Whether to Refinance?

[viscousmemories]

I bought this house a little over a year ago with a fixed-rate mortgage at 5%, and mortgages today are at 4.25%. I would like to lower my monthly payment if possible. Would refinancing allow me to do that, and at what cost?

[Dingfod]

If you can get a no fee refinance, it's probably worth it. But if they charge you a couple percent origination fee, it would depend on how long you plan to live there.

[teasasue]

I dont think you can until 5 years is normally the minimun but I think the normal is 10.

[Sauron]

I bought this house a little over a year ago with a fixed-rate mortgage at 5%, and mortgages today are at 4.25%. I would like to lower my monthly payment if possible. Would refinancing allow me to do that, and at what cost?

Possibly.

Some of the key considerations would be:

1. The refinancing costs - how much? Paid up front or rolled in with the loan? etc.

2. What is the period of the loan you are thinking about vs. the one you have now (10, 20, 30 years, etc.)

3. Loan-to-value ratio of the house - a refinance will require a reappraisal; given the real estate environment now, how do you think your house's market value would compare currently vs. when you originally bought the house? Is an inspection likely to disclose something bad that you would be required to divulge in the future with any sale of the home?

4. New conditions of the loan - in this environment, lenders are getting creative about new conditions on the loan; make sure you get all these disclosed and are comfortable with them

5. How is your job situation and credit now, compared to a year ago?

[Dingfod]

I dont think you can until 5 years is normally the minimun but I think the normal is 10.Totally not true seven or eight years ago. I refinanced twice in the first five years of ownership of this house, cashing in on the equity growth. Now, I've got a house that is worth less than I paid for it, but I owe $50,000 more than that. Yea, easy refinancing!

[Sauron]

I dont think you can until 5 years is normally the minimun but I think the normal is 10.Totally not true seven or eight years ago. I refinanced twice in the first five years of ownership of this house, cashing in on the equity growth. Now, I've got a house that is worth less than I paid for it, but I owe $50,000 more than that. Yea, easy refinancing!

Indeed. I forgot one important consideration - what is the real estate market in your area likely to do in the next 5 years?

[LadyShea]

Can't hurt to call your current lender and see if they'll do a low cost refi. You just want the lower interest rate, not an equity pull and they may be willing to do that....especially if you easily qualify for the lowest rate out there.

And lenders can choose to refi their own loans at anytime, and anyone is free to seek a new lender anytime as well (which is more or less selling your mortgage to another lender who pays off the note with the original lender).

You may have a prepayment penalty fee in your mortgage though, those are often installed for the first 3-5 years, so check for that before you seek other lenders. I got stuck with a 3500 fee when we sold the house in Vegas because I missed it when we refid the year prior.

[freemonkey]

]
And lenders can choose to refi their own loans at anytime, and anyone is free to seek a new lender anytime as well (which is more or less selling your mortgage to another lender who pays off the note with the original lender).


Yeah, our mortgage was sold a number of times. We are now owned by BofA, not a choice we would have made. We've thought about refinancing with a local bank or credit union, but it looked like every option would have cost us more in the long run, even with a lower rate.

[viscousmemories]

I haven't tried talking to the bank that owns my mortgage yet (Flagstar), but I talked to a loan guy at Wells Fargo and he said I'd have to pay about 5k up front to lower my monthly payment by about $60 a month. So not much help. Maybe I'll call Flagstar and see if they can do it cheaper.

[freemonkey]

vm, they are all about helping their own bottom lines, not yours.

[viscousmemories]

Oh I know, but I don't see what he would have to gain from not giving me a loan so I figured he was being straight.