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Leperflesh posted:What's a reasonable time period of payback before a re-fi makes sense? Maybe 5 years? So if total costs is less than $8200 or so then I guess it'll be worth it. I'm in a very similar situation. I'm about to refinance $211k from 5.5 to 4.625, and my monthly payment will be going from 1217 to 1084. While not significant, my closing costs are only expected to be 3-4000, so it will take less than 3 years for me to break even. On top of that my apartment complex is cool with investor units so I hope to hold onto this place and rent it out whenever I decide I want to move on, so having a lower monthly payment will help make that easier to do. I guess for you it comes down to how much the expected closing costs are going to be, versus how long you plan on staying in that house.
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Oct 8, 2010 18:36
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Right, pretty much. We assumed we'd be in this house for a minimum of 7 years (and we've only been here 10 months so far). Honestly I'm not sure I'd go for it even if it was like $7k. You said your costs are only like $3-4k though, that's pretty attractive (if I can get 4%). At $4000, I get breakeven at 23 months. \/\/\/Woohoo! Leperflesh fucked around with this message at 18:59 on Oct 8, 2010 |
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Oct 8, 2010 18:42
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Closed this morning without a hitch. 
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Oct 8, 2010 18:58
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Take into account the tax savings (if any) you have by deducting the interest and how much you could gain on the money by just shoving it into your retirement account. $8200 @ 5% is $34/mo. And of course how likely you are to stay in the house long enough to break even. I don't think I'd pay more than 1.5-2 points to drop one percent although I may just be cheap. Rate buydown on my mortgage was 1 point per quarter percent which just wasn't exciting to me.
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Oct 8, 2010 19:54
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My mom was saying 4% was with no points. But that's a good point; it's not just a dollar cost to re-fi, it's an opportunity cost, and that must be accounted for. Question though: I just realized I was assuming refinancing would still leave me with the original loan length - that is, I'd have 350 payments remaining. But does it actually entail opening a new 30-year (360 payments) mortgage? If so that changes the math a bit.
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Oct 8, 2010 20:00
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Leperflesh posted:My mom was saying 4% was with no points. Yes, since refinancing is really just opening a new mortgage with a different bank. edit: If you are going to try and plot out something like the difference in interest paid over the life of the loan then I guess you'd be comparing 233k @ 5.0 for 350 months versus 233k @ 4.0 for 360 senor punk fucked around with this message at 20:08 on Oct 8, 2010 |
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Oct 8, 2010 20:06
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Leperflesh posted:But that's a good point; it's not just a dollar cost to re-fi, it's an opportunity cost, and that must be accounted for. Speaking of opportunity costs, would it be worth calculating what the saved interest (at the existing rate) would be, if you just put the money that you would pay in closing costs to refinance straight into paying off a chunk of principal?
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Oct 8, 2010 20:10
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Doing quick math on a mortgage calculator I came up with $210,694.20 in interest paid if he stays at 5.0 for the next 350 months versus $167,846.20 in interest paid if he goes to 4.0 for 360 months, or 42800 in savings over the life of the loan if you refinance.
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Oct 8, 2010 20:18
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Ah yeah it's a new mortgage for 360. I don't particularly care about what the math comes out to at the tail end of the 30 years, because this isn't the house I'm going to retire in. We might be here 7 years or 15 years but not 30. E: what I should say isn't that I don't care, but rather, that I'm discounting that calc by some degree due to a guesstimated probability that I'll be selling within 15 years. It is worth paying attention to the full amortization table though because that's equity and equity affects when we'll stop paying the (PMI-equivalent) MIP (for FHA loans). Which for me is $105.79 a month. Also, it turns out the deal is specifically an "FHA streamlined re-financing" and it's gonna be something in the region of $1500-$2000, plus cost of an appraisal. Which is loving fantastic regardless of the math.
