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Refinancing home from 30 to 15 years...advice appreciated
Posted on 6/29/15 at 8:18 am
Posted on 6/29/15 at 8:18 am
Come to you guys for a little advice. Have an FHA loan that I financed for 30 years in 2012 at 3.8. Local lender has penciled me in at 3.375 for 15 years. My previous note with PMI, Escrow, Insurance was $1385. It's a no brainer for me note basically goes up $50 per month and PMI is cut in half. My question to you is what is my leverage on the interest rate. Credit score is over 800, income is over 6 figures and debt to income in good. I'd prefer to do business locally but i'm not against shopping the rate with Quicken Loans...Have you guys had good luck with quicken and what are the odds of me getting this under 3% for 15 years?
Also, the fees on these home loans appraisel $400, credit report to funding suite $10.04, flood certification to corelogic $8, title services and lenders title insurance $1010, recording fee $275, processing fee $395, underwriting fee $595, close fee $114, closing protection letter $25, settlement or closing fee $250. Just making sure all these are legit fees?
Also, the fees on these home loans appraisel $400, credit report to funding suite $10.04, flood certification to corelogic $8, title services and lenders title insurance $1010, recording fee $275, processing fee $395, underwriting fee $595, close fee $114, closing protection letter $25, settlement or closing fee $250. Just making sure all these are legit fees?
This post was edited on 6/29/15 at 8:26 am
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Posted on 6/29/15 at 8:32 am to basiletiger
quote:
odds of me getting this under 3% for 15 years?
My credit union is 3% for a ten year. It might be a stretch to get a 15 year under 3% but shop around.
quote:
Also, the fees on these home loans appraisel $400, credit report to funding suite $10.04, flood certification to corelogic $8, title services and lenders title insurance $1010, recording fee $275, processing fee $395, underwriting fee $595, close fee $114, closing protection letter $25, settlement or closing fee $250. Just making sure all these are legit fees?
Those look legit.
Posted on 6/29/15 at 8:52 am to basiletiger
We refinanced with Quicken Loans, from our experience I would recommend them the entire process was very simple and they had the best rates at the time. They did much better on fee's as well.
Posted on 6/29/15 at 9:15 am to swanny297
quote:
Also, the fees on these home loans appraisel $400, credit report to funding suite $10.04, flood certification to corelogic $8, title services and lenders title insurance $1010, recording fee $275, processing fee $395, underwriting fee $595, close fee $114, closing protection letter $25, settlement or closing fee $250. Just making sure all these are legit fees?
Playing devil's advocate here: is the PMI on your loan permanent (as it is with some FHA loans) or can it be removed when you hit 20% equity? Because all of those fees total to a bit over $3,000....why not just direct that cash toward prepaying the existing loan, add a bit more per month, and in essence reduce the repayment term of years without the cost of refinancing?
I encourage you to look in detail at an amortization schedule on your present loan with additional payment (whether monthly or an annual lump sum) figure in....compare it to the new loan terms/amort schedule, plus the refinancing costs factored in. You may not be saving as much as you think, especially if you can get the PMI dropped from the loan.
Posted on 6/29/15 at 9:31 am to basiletiger
I got 2.875% on my refi a few months ago. Not sure if prices have gone up or not. I had 20% down though so if you don't have that down, your rate will likely be higher.
Posted on 6/29/15 at 9:32 am to hungryone
quote:
I encourage you to look in detail at an amortization schedule on your present loan with additional payment (whether monthly or an annual lump sum) figure in....compare it to the new loan terms/amort schedule, plus the refinancing costs factored in. You may not be saving as much as you think, especially if you can get the PMI dropped from the loan.
This is what everybody misses, so many people just look at the interest rate and monthly note... I converted my 30 year to a 15 year (in theory anyway) by just upping the monthly payment and while my interest rate is still higher I am saving all of the closing costs and getting the house payed off earlier while paying less fees and interest.....Play with the numbers and look at the big picture
Posted on 6/29/15 at 9:37 am to hungryone
The PMI can be removed when I hit 20% equity and I'm about $10,000 away from that position. PMI on the current loan is $160 per month.
Posted on 6/29/15 at 9:46 am to Tigerpaw123
quote:
This is what everybody misses, so many people just look at the interest rate and monthly note... I converted my 30 year to a 15 year (in theory anyway) by just upping the monthly payment and while my interest rate is still higher I am saving all of the closing costs and getting the house payed off earlier while paying less fees and interest.....Play with the numbers and look at the big picture
Exactly. You basically get a built in option so you can pay aggressively if you want, but go down to your lower payment if you ever need to.
Posted on 6/29/15 at 9:50 am to basiletiger
quote:
The PMI can be removed when I hit 20% equity and I'm about $10,000 away from that position. PMI on the current loan is $160 per month.
