Home refinancing - do I need to pay a downpayment?

They should be able to wrap the closing costs into the mortgage so you don't have to come out of pocket. That's what we did.

You're going to have closing costs. So ask the mortgage guy what rate you'll get if you pay them out of pocket and run the numbers. You might save on the rate a little but it all depends.

ETA you asked if you need a downpayment. I told you you didn't have to have one they could roll it into the mortgage. I'm just trying to help bruh.

I gotcha.

I'm going to be going from 30 year to 15 year so my note will go up just with that alone. My plan is to still pay extra on top of that increase but I don't want to see how high I can make my monthly note.

I understand the benefits of rolling the closing costs and downpayment into the mortgage I just don't think it's something I want to do.

Why do you want to pay off your mortgage in 7 years?

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Why do you want to pay off your mortgage in 7 years?

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Why wouldn't I want to pay off my mortgage in 7 years?

Doing so will give me a $1,235 a month raise just in time for my children to be entering middle school. That's a whole lot of time and money to save for college, retirement, etc..

I know, I know... I can get a better return in the market that my interest rate is now but there's something to be said about being debt free. There's even more to be said about being mortgage-free by the time I'm 36 years old. It's a mentality that I want to achieve. I want freedom.

Poppa Dave told him to.

Unless you're lowering the interest rate by 1.5% or more AND you plan to stay in the home for years, you may simply be better served by paying off the existing loan more aggressively. Go look for loan calculators at Bankrate.com and put in all of your present loan's particulars. The calculator will allow you to run scenarios like adding extra $X per month, a lump sum per year, etc. You can see the full amortization schedule, then compare those details with a refinanced loan's numbers. LINK Click on the "show amortization schedule" to see the additional payment calculator options.

Unless you're reducing the interest rate significantly, you may be able to achieve your goal of early payoff without the cost & bother of a re-fi. (assuming your loan has no stupid prepayment penalties)

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Really? So if I have at least 20% equity I could get away with not having to pay a down payment?

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You are getting confused.

A "down payment" is simply the difference between the value of the home and the amount you are borrowing. Lenders won't lend you more than a certain percentage of the value of the home. So let's say your current loan balance is $180,000 and the house is worth $200,000. If you keep your loan balance the same, that's 90 percent. If your lender will refinance you at 90 percent, then no, you don't need a "down payment".

However, refinances are not free. There are certain costs that the bank will charge you. You generally have two options. One, you can pay them out in cash now. Two, they can roll the costs into your loan, which will make your balance slightly larger, AND will charge you a slightly higher interest rate. But you don't have to pay any cash up front.

If you are planning on staying in that house long enough to pay it off, your best bet probably is to pay the costs outright.

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LSUFanHouston

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You are getting confused.

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I agree. He is confusing "out of pocket" with "down payment". Since you are refinancing, your "down payment" will be the equity you currently have in your home.

As was stated earlier, refinancing costs money so you are either going to out of pocket for those fees or roll them into your new loan. It really is just that simple.