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Oct 8, 2010 20:18
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Leperflesh posted:Also, it turns out the deal is specifically an "FHA streamlined re-financing" and it's gonna be something in the region of $1500-$2000, plus cost of an appraisal. Which is loving fantastic regardless of the math. Just as long as the appraisal works out in your favor, which is the one thing that could really gently caress things up for me now, and I'm a bit terrified about it.
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Oct 8, 2010 20:19
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That is very very very true. There's been more foreclosures in my neighborhood. If the house's appraisal drops the worth we could be looking at being officially underwater. ... On the other hand, could we use something like that to lower our property tax assessment?
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Oct 8, 2010 20:21
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Leperflesh posted:That is very very very true. There's been more foreclosures in my neighborhood. If the house's appraisal drops the worth we could be looking at being officially underwater. Depending on how your town/city/county whatever works, maybe? I know a lieutenant at my station had it work out to his advantage when the town did reappraisals for tax purposes. He may now be underwater, but with his house being worth half what he paid for it, his property taxes are half what they were, and it's the house he's going to raise his kids in so he's not worried about trying to move in 5 years.
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Oct 8, 2010 20:30
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I think I'm going to explore refinancing as well. We're at 5.5% on appx 155K and if I could get down to 4.5 I would save almost 100 bucks a month. We're an FHA loan so a streamline refi might work out best for us. It's tempting to try to lock in a 15 year note at 3.75% though, the payment would go up a bit, but overall savings would be almost 200K
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Oct 8, 2010 20:32
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Math!pre:At 5% Principal + Interest = 1269.25 /mo. Payment #130 (10 years): Pmt Principal Interest Cum Prin Cum Int Prin Bal 130 506.37 762.88 50,957.51 114,044.99 182,585.71 22% equity (assumed $240,800 home value) is hit on Cum Prin= 52,976: payment #134 (in 124 months) At 4% refinanced: Principal + interest = 1114.97/mo payments Payment #120 (10 years): Pmt Principal Interest Cum Prin Cum Int Prin Bal 120 499.99 614.98 49,548.41 84,247.99 183,994.81 22% equity (assumed $240,800 home value) is hit on Cum Prin= 52,976: payment #127 (in 127 months) Savings: $154.28/mo $18,513.60 Opportunity cost: ~$2000 @ 5% for 10 years = $1257.79 earned (compounded annually with additions at end of each period) But I don't think I need to bother with it that much because saving $18k in 10 years for the cost of $2k up front is a no-brainer.
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Oct 8, 2010 20:38
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Also in the refinancing boat. Got approved and locked at 4.375% with no closing costs. Currently at 5.15% so I'll be saving around $140 a month. Woot!
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Oct 9, 2010 03:05
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Add me to list of prospective home buyers. Found a nice 3br ranch in a decent neighborhood here in Vancouver WA listing for 139.9. Offered 129.5, countered to 132 and agreed. Right now I’m at the point where earnest money is in escrow, appraisals are done and documents are under review by the underwriter. Signing is tentatively scheduled for the 19th and closing/possession on the 20th. I am a giant ball of nerves right now.
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Oct 9, 2010 04:07
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Yay docs made it through underwriting to the title co. It's on!
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Oct 12, 2010 00:51
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Hopping on the refi train, unless anyone sees anything wrong with this: We refi'd in January of 2009 to a 30-year @ 4.75%. We're about to refi again to a 15-year @ 3.625%. Everything looks great on paper. Closing costs are right at $4k, maybe less since this will be our 3rd mortgage with our local bank and they usually wave all kinds of fees and such (they did on the Jan '09 refi). The wife and I are about to jump today or tomorrow, but I wanted to post in case there was something we weren't thinking of, some reason not to jump all over this. I can't think of any. We can handle any bump in payment easily (since we first built our house we've been kicking $250/month extra for each mortgage payment). Let me know please if there's something I need to check or be wary of. Thanks!
