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Refinance or keep waiting??

Old 10-21-2010, 07:52 AM
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Default Refinance or keep waiting??

I want to refinance my 30 year (6%) mortgage to another 30 year at a lower rate. Not to lower my payment, but to lower the term. If I maintain the payment I'm making now AND make a payment the first month where there isn't a payment after a refinance, that 30 year mortgage will be down to around 20 years. Cutting 6 years off my current term.
Do you guys think rates are at their lowest now or will they go down some more? I DEFINITELY want to do it this year to get get a nice refund in the spring .

Thanks!
Old 10-21-2010, 08:01 AM
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Why not just look at a 15 or 20 year mortgage? Usually the rates are lower than for 30 year mortgages.
Old 10-21-2010, 08:07 AM
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A 20 year has pretty much the same rate and I can't quite afford a 15 at the time. We pay $420/WEEK for daycare.
If it wasn't for the daycare, I would no doubt go with a 15 year.

I also figure should something happen with our jobs (knock on wood) we have a little cushion with being able to save a few hundred dollars a month by dropping back to a regular payment.
Old 10-21-2010, 08:34 AM
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Buddy just re-financed and the origination fees were astronomical! Like $6800!
Take in to account all of your costs to re-finance and what you would be saving over your present mortgage. Remember, you will re-setting the clock so to speak. May be better off doubling up a couple of times a year or asking your present mort. company if they will accept bi-weekly payments. This will reduce your term substantially.
Old 10-21-2010, 08:34 AM
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Don't expect to see them go any lower they are getting the money for little to nothing and have to make a profit so we wind up with the present rate.
Old 10-21-2010, 08:41 AM
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I'm refinancing with my current mortgage holder and the fees aren't bad at all. $1600 plus escrow. No lawyers, appraisals, income verification, etc. Just meet at the bank and resign the loan.
Old 10-21-2010, 08:43 AM
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If you still have close to 30 years left on your mortgage and if you can refinance without significant fees, then you should definitely refi. They aren't going to go much lower. Once you refi, your payments will be lower. Take the change in monthly payment amount and apply it to the principal or even raise it $100, plus make an extra payment towards principal whenever you can. If you find yourself in a tight spot, you can immediately throttle back to the actual required monthly amount.

There is more risk in refi to a 20 than refi to a 30 and make extra payments. The advantage of the 20 is that SOMETIMES you can get a better rate than you can at 30. If the rates are similar, there is no benefit in the 20, only increased risk. Since you went with a fixed to begin with, you are obviously adverse to risk.
Old 10-21-2010, 08:43 AM
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Originally Posted by paulyjsob View Post
A 20 year has pretty much the same rate and I can't quite afford a 15 at the time. We pay $420/WEEK for daycare.
If it wasn't for the daycare, I would no doubt go with a 15 year.

I also figure should something happen with our jobs (knock on wood) we have a little cushion with being able to save a few hundred dollars a month by dropping back to a regular payment.
When rates hit their all time lows 3 yrs ago I refinanced with a 20 year mortgage and will save over $100k over the life of the loan but the monthly mortgage note was less than $50 difference but my rate dropped over 2%.

When shopping around I did notice that some lenders had the 20 year mortgage rate pegged to the 30 year rate and some had it pegged to the 15 year rate and some let it float so it pays to shop around.
Old 10-21-2010, 09:03 AM
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I'm refi-ing now. Was going to go to a 15 at a lower rate and like you, went with a 30 at a slightly higher rate. I'm essentially buying "insurance" of being able to have a lower payment if needed one day. Until then I'll pay it on a 15 year am.

Rates may go lower, but figured it still cheap money now and I just want to get it done and figure low 4's for 30 is cheap money any way you look at it.
Old 10-21-2010, 09:09 AM
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I re-financed last year to a 15. My interest dropped so much that my payment only went up around $70/month and I got rid of around 10 years of mortgage payments.

