Posted by
Bossier City
Member since Sep 2013
517 posts

Experts of Money Talk, teach me about refinancing my home
First time home owner here. Bought the home last year. It was a HUD Repo that is in a good neighborhood and I will end up making money on it when my wife and I sell it down the road. We put around $35k ($25k from the loan and around $10k of my personal savings) in the home to fix it up as it was in pretty bad shape when we purchased it. I have a few questions about refinancing.

First, when is the right time to refinance? We have around $103k left that we owe on the home as of right now.

Second, we were able to make some major improvements with the money we had. However, we weren't able to get everything done that we wanted, like our master bath, and decided to wait until later to get those things done. With that being said, if we refinance could we add in funds to have some more improvements made on the house?

Lastly, since my mortgage payment is still through my personal bank, should I look to move the loan to a mortgage company or some other lender? And who would be some companies, banks, etc. to look at when considering my refinancing options?

Kentucky Fan
Member since Aug 2017
147 posts

re: Experts of Money Talk, teach me about refinancing my home
Will your interest rate be lower? Significantly lower? Will you knock years off the term of the loan?

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Member since Oct 2009
830 posts

re: Experts of Money Talk, teach me about refinancing my home
Refinancing is smart when you are moving to a lower interest rate.

I don't know your exact scenario, but If you purchased last year, you most likely will have a higher interest rate now plus fees from a refinance since the federal interest rate is higher this year than last.

Maybe you are more interested in taking a heloc against the equity you have in your home in order to upgrade the bathroom?

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Georgia Fan
East GA
Member since Nov 2014
1545 posts

re: Experts of Money Talk, teach me about refinancing my home
Also, remember you'll have to pay closing costs again

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Alabama Fan
Member since Dec 2012
1339 posts

re: Experts of Money Talk, teach me about refinancing my home
talk to your bank about heloc. much cheaper to obtain.

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Auburn Fan
Member since Feb 2016
7325 posts

re: Experts of Money Talk, teach me about refinancing my home
Mortgages under $100k or close are more expensive FYI then a $150k plus mortgage. The bank doesn't make as much money and they are often higher risk.

A refinance will cost you at least $2500 if not closer to $4000.

What is your current rate?

Look into a HELOC as said, it would be basically a "2nd" mortgage. But you can often times close a HELOC for free or almost free (just the cost of an appraisal), they are still tax deductible, and the rates are often better. YOu can find Heloc rates for as little as 1.99% occasionally. For something like a $10-20k repair/ remodel, a HELOC would be a lot cheaper then a refinance.

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out here in the middle
Member since Aug 2005
7128 posts

re: Experts of Money Talk, teach me about refinancing my home
I agree with others that a HELOC would be good for your purpose. Closing costs are lower, you withdraw the specific amount of money you need, pay interest on that amount only, and the interest is tax-deductible.

when is the right time to refinance
If your intent is to save on the total amount of money you pay in interest over the life of the loan, then you should only refinance when you can get a low enough rate that will cover your closing costs and provide a significant amount of savings. Just because published rates are lower than your current mortgage rate doesn't automatically mean you should run out and refinance. Some people may refinance to get a lower monthly payment, or to get a large lump sum of cash. Depending on their specific needs, the new rate may be insignificant.

Your local bank can refinance the loan for you, you don't have to go elsewhere. Online mortgage lenders may offer better rates, terms, or closing costs, but that is not always true. Shop around, sometimes the local bank can be very competitive. Also, with a local bank you will have a physical location to walk into and speak to someone face-to-face if the need arises. For some, that's worth paying a little extra. For others, they strictly want the lowest rate and lowest closing costs.

Denham Springs
Member since Feb 2011
13847 posts

re: Experts of Money Talk, teach me about refinancing my home
Find a mortgage broker. Ask your friends and coworkers. Do NOT feel obligated to go with any of them. Reach out to several and ask to have coffee or meet over lunch.

When you meet, explain your situation. Tell him you’re living in a home you just bought and that you view it as an owner occupied investment property long term in a sense. If you have your old closing disclosures form, that would be helpful.

Explain to him what you want compared to what you have, and make sure they understand your long term goals as the owner and future seller of the home. Also explain to him he’s just one of a few convos you’ll have with them.

Don’t pigeonhole yourself by zeroing in on a HELOC, or a single bank that’s only lends money. An experienced, open minded broker should recommend a solution but offer multiple options.

Choose the person who does the best job of educating you about the parts of the process you don’t know. Don’t expect them to quote a rate or totals of closing costs on the first meeting. It’s a process.

But you need to find someone you can work with long-term. You’re looking at makin a grand total of 3 separate mortgage-related transactions on your house and you’ll at some point be moving on which is at least one more. You need a partner to help walk you through this stuff long term.

Find someone you trust and go with them.

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