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Oct 13, 2010 16:05
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Leperflesh posted:Math! It won't make a huge difference for you because you are not very far into your loan, but be careful of this when you are looking at refinancing. The 154.28 you get from the difference between your old payment and your new payment is your cash flow improvement. The savings is actually the cumulative interest you would have paid on your old mortgage vs. the interest you'll pay on the new one [and then adding in missed tax savings on the extra interest, when you get rid of PMI, alternate investment returns, etc.]. As an example, if you are 15 years into a 30 year mortgage and refinance to a new 30 year, then your monthly payment will be almost halved even if the interest rate stays the same. This obviously helps your monthly cash flow a lot but it isn't savings.
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Oct 14, 2010 14:24
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That's very true. In my case I'm only 10 payments into my 30 year loan so as you said, the difference is pretty negligible, but it's well worth being aware of. I would think that unless they are in some dire situation where they can't afford their payments and need a lot more room in their budget, most homeowners would not refinance into a new 30-year mortgage when they're 15 years into their current 30-year; much better to refi into a new 15-year mortgage (probably at lower interest rate than the 30!)
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Oct 14, 2010 19:31
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I purchased my house nearly two years ago, and my interest rate was 5.75% for a 30 year. The mortgage broker recently contacted me telling me interest rates had gone way down. I can get 3.625% on a 15 year, and basically my monthly payment will go up only about 100 dollars a month. However, on Oct. 6th he told me approximately 2700 dollars for closing costs. Then after he got quotes calculated one day ago, he came up with $3661. That is nearly a thousand dollar difference. So of course I asked him why, and here was his response: "The title charges are usually overestimated by about $200-300 by the closing companies because they don’t know the true cost of bringing up the abstract until they do it. The last several closings I have had they have come in under their estimate. If they underestimate the charges, they cannot change them at closing ….. Also the attorney fees and doc prep fees have increased because of the foreclosure mess going on right now. And most lenders will make you pay for the appraisal up front (around $350) but I am including it to be paid at closing as part of the closing costs in each scenario." I am thinking about telling him that I will just hold of on refinancing until closing costs go down to normal levels. Is this really what closing costs are these days?
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Oct 15, 2010 00:50
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Mine will be $3300 on the low end, potentially $4300. Sorry!
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Oct 15, 2010 00:55
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tronester posted:
You think that's bad? 
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Oct 15, 2010 00:59
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tronester posted:Is this really what closing costs are these days? If you think you're being overcharged, go to another bank and see what their fees are. There's nothing binding you to your current broker. Also, as a point of reference, I'll soon be doing my second refinance. On the first one, I refinanced through my existing bank. The costs ended up being about 664 dollars. The rate was also competitive, so they didn't just inflate that to recoup costs. However, this was also on a loan for 70K, and in a low cost of living area, and I didn't need to get my home reappraised, so it's fairly different from your situation.
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Oct 15, 2010 02:44
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A $300,00 loan in Massachusetts has $8,000 in closing costs. Hence, I'm going with 4.25% with no closing costs. Pretty easy decision for me!
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Oct 15, 2010 13:22
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Ca anyone here offer advice on unfucking my mortgage? Currently Have $258k left on a $273k loan. Never been late on a payment, and I have a steady job for the last 6 years and drat near perfect credit (high 700's). That's the good news. Bad news is that we bought at possibly the worst time and my house is worth $240k - $230k right now based on the price others have recently sold for. We're currently on a 30 year conventional loan with 6.25% interest. I'd love to refinance but I don't have a Fannie Mae/Freddie Mac loan so no one seems to want to even touch my rear end since we are upsidedown/underwater/whatever on the loan. Everyone I talk to says I should get a loan backed by one of the FM's, but I spoke with them and they won't refinance unless I started off with them to begin with. Basically I'm stuck in this wonderful catch 22 because I bought at a lovely time and even though I can afford to pay my mortgage and am pretty much the perfect borrower nobody want to help unless I pay off about $50k in principal of my loan. Any advice? The one silver lining is that I live in an area that is about to see a huge influx of people due to the BRAC (Base Realignment and Closure) program, so maybe prices will go back up in my area since I live right outside a growing military base.
