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Refinancing a mortgage and the alternatives
Posted on 10/4/12 at 10:19 am
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?
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?
4
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.
Posted on 10/4/12 at 11:11 am to Glock17
Yep
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.
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.
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.
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.
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
Thanks for the help, all
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