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Started By
Message
Currently at 3.75% for 30-year fixed - Should we try to refinance?
Posted on 10/18/16 at 12:45 pm
Posted on 10/18/16 at 12:45 pm
We are currently at 3.75% 30-year fixed on our home. The comps in the neighborhood for similar homes is around $800K and our principal remaining is around $460K. Just wondering if this is a good time to refinance? I did make a couple of quick calls to brokers and they came back with 3.625-3.75% for 30-year fixed, so isn't much different than our current rate.
At this point would it make sense for us to look at something like a 15 or 20 year fixed?
At this point would it make sense for us to look at something like a 15 or 20 year fixed?
6
Posted on 10/18/16 at 12:51 pm to saintforlife1
I don't know why you would spend closing costs to refinance if you can't get at least a point less on your rate.
Posted on 10/18/16 at 1:00 pm to saintforlife1
Are you wanting a cash out refi?
Posted on 10/18/16 at 1:12 pm to Chad504boy
quote:
Are you wanting a cash out refi?
No. Just want to refinance if a lower rate is available.
Posted on 10/18/16 at 1:19 pm to saintforlife1
quote:
Just want to refinance if a lower rate is available.
doesn't appear to be worth the hassle thus far. i'm thinking you should be able to get lower than what you've been quoted.
Posted on 10/18/16 at 1:22 pm to Chad504boy
quote:
doesn't appear to be worth the hassle thus far. i'm thinking you should be able to get lower than what you've been quoted.
Agreed. Both wife and I very good credit score (>800), so I am going to shop around some more.
Posted on 10/18/16 at 1:41 pm to saintforlife1
Refinancing on a jumbo loan >$417,000 at a rate lower than 3.75% on a thirty year is going to be tough to beat. Let alone beating it by enough to make it worth the closing costs of the refinance.
A 15 year jumbo you can maybe get it as low as 3%. Run a amortization table based on what the closing costs would look like and how long you plan to live in the house.
If it were me personally 3.75% rate for thirty years is pretty salty and I would be content with just keeping it and not going through the hastle of a refi.
A 15 year jumbo you can maybe get it as low as 3%. Run a amortization table based on what the closing costs would look like and how long you plan to live in the house.
If it were me personally 3.75% rate for thirty years is pretty salty and I would be content with just keeping it and not going through the hastle of a refi.
Posted on 10/18/16 at 8:22 pm to saintforlife1
Even without running the numbers in Excel (which I highly encourage) a refi doesn't look promising.
Keep in mind that paying a slightly higher rate for a longer time can be a good thing. Essentially you're paying "insurance" of sorts that rates won't rise a bunch between 15 and 30 years from now.
For example, if rates remain more or less constant for 15 years, and then inflation picks up and rates go up to 10%, suddenly owing 3.75% for 10-15 more years is looking very smart.
Having debt can be perfectly fine, the question is what return you get with the money you borrowed.
Keep in mind that paying a slightly higher rate for a longer time can be a good thing. Essentially you're paying "insurance" of sorts that rates won't rise a bunch between 15 and 30 years from now.
For example, if rates remain more or less constant for 15 years, and then inflation picks up and rates go up to 10%, suddenly owing 3.75% for 10-15 more years is looking very smart.
Having debt can be perfectly fine, the question is what return you get with the money you borrowed.
Posted on 10/18/16 at 8:28 pm to saintforlife1
If it were me and I liked the idea of paying the mortgage off sooner I would just add $300 or so a month on your current loan rather than refi and pay all of those closing costs for such a small decrease in rate.
Posted on 10/18/16 at 8:58 pm to foshizzle
That's an interesting thought. But if he pays off in 15 and rates have risen substantially, won't he be in a position to invest the money he would be paying toward the 30 year? And be debt free?
Posted on 10/18/16 at 9:58 pm to dirtsandwich
quote:
But if he pays off in 15 and rates have risen substantially, won't he be in a position to invest the money he would be paying toward the 30 year? And be debt free?
No, because he spent all that money paying off principal when interest was low instead of keeping it to himself, paying a low rate to do so.
When you prepay a 30 year note charging 3.5% interest, you are effectively investing in a 30 year bond that pays 3.5%. If you can deduct interest on your taxes, then that bond pays even less. Don't forget that you have to beat the expected 30 year inflation rate for it to make sense.