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Oct 15, 2010 15:46
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Yeah nobody's going to offer you a loan for more money than your house is presently worth. Your only option is to seek relief with your current mortgage holder (that is, ask them to take a loss and write down part of your loan). Who are unlikely to bother with you because, as you've said, you make all your payments and can clearly afford to continue doing so. The banks have been incredibly reluctant to grant relief even to people who are months behind on payments, unemployed, and in a position to be foreclosed. They'll really only grant relief if they're convinced it will save them money vs. foreclosing and reselling the property. It is a sad fact that people who were responsible and bought what they can afford are being left out of the various programs designed to grant relief to troubled borrowers. I don't want to tell you that there's literally nothing you can do, because there might be and I just don't know about it, so certainly keep asking around and doing your research. But were I in your position, I'd likely just chalk it up to experience, keep paying my mortgage, and hope that prices go up again sometime soon. Or, if you are actually in financial trouble and you think you might not be able to keep paying your mortgage, then that's completely different.
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Oct 15, 2010 17:48
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Sounds like your stuck man, just keep doing what you're doing and ride it out. Maybe by the time your house is no longer underwater you'll be able to get a lower rate. Depending on how my appraisal goes I might end up in the same situation.
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Oct 17, 2010 02:26
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senor punk posted:Sounds like your stuck man, just keep doing what you're doing and ride it out. Maybe by the time your house is no longer underwater you'll be able to get a lower rate. Depending on how my appraisal goes I might end up in the same situation. A coworker paid $700k for a house that appraised at $700k for closing 3 weeks ago. Last week it was appraised for his heloc app. Came back at $600k. $100k in 3 weeks. Housing market is hosed.
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Oct 17, 2010 13:20
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Jealous Cow posted:Housing market is hosed. It's not so much this as house appraisers that work with banks are loving scumballs. When my parents bought their house recently (and when I bought mine a few years back) the banks appraiser literally asked what we needed it appraised at. I mean what the gently caress?
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Oct 17, 2010 13:48
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The negotiated price between you and the seller is a valid data point for the appraisal of the house. It must not be used as the sole piece of information, of course, but an appraisal should start with the sale price and then only over/under appraise if there is substantial evidence contradicting that negotiated price. The reason is because the negotiated price is a number that both the seller and buyer have arrived at, presumably in a marketplace where other sellers and buyers are competing. E.g., if it was too high the buyer wouldn't pay, if it was too low the seller wouldn't sell. In theory. So, while appraisers are often lazy and I'm sure many are scumbags, it's quite reasonable for an appraiser to request the settlement price and then work from there. That said, $100k in three weeks is obviously evidence that one of the two appraisals was way off the mark. A third indipendent opinion is warranted.
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Oct 17, 2010 20:02
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CyberLord XP posted:It's not so much this as house appraisers that work with banks are loving scumballs. When my parents bought their house recently (and when I bought mine a few years back) the banks appraiser literally asked what we needed it appraised at. I mean what the gently caress? You can interpret this 2 ways. 1. The guy is a scumball (maybe, but what is his incentive to appraise at whatever value you want? Does he somehow make more money doing that?) 2. The market is so wrecked that it's nearly impossible to properly value a home and he's just doing the best he can with what he has.
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Oct 18, 2010 00:19
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I am having my home appraised soon in order to refinance. Zillow.com, the accuracy of which I can't attest to, estimates that my property is worth pretty much exactly what I need it to be worth in order to get rid of my PMI. My question is, what factors will swing an appraisal higher or lower than what zillow is estimating? The house has a new furnace, new water heater, all new electric, a recently remodeled bathroom, refinished hardwood floors, etc. The only part of the house that still needs work is the kitchen floor, which is currently very beat-up looking hardwood (didn't get refinished with the rest of the house). Does any of that matter much one way or another? I will be very disappointed if I can't get rid of this PMI, as it's a big part of why I'm refinancing in the first place.
