Refinancing again

[glockmail]

I last did this in 2009 and got a 30 year fixed at 4.25%. Our goal is to retire in 12 years so we want to pay it off so we'll own it free and clear then. Wife's car loan has one more payment so we can use that to accelerate mortgage payments. She'll keep that car for at least another year, and by then our son will have graduated college so we'll easily be able to afford the larger payments. Not only will we not have a mortgage at retirement we'll save a boatload of interest expenses.

Knowing that rates for 15 year loans were even less, I did the math, and based on closing costs of $3000 and a rate of 3.25% we could save another $8000 by refinancing.

I applied online at Quicken this morning and they called me back in less than a minute. No kidding. He took the remainder of the information and then called back later in the day. Surprise, closing costs were $4900. They wanted to charge me 1.875 in discount points.

Costco has been advertising loan services so I got on their site and selected one of the partner companies pretty much at random. They emailed me back within 5 minutes and I just got back to them at 5:30. The guy was fixing dinner for his kids so I told him to call me back at a better time, which he did at 7:30 this evening. After about 45 minutes I locked in, same rate but zero points, total closing costs are $2800 which included a very high title insurance rate, over $1000 more than Quicken. I sent him Quicken's quote and he promised to match it, so my closing costs will now be $1800, or $3100 less than Quicken.

[jimnyc]

The only thing better than a good refinance deal to save you money, is finalizing payments on other contracts and watching the monthly payments disappear. Congrats on both ends! We are 15 years into our 30 and I've been nagging the woman to at least look into how/if refinancing may help us.

[glockmail]

It depends on your current interest rate and your principle. Do the math (there are numerous calculators on the web if you don't have a business calculator).

My payments are about $300 more a month, but I'm paying it off in 15 years vs. 27 years. Since you'd be paying off in 15 years either way, with a lower rate you'll be paying less every month.

You should look at a ten year loan if you can get a rate that is even lower. If you can afford the higher monthly expense, you'll save a lot. But keep in mind you'll have college expenses in a few years.

[aboutime]

The only thing better than a good refinance deal to save you money, is finalizing payments on other contracts and watching the monthly payments disappear. Congrats on both ends! We are 15 years into our 30 and I've been nagging the woman to at least look into how/if refinancing may help us.


Jim. If you don't have to do it. Don't! As the economy is going. If you are locked-in to your present percentage rate, and you are comfortable, not behind. Take a deep breath, wait a few weeks, then re-consider doing it again.
If it is a last resort, and things are getting pretty hard to manage. Your best security is your present Mortgage. I know it's tempting to do, and having a few extra bucks around would probably help. But..odds are. Any refinancing IS going to COST more. No matter how nice it might sound now.

[gabosaurus]

How does refinancing work? I am not a business person and have never looked into it.

[fj1200]

How does refinancing work? I am not a business person and have never looked into it.

Do you remember when you financed the first time? You just re-do it.

[Nukeman]

The only thing better than a good refinance deal to save you money, is finalizing payments on other contracts and watching the monthly payments disappear. Congrats on both ends! We are 15 years into our 30 and I've been nagging the woman to at least look into how/if refinancing may help us.


Jim. If you don't have to do it. Don't! As the economy is going. If you are locked-in to your present percentage rate, and you are comfortable, not behind. Take a deep breath, wait a few weeks, then re-consider doing it again.
If it is a last resort, and things are getting pretty hard to manage. Your best security is your present Mortgage. I know it's tempting to do, and having a few extra bucks around would probably help. But..odds are. Any refinancing IS going to COST more. No matter how nice it might sound now.
Jim I disagree with AT.. Here's why your current mortgage is based upon the amount YOU borrowed, you still owe 15 years if you refinance you will set your payments to what is OWED still so for the next 15 years your payment will not only be lower because of the principal but the current rates compared to 15 years ago are phenomenal. You can save a lot of money..

Say for example you took a 250K mortgage 15 years ago at 7% interest.. your monthly payments are 1,663.22 each month now for 15 years you have already payed 300K back if you continue you will pay an additional 300K. At this point you will still owe 185k in principal (kind of pathetic don't you think)

Now if you refinance, which AT doesn't recommend, Your new payment based on remaining principal of 185K and a 3.5 % interest rate would be 1,323 that's is 300 dollars LESS for the whole 15 years, that my friend is a savings of 54k.

You can do what you want but if you still have 15 years to go refinancing is the way to go!! AT likes to be safe but in this case that is stupid!!!!!!!! IMHO

[fj1200]

^Yup. It's almost a no-brainer but your results may be different. :)

[Nukeman]

^Yup. It's almost a no-brainer but your results may be different. :)
It was just an example. knowing where he lives and what the rates were 15 years ago I can say it is probably pretty close... 30 year mortgages are notorious for gouging the homeowner...

