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Rush2112 
LSU Fan
Asheville
Member since Mar 2008
752 posts
| Refinancing a mortgage and the alternatives (Posted on 10/4/12 at 10:19 am)
Let’s say that you owe roughly $80k two years into a 15 year mortgage at 6% and currently banks are offering 15 year mortgages at 3%. If I understand refinancing correctly, you would pay somewhere between $1k-$2k to refinance, but your mortgage would start over with the 3% rate so you are better off in the long run.
My question is what is stopping you from just going to another bank and asking for an $80k loan at the lower interest rate? You take the lump sum of cash, pay off your 6% interest mortgage, and you are in the same boat as the situation above owing the $80k at 3%, but you avoided paying the hefty refinance fee. Is there something I’m missing that won’t allow you to do this, or hidden fees somewhere?
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Glock17 
USA Fan
Member since Oct 2007
12164 posts
 Online
| re: Refinancing a mortgage and the alternatives (Posted on 10/4/12 at 11:01 am to Rush2112)
I doubt a bank would give you an 80K loan signature loan, and if they did the interest rate would be a lot higher.
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I Love Bama 
Alabama Fan
Alabama
Member since Nov 2007
27099 posts
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| re: Refinancing a mortgage and the alternatives (Posted on 10/4/12 at 11:11 am to Glock17)
Yep
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ds1tiger
LSU Fan
Closer than you think
Member since Apr 2006
203 posts
| re: Refinancing a mortgage and the alternatives (Posted on 10/4/12 at 11:58 am to Rush2112)
If you are securing the new loan with real estate, there will be costs involved no matter what. For that amount, you will be using real estate......unless you are an OT baller.
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foshizzle
LSU Fan
Member since Mar 2008
25118 posts
| re: Refinancing a mortgage and the alternatives (Posted on 10/4/12 at 12:54 pm to Rush2112)
quote:
what is stopping you from just going to another bank and asking for an $80k loan at the lower interest rate?
The fact that it's an unsecured loan, not backed by anything they can seize if you fall behind.
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ZereauxSum
LSU Fan
Atlanta, GA
Member since Nov 2008
5755 posts
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| re: Refinancing a mortgage and the alternatives (Posted on 10/4/12 at 12:55 pm to Rush2112)
quote:
mortgages at 3%
This is what you're missing.
As has been stated, the 15 year loan is still secured by real estate and will still cost money to originate. No way around that.
Your only way around this is to ask to have your closing costs rolled into the principle balance. No idea if anyone is doing this or not.
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foshizzle
LSU Fan
Member since Mar 2008
25118 posts
| re: Refinancing a mortgage and the alternatives (Posted on 10/4/12 at 1:26 pm to ZereauxSum)
quote:
Your only way around this is to ask to have your closing costs rolled into the principle balance. No idea if anyone is doing this or not.
I am about 2 weeks away from closing my refi and I am rolling everything into the principal. It's insane not to borrow as much as possible for as long as possible at these rates.
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Rush2112
LSU Fan
Asheville
Member since Mar 2008
752 posts
| re: Refinancing a mortgage and the alternatives (Posted on 10/4/12 at 1:44 pm to ZereauxSum)
Got it, that make sense. Knew that I was missing something.
Thanks for the help, all 
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