It was the best thing we ever did.
Old 10-21-2010, 10:15 AM
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Originally Posted by paulyjsob View Post
If I maintain the payment I'm making now AND make a payment the first month where there isn't a payment after a refinance, that 30 year mortgage will be down to around 20 years. Cutting 6 years off my current term.
Making 1 extra payment in 30 years is not going to significantly affect the mortgage

If you make 1 extra payment a year it will cut the term to about 20 years. 26 bi-weekly payments is the way it is commonly done.
Old 10-21-2010, 10:22 AM
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I'll be adding $270 monthly to the new mortgage.
That's what will knock most of the time off the 30 year.
Old 10-21-2010, 11:11 AM
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You should be able to refinance into a 30 year fixed mortgage for 4.125% with no origination fees today. Assuming you have 20% equity in the home and 720+ credit score. I don't see rates getting much lower, after all the banks have to earn interest on the money they lend. Rates always go up faster than they go down, so if you are happy with the rate you get today go with it before it gets worse.
Old 10-21-2010, 11:18 AM
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First off, how many kids is $420 a WEEK?

Second, we went from a 30 year @ 5.75 to a 15 @ 4.375 this time last year. Now you can get 3.95 for a 15 year.

I would HIGHLY recommend you find a way to get on the 15 year train. In your case, you would be cutting your interest payment almost in HALF!

We just enrolled our son in "academic enrichment" (friggin pre-school), and live in North Jersey... so I know what all the different programs cost.

Post up (or PM) more info.

Pete
Old 10-21-2010, 11:32 AM
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Calculate what paying the higher interest is costing you every month compared to today's rates. Rates may be at a bottom, may go a bit lower, may drift up - all this is a guess. The cost of waiting is real. How much do you want to spend to see if rates drop a little?
Old 10-21-2010, 11:43 AM
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I have a 2 and a 4 year old. Seriously though. That daycare bill is almost the same as my current mortgage! It'll ease up in Sept 2011 because my daughter will be off to kindergarten. It'll be down to around $260/week for both then.
For this next year I don't want to over do it with a 15 year mortgage. I'd rather have the cushion of the 30 year with the extra monthly payments. I figure next fall when day care bills are smaller, I can throw more at the mortgage. My main goal is to have the house paid off in 14 years when my daughter is off to college.
Old 10-21-2010, 11:50 AM
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Originally Posted by paulyjsob View Post
I have a 2 and a 4 year old. Seriously though. That daycare bill is almost the same as my current mortgage! It'll ease up in Sept 2011 because my daughter will be off to kindergarten. It'll be down to around $260/week for both then.
For this next year I don't want to over do it with a 15 year mortgage. I'd rather have the cushion of the 30 year with the extra monthly payments. I figure next fall when day care bills are smaller, I can throw more at the mortgage. My main goal is to have the house paid off in 14 years when my daughter is off to college.

I would refinance now for 30 years like you said. I wouldn't stress about getting it paid off quickly 4.25% plus the tax benefit your are getting pretty close to free money. I think you would be better off investing the money vs. paying your loan down faster. You should be able to find a return greater than you effective rate of your loan.
Old 10-21-2010, 11:59 AM
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Wells Fargo just did mine FREE!!! In fact they called me.Lowered interest from 6.1 to 4.3 with no out of pocket expense to me at all and they are mailing me the papers to sign and get notarized,that is it!!
Old 10-21-2010, 12:34 PM
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Wow. Great deal! Unfortunately, I don't qualify for those crazy low loans because I do not have 20% equity. I have around 15%. The best I can get is around 4.875 (0 points).
Old 10-21-2010, 08:45 PM
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I just refinanced from a 6.75% fixed rate to, 3.875%. It lowered our payment by almost $200/month. I don't think you should wait any longer. By the time the bank gets financing done, a title search, etc. it will take a couple of weeks. Make sure you tell the bank that if the rate goes down during this process that you will be able to take advantage of the lower rate. Also if the rate goes up during this process tell them to make sure your rate won't go up because you are waiting for them to finish the paperwork.

Russ

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