[fj1200]

It was just an example. knowing where he lives and what the rates were 15 years ago I can say it is probably pretty close... 30 year mortgages are notorious for gouging the homeowner...

Oh I know. I was just throwing out that financial industry standard disclaimer. :laugh:

I don't know if they're gouging though because you get the use of the money at relatively low rates. Having said that we're trying to pay our mortgage off radically fast, before High School kicks in for the oldest, and the average consumer is ignorant as to basic personal finance so they do end up getting gouged. :eek:

[Tyr-Ziu Saxnot]

It was just an example. knowing where he lives and what the rates were 15 years ago I can say it is probably pretty close... 30 year mortgages are notorious for gouging the homeowner... My sister just refinanced about 11 months ago. She told me her savings were great. Monthly notes so much lower and her payoff date much sooner too. I am currently 21 years into a 30 year mortgage . I think I'll check it out to see how much I can save. --Tyr

[Nukeman]

Oh I know. I was just throwing out that financial industry standard disclaimer. :laugh:

I don't know if they're gouging though because you get the use of the money at relatively low rates. Having said that we're trying to pay our mortgage off radically fast, before High School kicks in for the oldest, and the average consumer is ignorant as to basic personal finance so they do end up getting gouged. :eek:I have 2 in college right now and working on finishing off the mortgage. Its been tough but the end is in sight..:beer:

[Nukeman]

My sister just refinanced about 11 months ago. She told me her savings were great. Monthly notes so much lower and her payoff date much sooner too. I am currently 21 years into a 30 year mortgage . I think I'll check it out to see how much I can save. --TyrI would check the 10 year plan and double up on payments if you can!!

[Tyr-Ziu Saxnot]

I would check the 10 year plan and double up on payments if you can!! Will do-- :beer: -Tyr

[aboutime]

Jim I disagree with AT.. Here's why your current mortgage is based upon the amount YOU borrowed, you still owe 15 years if you refinance you will set your payments to what is OWED still so for the next 15 years your payment will not only be lower because of the principal but the current rates compared to 15 years ago are phenomenal. You can save a lot of money..

Say for example you took a 250K mortgage 15 years ago at 7% interest.. your monthly payments are 1,663.22 each month now for 15 years you have already payed 300K back if you continue you will pay an additional 300K. At this point you will still owe 185k in principal (kind of pathetic don't you think)

Now if you refinance, which AT doesn't recommend, Your new payment based on remaining principal of 185K and a 3.5 % interest rate would be 1,323 that's is 300 dollars LESS for the whole 15 years, that my friend is a savings of 54k.

You can do what you want but if you still have 15 years to go refinancing is the way to go!! AT likes to be safe but in this case that is stupid!!!!!!!! IMHO


Sure thing Nukeman. It's not like I ordered him to do as I suggested. Glad you think it's stupid. Guess you know how the Economy, despite our tiny national debt, and everything Congress wants to spend won't affect US Citizens?
Glad I'm not a betting man.

[Nukeman]

Sure thing Nukeman. It's not like I ordered him to do as I suggested. Glad you think it's stupid. Guess you know how the Economy, despite our tiny national debt, and everything Congress wants to spend won't affect US Citizens?
Glad I'm not a betting man.What the F are you talking about. You really don't like it when ANYONE disagrees with a freaking thing you post. You are pathetic at time you know that!!!!!!

Do you really have that difficult of a time ADMITTING you are wrong or maybe way off base sometimes. Geezus just give it a rest already asshat!!!!!!!!!!

[aboutime]

What the F are you talking about. You really don't like it when ANYONE disagrees with a freaking thing you post. You are pathetic at time you know that!!!!!!

Do you really have that difficult of a time ADMITTING you are wrong or maybe way off base sometimes. Geezus just give it a rest already asshat!!!!!!!!!!


Nukeman. Actually. THIS....5723 looks more like you, now that I stare at it more. Don't bother reading what I actually said. It might make you look dumber than you really are anyway.

[glockmail]

... Here's why your current mortgage is based upon the amount YOU borrowed, you still owe 15 years if you refinance you will set your payments to what is OWED still so for the next 15 years your payment will not only be lower because of the principal but the current rates compared to 15 years ago are phenomenal. You can save a lot of money..

Say for example you took a 250K mortgage 15 years ago at 7% interest.. your monthly payments are 1,663.22 each month now for 15 years you have already payed 300K back if you continue you will pay an additional 300K. At this point you will still owe 185k in principal (kind of pathetic don't you think)

Now if you refinance, which AT doesn't recommend, Your new payment based on remaining principal of 185K and a 3.5 % interest rate would be 1,323 that's is 300 dollars LESS for the whole 15 years, that my friend is a savings of 54k..

