Refinancing

[Southern28Chick]

Quote:
Think about the term too. Are you starting over at a thirty year mortgage? DO NOT go for the forty or fifty year terms. Depending on how far along you are, starting over is not such a good idea unless you are really dropping your interest rate. The one time I re-financed, I dropped my rate over 2%, and was not quite 14 years into my 30 year term. We ended up selling the house anyway two years later for a profit. Then we started over on the new house with a 30 year at 5.5%, and as soon as Daddy's little princess is out on her own, we start making double payments.

We've been in the house for 2 years starting with a 30 year fixed rate at 6.5%. Now we're refinancing with a new 30 year fixed rate at 5.5%.

 

[FutureChickenMan]

Sometimes refinancing for 1% isn't worth it. You have to consider that although your payments per month may be lower, but you're adding x number of years to your loan. In other words, you might have 25 years to continue paying now, but unless you refi to the same term length, you're adding 5 years to your loan to save 1% of interest. Not worth it in my opinion. It'd be better to see where you can cut back in other things to get that difference of 1%.

Also, if you have PMI you should check your loan documentation and see if you can get your PMI taken off by other means than refi. Typically PMI adds about $100/month to your loan. If you can get the PMI taken off with a couple of phone calls without going through a refi, that would be the best way to do it.

 

[Galaxie_Man]

Quote:
Think about the term too. Are you starting over at a thirty year mortgage? DO NOT go for the forty or fifty year terms. Depending on how far along you are, starting over is not such a good idea unless you are really dropping your interest rate. The one time I re-financed, I dropped my rate over 2%, and was not quite 14 years into my 30 year term. We ended up selling the house anyway two years later for a profit. Then we started over on the new house with a 30 year at 5.5%, and as soon as Daddy's little princess is out on her own, we start making double payments.

We've been in the house for 2 years starting with a 30 year fixed rate at 6.5%. Now we're refinancing with a new 30 year fixed rate at 5.5%.

OK....so a new 30 yr term is no big deal, you're only 2 years in. The longer you stay in your house after the re-fi, the more you'll benefit.

NOTE: I'm no financial guru. I only play one on-line.

 

[mom'sfolly]

If I understand your post when you refiance and roll closing costs into the new mortgage, the amount you owe becomes more than the home is worth. If this is correct, this is a bad idea. You want to be building equity so you can get that 20 acre place. Your two years worth of equity is probably not be much but owing more than the house is worth can spell disaster. If something should happen, an illness, divorce, death, family issues, job loss, whatever, the only way to get out of your loan would be to declare bankrupcy. I'd hate to have that happen. It's like the market dropping, if you owe more than the house is worth. The market dropped on us, and we lost 30% on our first home. Luckily we were offered a 0 interest loan from my dh work to help cover the cost, but my neighbor was not so lucky. He was laid off and faced with a major illness so he just defaulted on his mortgage. No credit for a long time.

I don't think the extra 1% is worth it. JMHO

Karen

 

[Southern28Chick]

This is the way I've figured it. We do want to buy 20 acres in the future BUT that can be 10 years in the future.

Our property value has already gone up in the 2 years that we've lived here, I can tell because our property tax went up. We have a lot of transplants moving here and with them is more shopping, a country club and million dollar subdivisions and my property is right in the heart of that.

If we refinance now we get a refund on our escrow balance from our other mortgage company and we don't have to pay the new company anything until February 1st. So we get to save 2 months of payments. I guess that is kinda like borrowing on the new loan...IDK.

With this refinancing we'll save an estimated $615 a year. We could use that!

 

[FutureChickenMan]

So you're going to save about $50/month by doing a refi, but you'll be adding 2 more years to your payment life.

Is there any other way to squeeze $50/month out of your lifestyle?

Skip a dinner out once a month? Get cheaper internet service? Carpool? Change to compact flourescent lights? Turn the thermostat down?

 

[mdbucks]

Quote:
Be careful, by not paying anything for two months you will be adding to your amount financed, because you start paying interest as soon as you sign on the dotted line, so even though you make no payment for 2 months, the interest that accrues will actually make your principle rise because 2 months have gone by with nothing being applied to principle.

 

[Southern28Chick]

I'm cutting back everything I can.

Monthly
Cable: $60
Phone line (I only use it for faxes): $40
Mortgage payment: $50 (estimated, it may be more)
Loan payment (will be paid off with $ saved with no mortgage payment for 2 months): $100.00
That's $250 saved a month

Then I have credit cards to pay off, once I get them down I'll be able to save a TON of money.

My car will be paid off October 2008 so that'll save $275 a month

I'm going to change car insurance soon too.

I figure since we will be in this house for a very long time to come then refinancing isn't such a bad idea.

 

[TxChiknRanchers]

I am not a big fan of refinancing if you are going to gain 1% on your rate. The closing costs and the added years will in the long run hurt you IMHO. If your need to lower your payments is critical, then you mat not have a choice. That being said, You may save a little monthly but in the long run you will be paying longer.

I recommend seeking a financial for advisor on this, after all, all you know about most of us is that we have access to a computer on line !

Wish you luck with your decision, Randy

 

[Southern28Chick]

Thanks y'all. I do believe I'm going to refinance. I've know a lot of people who have and they we're fine.

If I live in this house for another 10 years then the refinancing won't be a big deal at all. Especially since I live in "relocation world" where EVERYONE in the country/planet is moving to my neck of the woods and increasing everyone's property value. Even though they don't realize that in trying to escape high taxes, they're moving here is increasing the taxes.

Whatever.

Isn't that funny. Move here thinking you're getting a better deal on property BUT your moving here is increasing the cost of properties and raising taxes. It's a crazy cycle.

Word to the wise...don't move to NC. The property value is shooting throught the roof, taxes are getting higher and higher, people are foreclosing left and right AND we're running out of drinking water!

What is happening to my once beautiful, peaceful state?!