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Is mortgage refinancing worth looking into for me?
Posted on 9/6/19 at 1:28 pm
Posted on 9/6/19 at 1:28 pm
Situation - Wife and I moved and bought a house about a year ago. It was a complicated process, and ultimately I was the only one that went on the mortgage because of her credit score and at the time, no verifiable income as she was between jobs during the move.
We took whatever financing we could get, and our mortgage interest rate is 4.75% on a 30 year fixed. Our house is $200k and we have $172k outstanding on the mortgage. We pay $915/mo in P&I, and an additional $65 a month in PMI.
Fast forward a year, and we both now have verifiable income - combined of $115k. We have also improved the wife's credit score, and mine as well. It got me thinking that maybe with our two incomes and better credit scores - maybe we can get a better interest rate? So I looked into it, and am seeing refinance offers online at 3.5 - 3.75% and fees as low as $0 -$850. That seems to good to be true and some bait to get me in the door. We aren't struggling by any means to pay it, but some of these offers would lower our monthly payments by $100+ a month, and an extra $1,200 a year would be nice.
I have never refinanced a mortgage and don't know much about it. My initial thoughts, for whatever reasons, are that refinancing after only a year + not even having 20% down would make it difficult to make it worth the hassle. I don't know why I even think that, just seems like something that makes sense. In our situation, does it make sense to pursue some of these offers or are they fools gold and we will have a hard time saving any real money by refinancing?
We took whatever financing we could get, and our mortgage interest rate is 4.75% on a 30 year fixed. Our house is $200k and we have $172k outstanding on the mortgage. We pay $915/mo in P&I, and an additional $65 a month in PMI.
Fast forward a year, and we both now have verifiable income - combined of $115k. We have also improved the wife's credit score, and mine as well. It got me thinking that maybe with our two incomes and better credit scores - maybe we can get a better interest rate? So I looked into it, and am seeing refinance offers online at 3.5 - 3.75% and fees as low as $0 -$850. That seems to good to be true and some bait to get me in the door. We aren't struggling by any means to pay it, but some of these offers would lower our monthly payments by $100+ a month, and an extra $1,200 a year would be nice.
I have never refinanced a mortgage and don't know much about it. My initial thoughts, for whatever reasons, are that refinancing after only a year + not even having 20% down would make it difficult to make it worth the hassle. I don't know why I even think that, just seems like something that makes sense. In our situation, does it make sense to pursue some of these offers or are they fools gold and we will have a hard time saving any real money by refinancing?
8
Posted on 9/6/19 at 2:12 pm to Tigerfan56
My wife and I just locked in a rate of 3.625%. If you're going to be in the house for a long time then it probably makes sense to try and get a better rate. You'll have to look at what rate you can get and the monthly savings. If you'll be in the house long enough for that savings to pay for the fees for refinancing then I would do it.
Posted on 9/6/19 at 2:14 pm to Tigerfan56
Do you have enough capital to throw down and get 20% equity? If not, I’d try hard to save to get to that point within the next year or so then refi. I don’t believe rates are going to bounce back upwards that quickly.
Posted on 9/6/19 at 2:19 pm to Tigerfan56
I would wait until you have enough to put down (or enough equity) to get rid of the PMI. I don't think rates are going up significantly anytime soon so you have some time.
When you refinance, go to 15 year. You will have extra cash from no PMI and a lower rate so the payment will likely be what you are already paying out of pocket.
When you refinance, go to 15 year. You will have extra cash from no PMI and a lower rate so the payment will likely be what you are already paying out of pocket.
Posted on 9/6/19 at 3:05 pm to Tigerfan56
I would refi if I were you.
You can get in the low to mid 3’s right now and if your home appraised for 215ish, you may be able to drop the PMI
You can get in the low to mid 3’s right now and if your home appraised for 215ish, you may be able to drop the PMI
Posted on 9/6/19 at 11:58 pm to Tigerfan56
Depending on where you’re at, its possible your home may have appreciated some to where 20% equity could be closer than you think once a new appraisal is done. Then it would definitely be worth it if you could get rid of PMI and get 1% lower rate at the same time
Posted on 9/7/19 at 6:27 am to Tigerfan56
Call 3 or 4 local banks and see what they can offer you OP. Roll the cost of refinancing which will be $3,000 or so into the new loan. If you drop 1% in interest you will likely be saving money pretty quickly even with the additional cost of refinancing. As said your house may appraise for more also so you may be able to drop the PMI at the same time.
The only thing that matters is your closing costs and interest rate, most small banks sell your loan anyway.
The only thing that matters is your closing costs and interest rate, most small banks sell your loan anyway.
Posted on 9/9/19 at 2:52 pm to Tigerfan56
I'm at 4.625% 1 year into a 30 yr. 150K mortgage with no PMI. I have an additional 40K in a HELOC on the home. If I refinance, will the HELOC need to be paid off first? I assume it can't just be transferred behind the new mortgage.
Posted on 9/10/19 at 7:27 pm to Tigerfan56
quote:
We took whatever financing we could get, and our mortgage interest rate is 4.75% on a 30 year fixed. Our house is $200k and we have $172k outstanding on the mortgage. We pay $915/mo in P&I, and an additional $65 a month in PMI.
Try going to your existing lender and ask them to refi at the rates you are seeing. May tell you to pound salt, but I would still look into it with a new lender if so. If you are reducing your rate 1% or more I wouldn't worry about paying down to get rid of the PMI. If it has appreciated the PMI may be negotiable, or at a lower amount. Much rather cut the rate by 25% or more than sitting around waiting to see what rates do over the next 6 - 12 months. This assumes you plan to stay in the house 4 more years or greater.
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