It always tickles me that some (not all) of the people who forecast skyrocketing inflation aren't borrowing as much as they can today while rates are low.
Posted on 10/19/16 at 6:54 am to foshizzle
quote:
No, because he spent all that money paying off principal when interest was low instead of keeping it to himself, paying a low rate to do so.
When you prepay a 30 year note charging 3.5% interest, you are effectively investing in a 30 year bond that pays 3.5%. If you can deduct interest on your taxes, then that bond pays even less. Don't forget that you have to beat the expected 30 year inflation rate for it to make sense.
It always tickles me that some (not all) of the people who forecast skyrocketing inflation aren't borrowing as much as they can today while rates are low.
You should have heard my convo with a client who is a Ramsey disciple the other day. Literally almost fired me until her bff lender was in unicen with my advice.
Posted on 10/19/16 at 8:58 am to saintforlife1
quote:
saintforlife1
quote:
At this point would it make sense for us to look at something like a 15 or 20 year fixed?
Advice: Take your monthly total payment (PITI-Principal, Interest, Taxes & Insurance) and divide it by 12. Take the # that comes out to, and then add that to every payment from here on out, and ensure that it's applied to the principal balance only.
You should cut your term down in a major, major way, and save yourself a ton of interest in the process.
JMO, stay where you are and don't cost yourself the closing costs of the loan. Shifting to a shorter term locks you into a higher monthly obligation. As opposed to the principal only suggestion I've made, if you ever-God forbid-run into income-related stress, you can switch back to your normal, 30-year obligation amount.
In other words, if something were to happen to create income stress after you refi, the payment is inflexible. it is what it is. If that something happens and you're utilizing principal only payments, you have the flexibility to reduce your payment amount back to what it already is, which reduces the strain on your monthly income amount.
Just my $0.02...but stay where you are.
Posted on 10/19/16 at 9:59 am to GFunk
no to highjack thread, but I was talking with loan officer also about refinance.
owe 300k on a fixed 30 yr at 4.875% (23 yrs left come February)
appraisal should be about 385K
would like a 15 yr fixed.
they came back with 3.125% APR and 3100 for closing and note would increase by 250/month which isn't a problem.
my question is, would I be better off saving the 3100 closing and just adding 200/month to principal on the 30 year loan? How would that compare timewise in paying off to a refinance at 15 years they quoted above?
thanks
owe 300k on a fixed 30 yr at 4.875% (23 yrs left come February)
appraisal should be about 385K
would like a 15 yr fixed.
they came back with 3.125% APR and 3100 for closing and note would increase by 250/month which isn't a problem.
my question is, would I be better off saving the 3100 closing and just adding 200/month to principal on the 30 year loan? How would that compare timewise in paying off to a refinance at 15 years they quoted above?
thanks
Posted on 10/19/16 at 2:53 pm to GFunk
quote:How do you ensure anything above minimum payment goes to principal only? Just by making the higher payment or does something need to be arranged with lender?
ensure that it's applied to the principal balance only.
Posted on 10/19/16 at 4:40 pm to jdani11
quote:
owe 300k on a fixed 30 yr at 4.875% (23 yrs left come February)
You should definitely refi this if you are planning on owning the property for at least the next 18 months.
Ask about a 20 yr. loan if the 250 a month will affect your monthly budget more than you would like. Our rates right now for a 20 yr. are running at ~3.25/ 3.375%.
You will save more hastle money and time by just doing a refi at your current rate of 4.875%. Totally worth the closing costs in your situation.
Posted on 10/19/16 at 6:29 pm to saintforlife1
quote:
No. Just want to refinance if a lower rate is available.
You owe enough that a half point might make it worth your while. But, you'll probably have to get into a 15 to get that based on what you said.
You know what a 15-year note on $500k at 3 1/4, for example would be? $3500.
Posted on 10/19/16 at 6:31 pm to foshizzle
quote:
When you prepay a 30 year note charging 3.5% interest, you are effectively investing in a 30 year bond that pays 3.5%.
Only if you value housing at $0. Everyone has to have housing. As a pure investment? Of course your logic is unassailable.
As an investment AND housing for yourself? It is a little more complex than that.
Posted on 10/19/16 at 7:39 pm to Ace Midnight
PenFed had 3.375% 30 yr fixed with no points
Posted on 10/19/16 at 7:56 pm to jdani11
quote:
jdani11
Refi all day brah.
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