This is exactly right. And since I'm a CostCo Executive Member ($110/ year vs $55 for he regular membership) this is one of my perks. My origination fee, instead of being 1% of the loan value, is capped at $600 or less. Since my loan is for $180,000, instead of paying $1800, I'm only paying $600.

[Kathianne]

I certainly hope no one here is in my circumstances, which I'm not going into.

With that said, look at your current mortgage and pmi. Can you pay early? Can you pay ahead and reduce your costs? If so, think before re-fi.

If the re-fi is simply for the loan outstanding, what does it buy YOU in terms of interest and loan years? Again, can you prepay it or accelerate without penalty? Be careful here, most earlier loans allowed such, does the new one?

I was near 48 months ahead on my mortgage when RIFd. Part of the reason I'm still here, 3 years later. Don't want to be, but the bank really thought it was a 'good loan.' It was, 4 years ago.

[glockmail]

Actually, Nuke's calculations are slightly off. If your current balance is $185, you've got to figure closing costs of about $3k. That can be rolled into the new loan, so you will be borrowing $188k. But with a interest rate reduction from 7% to 3.5% it's still a no-brainer. You're going to save nearly $300/ month, which is a decent car loan.

[glockmail]

Smart consumers will look at refinancing cars too. Here's an example of what I did in early 2012:

When I bought a Jeep Grand Cherokee in January 2012 I was offered $1000 rebate or 1.9% financing up to 36 months. The monthly payment was just too high for me at the time. So the old adage, a bird in the hand is worth two in the bush prevailed, and I took the $1000, financed about $31k through the dealer's bank at 3.5% for 60 months. That was a lower rate than new mortgages at the time so it was still a fair deal.

But I was still paying $90/ month in interest.

Four months later, after my taxes were figured out and paid, I ended up not getting as screwed by GovCo as I had earlier figured, so I had about $10k available. My local credit union was offering refinancing deals for vehicles 2011 or newer with no fees. So I put the $10k into the car loan, getting the principle down to $20k and keep the payments about the same but for 36 months, obtaining their lowest new car loan rate of 2.25%. I then agreed to direct withdrawal from my checking account getting the interest rate down to 2%.

I'm now paying less than half the monthly interest that I was originally paying, and over the life of the loan I save about $1800.

Beware though. Some of these car refi deals are real scams. I've seen used car refi schemes where the fees are high and the interest rates are stupid high. As a general rule of thumb, if you are looking to extend the length of your loan, like from 48 months to 60, you're setting yourself up going to get screwed.

[Nukeman]

Nukeman. Actually. THIS....5723 looks more like you, now that I stare at it more. Don't bother reading what I actually said. It might make you look dumber than you really are anyway.Dude you make NO SENSE what so ever... Do you know how to get a point across without ALWAYS having to be RIGHT!!!!!!?????????? Sometimes you just need to know when to admit you are wrong or MOVE ON!!!!!!!!!! MORON!!

[jimnyc]

I'm completely oblivious to the numbers behind the scenes! I just know that in 1998 we put a sizable amount down on our home, with a 30 year payoff. I think our monthly payments, which includes insurance, is just shy of $3,000. It's affordable - but if we can save money over time, why not?

According to various sources (none in writing), our home value has about doubled, if not more, since our purchase. I'd like to sell and take advantage of that. Imagine if we wait another 15 and the value drops back down again?

Speaking of our money pit - the heating company just left - $853 to fix our heater. This is like the 4th time we have replaced the board, in addition to many other fixes, and that's not counting the endless issues to the hot water heater and AC either (all due to the flood/water issues).

I'm thinking a sizable condo would be nicer, where some other dummy foots the bill for all of these costs!

[Nukeman]

I'm completely oblivious to the numbers behind the scenes! I just know that in 1998 we put a sizable amount down on our home, with a 30 year payoff. I think our monthly payments, which includes insurance, is just shy of $3,000. It's affordable - but if we can save money over time, why not?

According to various sources (none in writing), our home value has about doubled, if not more, since our purchase. I'd like to sell and take advantage of that. Imagine if we wait another 15 and the value drops back down again?

Speaking of our money pit - the heating company just left - $853 to fix our heater. This is like the 4th time we have replaced the board, in addition to many other fixes, and that's not counting the endless issues to the hot water heater and AC either (all due to the flood/water issues).