Ok, think about it this way: you'd spend $3K to refinance this loan. If you put the $3K toward the principal of your existing loan, you're only $7K from ditching PMI. Scrape together the remaining $7K, get PMI off that loan, and put the previous PMI $160 toward the principal. This equates to $1920/yr....which will put a pretty good dent in the number of years.
Take a look at bankrate's mortgage calculator: LINK If you click on the button "show amortization schedule" you will be able to add a supplemental monthly or annual payment. Run the numbers with your current loan plus the previous PMI amount, then run the numbers on the proposed new loan. The only way to determine if this is a good idea is to compare the actual values.
I wouldn't bother with a refi if you were planning to roll the $3K in loan costs into the new loan. You'll be paying too much for a rather limited rate reduction, and you'll still be carrying PMI. Keeping the 30 year loan gives you the flexibility of a lower minimum payment if you need it, yet you can still shovel cash onto the loan as your finances permit (which will reduce the length of time/term of years you spend in repayment).
Posted on 6/29/15 at 10:01 am to basiletiger
I think your better argument is to get rid of the PMI. Screw the FHA process, go with a conventional.
My community bank in Mississippi has 3.25% on 15 years, no PMI if you have 10% equity.
My community bank in Mississippi has 3.25% on 15 years, no PMI if you have 10% equity.
Posted on 6/29/15 at 10:11 am to anc
The re-finance is a conventional, I'm waiting on the local guy to get back with me on under 3% for 15 years. Thanks for all the input.
Posted on 6/29/15 at 10:21 am to Tigerpaw123
quote:
I encourage you to look in detail at an amortization schedule on your present loan with additional payment (whether monthly or an annual lump sum) figure in....compare it to the new loan terms/amort schedule, plus the refinancing costs factored in. You may not be saving as much as you think, especially if you can get the PMI dropped from the loan.
This is what everybody misses, so many people just look at the interest rate and monthly note... I converted my 30 year to a 15 year (in theory anyway) by just upping the monthly payment and while my interest rate is still higher I am saving all of the closing costs and getting the house payed off earlier while paying less fees and interest.....Play with the numbers and look at the big picture
Yes BUT, you need to add the same "extra" amounts to the amortization of the new loan (if amount exceeds premium savings amount by staying with current loan)
I personally think he should stay put, save up 10k and put it on his current loan (he said he has a 6 fig income). PM I drops off and his amortization is probably lowers 7 years.
Posted on 6/29/15 at 10:24 am to GeeOH
I would be wary of refinancing to 10/15 years. With interest rates this low, you can pay the 15 year rate and pay off like 9MO-1YR later.
Ya, that year sucks but the flipside is you get incredible financial flexibility.
Ya, that year sucks but the flipside is you get incredible financial flexibility.
Posted on 6/29/15 at 10:33 am to GenesChin
Why aren't yall just taking advantage of the free refi that the government is offering? You don't deal with closing costs, appraisals, etc.
Posted on 6/29/15 at 10:38 am to TJG210
quote:
free refi that the government is offering
Posted on 6/29/15 at 10:58 am to Tigerpaw123
quote:
This is what everybody misses, so many people just look at the interest rate and monthly note... I converted my 30 year to a 15 year (in theory anyway) by just upping the monthly payment and while my interest rate is still higher I am saving all of the closing costs and getting the house payed off earlier while paying less fees and interest.....Play with the numbers and look at the big picture
Exactly. I didn't refi till I cut my interest rate from 4.25 to 2.875. That was a big enough leap to make it worth wile to refi, otherwise just overpay to principal by a few hundred dollars a month.
Posted on 6/29/15 at 11:22 am to Armymann50
I refinanced through the harp program and didn't pay any of that. Unless your mortgage is over $650 I think you're eligible.
Posted on 6/29/15 at 11:47 am to basiletiger
I don't think this is a no-brainer at all. 3.8 is pretty good, and if you're deducting mortgage interest from your taxes your true rate is around 2.85%. Your 15 year note would have an after-tax rate of about 2.5%. Since the long-term inflation rate is about 2% you are paying extra to cut your real cost (i.e. after tax and inflation) from 0.85% to 0.5% - not much at all.
Honestly, with your current note I'd suggest just focusing on getting the equity up to 20% so you can quit paying PMI and leave it at that.
Honestly, with your current note I'd suggest just focusing on getting the equity up to 20% so you can quit paying PMI and leave it at that.
Posted on 6/29/15 at 6:52 pm to foshizzle
What about 5.25% with 24 years remaining of the original 30? Should I look at refi?
This post was edited on 6/29/15 at 6:53 pm
Posted on 6/29/15 at 9:17 pm to foshizzle
Thanks for input. I'm going sit with loan officer Tomorrow to weigh all options.
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