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Oct 21, 2010 04:12
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Slugworth posted:I am having my home appraised soon in order to refinance. Zillow.com, the accuracy of which I can't attest to, estimates that my property is worth pretty much exactly what I need it to be worth in order to get rid of my PMI. My question is, what factors will swing an appraisal higher or lower than what zillow is estimating? The house has a new furnace, new water heater, all new electric, a recently remodeled bathroom, refinished hardwood floors, etc. The only part of the house that still needs work is the kitchen floor, which is currently very beat-up looking hardwood (didn't get refinished with the rest of the house). Does any of that matter much one way or another? I will be very disappointed if I can't get rid of this PMI, as it's a big part of why I'm refinancing in the first place. Do appraisers ever even look inside the house? I may have gotten a bad/lazy one, but all my paperwork came back without ever having to let someone through the door.
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Oct 21, 2010 04:23
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Slugworth posted:I am having my home appraised soon in order to refinance. Zillow.com, the accuracy of which I can't attest to, estimates that my property is worth pretty much exactly what I need it to be worth in order to get rid of my PMI. My question is, what factors will swing an appraisal higher or lower than what zillow is estimating? The house has a new furnace, new water heater, all new electric, a recently remodeled bathroom, refinished hardwood floors, etc. The only part of the house that still needs work is the kitchen floor, which is currently very beat-up looking hardwood (didn't get refinished with the rest of the house). Does any of that matter much one way or another? I will be very disappointed if I can't get rid of this PMI, as it's a big part of why I'm refinancing in the first place. Are you sure it's a full scale appraisal? I'm in the middle of a refinance, and my lender said our appraisal is of the drive-by variety. They basically drive up to the house, make sure it's still standing, that it hasn't fallen into disrepair, etc, and then check it off.
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Oct 21, 2010 13:48
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poo poo.Leperflesh's broker posted:Hi <Leperflesh>, So if I'm reading this right, there has to be a minimum amount of savings before FHA allows a re-fi, and because FHA has made the monthly mortgage insurance premium higher, a 1% drop in rate now only saves us $75 a month, which isn't enough. Or something. I'm literally not allowed to pay ~$3000 to save $900 a year for (potentially) 30 years? WTF?
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Oct 21, 2010 19:44
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Leperflesh posted:poo poo. If you make a large payment towards the principal on the house, and cover closing costs you could make it work. It would be quite a bit of cash out of pocket though and might not make sense for you.
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Oct 21, 2010 21:02
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Leperflesh's Broker posted:The rate at 4% would not give me enough yield spread premium to pay for your closing costs. So offer to pay a portion of the closing cost.
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Oct 22, 2010 05:53
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Already did, actually. I asked him to give me options between me paying all the costs, and him picking up some. I wanted to see how much of a difference it would make. Making a large payment on the principal isn't possible I'm afraid: not without tapping my 401(k), anyway, which I won't do. We could cover costs up to something like $5k and then we get into putting us into a really risky no-cash situation. I didn't get a response to my questions today so I'm gonna call him tomorrow, but if he's still sure he can't do it, I'm gonna get a second opinion by going directly to a bank or three to see what they can offer.
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Oct 22, 2010 06:01
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Partly due to the fact that I suspect I'm screwed on my mortgage, and partly due to the fact that I really hate talking to my lender unless I absolutely have to, I'm posting this to see if anyone thinks I even have a snowball's chance in hell of getting a refi. In a nutshell: Bought in the Phoenix area in '07. House was appraised about 10% more than I paid for it when I bought it, but is now worth maybe 60% of what I owe, and it'll take a long drat time for me to accumulate enough cash to pay that down or pay the difference without just taking out a second loan. I'm actually better off financially now than I was when I bought the place, so I'm essentially hosed out of getting help due to missed payments or anything like that. The loan is backed by Freddie Mac, at least. I'm not looking for a reduction in principal or cash out, I'd just be happy to come down from 6.75% to somewhere in the 4-5% ballpark where rates are now. Any thoughts?
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Oct 27, 2010 00:56
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