay it down...and rarely ever do.

That is my wifes main issue. She feels like the first two years will be completely erased if we refinance. We have 27 yrs left so I am trying to convince her that 2 extra yrs isn't that big of a deal. Also, I am having atough time convingcing her that we should continue to pay 1500 a month versus just pocketing the 200 dollars a month we would be saving.

I could use some good insights to convince her. Any thoughts?

Is there an online amoritization schedule I could use to show her how many years would be lopped off the end of the mortgage if we paid 1500 instead of the 1300 it would move down to?

 

[LVG]

Just an idea, but look at the option to shorten the term of your loan, say to 20 years with the current interest rate. You may find that the payment is the same as you are currently paying, while shaving years off of the mortgage.

At least, that's what happened to me.

 

[BACH]

That is my wifes main issue. She feels like the first two years will be completely erased if we refinance. We have 27 yrs left so I am trying to convince her that 2 extra yrs isn't that big of a deal. Also, I am having atough time convingcing her that we should continue to pay 1500 a month versus just pocketing the 200 dollars a month we would be saving.

I could use some good insights to convince her. Any thoughts?

Is there an online amoritization schedule I could use to show her how many years would be lopped off the end of the mortgage if we paid 1500 instead of the 1300 it would move down to?

Just show her the simple math, a amoritization schedule would only confuse her if she's doesn't get the point now IMO.

$1300 * 12 months * 30 years = $468000
$1500 * 12 months * 27 years = $486000

And yes, there's no question that you should refinance now. There's a chance that the rates will drop even further, but they're so low right now, that any gain would be marginal.

Would you risk endning up with a $1350-rate for the chance of getting a $1290-rate? Or just take the $1300-rate now?

 

[conraddobler]

On a VA loan you're allowed to term match, IE if you have 27 years left you can do a 27 year loan.

Not all lenders allow this but it can be done.

 

[conraddobler]

Umm, Conrad, Shane has not posted in this thread.

I know it is an easy mistake to make since he is about 6'4 and 200+ and I'm about 5'11 and a buck-sixty after steak night. He has a shaved dome and I have brown hair. Completely understandable how we were twins separated at birth. Everyone confuses us, so no problem, very common mistake.

Actually pretty funny

Whoops...

Should I apologize to you or Shane?

I'll go with you since Shane confused me in the first place

 

[jw7]

Are you adding years to your current mortgage or getting to keep or reduce the remaining years left? The fewer the better. Lower payments are not worth taking a mortgage with 17 years left and making it 30 again, but people do it and say they'll pay it down...and rarely ever do.

Yes, I was adding years, but it really is irrelevant. You just need to make sure there is no pre-payment penalty, and most auto and home loans don't have it. I have never carried an auto or home loan to term, so that is the wrong mindset.

You need to look at the 3 components of loans. Principle, interest rate and minimum payment. By refinancing a $150K loan from 7.75% to 5.5% I took the total expense and minimum payment down by about $200 per month.

And given market conditions right now, paying down expensive debt is the best risk-free investment there is. By paying $1000 extra now on a mortgage you are saving somewhere around $2500+ per the life. You can't get that rate of return from a CD.

 

[DeAnna]

I keep hearing in April rates will start to creep up.

http://www.bankrate.com/calculators/index-of-mortgage-calculators.aspx

 

[jefftheshark]

I keep hearing in April rates will start to creep up.

Like cheap underwear.

JTS

 

[Yuma]

The Fed signaled today that keeping rates low will not last forever. Most people interpret that to mean they will quit their mortgage buybacks this year and let the market rise or fall on it's own. It will probably rise, especially if the US loses it's triple A bond rating with all the debt we are piling up. Moody's is questioning if the US is still a triple A borrower.

 

[Dr. Jones]

Looks like I jumped at the right time. The rates have steadily increased since I locked in a couple weeks ago.

I chose a 5.0% rate with negative points. I refinanced $211,000.

My Wife and I liked it better than the 4.875% rate with .375 points. That total re-fi would have been $215,000

Since we locked in the 5% rate now has a full point.