Home refinance advice

[dotman]

I've got a fixed rate of 5.5 over 30 years. Was thinking of refinance at the 4+ rates i'm seeing for 15 years. Is this a good idea? where the heck do I start getting quotes. And what fees should I be aware/suspicious of?

.dot

[clay]

how long are you planning to be in your home?

what's your cash flow like? Some people believe strongly that it's better to stay in a 30-year mortgage and pay it off on an accelerated schedule rather than refinancing to a shorter term. It gives you flexibility to fall back to the default 30 year payment schedule if you'd ever experience a change in financial ability to pay (job loss, other unanticipated expense).

I was lucky enough to refinance into a 4.5% 30 year last spring and we're paying it off as quickly as we can, but we have the flexibility to slow down our pre-payment if my wife quits her job to stay at home and have kids, or if I decide to quit my job for whatever reason.

[dotman]

interesting thought clay. obviously i can't tell what the future will bring, but it's really the only debt I hold, and i want it gone asap. i may contact some local banks. just really interested in seeing what people are doing in this economy.

.dot

[3d]

If you have any cash saved up for a rainy day chip into that principal balance as much as you can before you refinance.

If your current mortgage is with TDBank, they have something called "mortgage modification". The term of the mortgage does not change. The interest rate is adjusted and payments recalculated. I think it cost one point. Not 100% sure. Not all banks offer this.

[mattkime]

i think you just need to get some quotes. there would be more to discuss if you had numbers.

[Black]

dotman wrote:
I've got a fixed rate of 5.5 over 30 years. Was thinking of refinance at the 4+ rates i'm seeing for 15 years. Is this a good idea? where the heck do I start getting quotes. And what fees should I be aware/suspicious of?

.dot

How much is your mortgage relative to the current value of your home?

If you have less than 80% LTV it may be tough..

Do you know a realtor that can do a market assessment and give you a rough estimate?

[dotman]

Yep black, I need to get a current assesment. hope it's now underwater. the neighborhood is desirable, but i'm of course seeing more homes on the market than i ever did before the bubble burst in 08.

i love my location, and got a good price considering the time i bought it. but i HATE debt.

and 3d, I do have some cash reserves. In fact I was throwing money at principal until i heard that wasn't such a good idea. better to have cash on hand. well we'll see what happens.

.dot

[3d]

dotman wrote:
...and 3d, I do have some cash reserves. In fact I was throwing money at principal until i heard that wasn't such a good idea. better to have cash on hand. well we'll see what happens.

.dot

It's a bit of a waste to make extra payments on an existing mortgage because those extra payments get applied to the BACK END of the mortgage where the amortized interest payments are minimal. On the other hand it is highly benefitial to pay off as much principle as possible before you refinance and payments are recalculated.

[davester]

That's what we did. I think it's a no-brainer if you'll keep your house for at least a few years and you can swing the higher payment. Bear in mind that since your interest rate will go down and your principal payments will go up that you'll have a little less to deduct from your taxes.

You should only take a loan with fees or points if you're buying. For a refinance you should ONLY look at no fee no point loans since none of those fees are deductible. Most lenders will likely require you to pay an upfront refundable deposit though, usually around $300. Shop around. I'd suggest checking with Provident Funding* and if you're in No Cal check Fremont Bank (currently 4.25% http://www.fremontbank.com/personal/loan.../index.asp ). After checking the banks and regular mortgage companies (remember, NO FEE loans only), be sure to check with a mortgage broker. They might come up with a better rate than you can find.

*Note that on Provident Funding you can approximate a no fee loan by looking at the loan with one increment of negative points beyond the zero point loan on this calculator https://www.provident.com/Origination/In...sCalc.aspx .

[davester]

3d wrote:
It's a bit of a waste to make extra payments on an existing mortgage because those extra payments get applied to the BACK END of the mortgage where the amortized interest payments are minimal. On the other hand it is highly benefitial to pay off as much principle as possible before you refinance and payments are recalculated.

Exactly. Also note that the bank collects the interest on those extra payments, not you. Better to put the extra payment money in a dedicated account from which you can buy a CD every now and then and collect the interest yourself.