I'm thinking a sizable condo would be nicer, where some other dummy foots the bill for all of these costs!Are you telling me they charged you $853.00 to replace the circuit board in your furnace?? Hell dude I will do it for that. I fixed my own and was able to baby it along for 4 years until I finally replaced the whole thing.. those circuit boards are only $200.00 and are pretty standard in the heating units... I take a digital pic of the board and how the connections are made, than I do one connection at a time to be sure I place them correctly..

[jimnyc]

Are you telling me they charged you $853.00 to replace the circuit board in your furnace?? Hell dude I will do it for that. I fixed my own and was able to baby it along for 4 years until I finally replaced the whole thing.. those circuit boards are only $200.00 and are pretty standard in the heating units... I take a digital pic of the board and how the connections are made, than I do one connection at a time to be sure I place them correctly..

Yep. I looked it up online and I could have gotten the board for between $240-275. It was 5 screws, one wire screwed down and 3 power type plugs. I don't understand heating, but even I could have popped that sucker in and out in short time. So basically I paid the guy like $600 or so to swap it. The rest was based on the service call itself, and the board and labor were separate. They don't show the actual price of the board on the receipt, and now I know why.

We have a leak in our AC unit it appears, from the problems over the years. The condensation that leaks apparently takes out the circuit board. Now we have to have them come back before next summer to service it. I think he said they would pour water into it somewhere and see where the leak is.

[fj1200]

I'm completely oblivious to the numbers behind the scenes! I just know that in 1998 we put a sizable amount down on our home, with a 30 year payoff. I think our monthly payments, which includes insurance, is just shy of $3,000. It's affordable - but if we can save money over time, why not?

According to various sources (none in writing), our home value has about doubled, if not more, since our purchase. I'd like to sell and take advantage of that. Imagine if we wait another 15 and the value drops back down again?

Speaking of our money pit - the heating company just left - $853 to fix our heater. This is like the 4th time we have replaced the board, in addition to many other fixes, and that's not counting the endless issues to the hot water heater and AC either (all due to the flood/water issues).

I'm thinking a sizable condo would be nicer, where some other dummy foots the bill for all of these costs!

Oh you're still footing the bill, you just don't have to write the actual check or deal with the issues directly. Of course one major problem with condos is that you don't have to worry about just one dummy, you need to worry about a building full. :slap:

If you do refinance, and it sounds like you'd do well to, just don't refinance out another 30 years and think that you've got all this new money to spend. Personal finance is largely behavioral so you may need to trick yourself into doing the right thing like going 15, or less, years. I wouldn't worry too much about your value dropping either because if it does then pretty much anything else has dropped right along with it.

http://www.jparsons.net/housingbubble/new_york.png

[jimnyc]

Oh you're still footing the bill, you just don't have to write the actual check or deal with the issues directly. Of course one major problem with condos is that you don't have to worry about just one dummy, you need to worry about a building full. :slap:

If you do refinance, and it sounds like you'd do well to, just don't refinance out another 30 years and think that you've got all this new money to spend. Personal finance is largely behavioral so you may need to trick yourself into doing the right thing like going 15, or less, years. I wouldn't worry too much about your value dropping either because if it does then pretty much anything else has dropped right along with it.

True, true. But it's still easier to write one check - and then not have to have non-stop worries about heat, AC, shoveling snow, cleaning gutters, how water heater & all the other glorious crap that comes with owning a home. And yeah, I know, the neighbors have to be factored in too. I'm not a peoples person, mostly, so having to deal with a building/complex full of assholes is a negative!

The woman would handle all contracts until it's time to sign my name. My financial behavior would have us losing our home within a month! :)

[glockmail]

Jim if you are paying that much and your current interest rates are as we expect, you're going to save a fricking bundle by refinancing, like $600 or $900/ month. Seriously dude, don't fuck this up.

I went to refi about 10-11 months and the market was a lot more volatile due to GovCo issues (I think it was the sequester) so I didn't do it. A month ago it was very volatile due to the shutdown. It should be stable for the next two months, the next budget fight is in January or so, so it's a good time to do a refi.

[jimnyc]

Jim if you are paying that much and your current interest rates are as we expect, you're going to save a fricking bundle by refinancing, like $600 or $900/ month. Seriously dude, don't fuck this up.

I went to refi about 10-11 months and the market was a lot more volatile due to GovCo issues (I think it was the sequester) so I didn't do it. A month ago it was very volatile due to the shutdown. It should be stable for the next two months, the next budget fight is in January or so, so it's a good time to do a refi.

I sent an email to my wife asking what our interest rate is and a few other questions and I'm waiting to hear back. Hell, if we saved $600 a month, that would save us over $100k? 600x12x15?

[glockmail]

Yup. When you start to multiply the numbers it gets pretty amazing. :laugh: