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Tigerfan56
LSU Fan
Member since May 2010
7679 posts

Is mortgage refinancing worth looking into for me?
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?


Phate
New Orleans Saints Fan
Baton Rouge
Member since Mar 2006
11205 posts

re: Is mortgage refinancing worth looking into for me?
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.


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Shepherd88
Member since Dec 2013
2690 posts

re: Is mortgage refinancing worth looking into for me?
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.


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71
BamaAlum02
Alabama Fan
Huntsville, AL
Member since Nov 2005
496 posts

re: Is mortgage refinancing worth looking into for me?
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.


GatorReb
USA Fan
Dallas GA
Member since Feb 2009
7716 posts

re: Is mortgage refinancing worth looking into for me?
quote:

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.


I just refinanced and was in pretty much the same position of the OP.

Bought my house last year had 4.7 over 30 years. Closed on refi last month. Got down to 3.6 over 29. They ditched the PMI. (and im not at 20% equity)

Saving me $150 a month. Cashed out $1500 through closing. And didnt have a September mortgage payment.

OP just ask your mortgage provider or whoever to run the numbers. See if they add up and make sense for you. My house is at least a 10 year home for us if not longer (planned at least) and getting ahead on our actual mortgage due to closing cost and such will take 4.5 years. So if we were to move next year then it would have cost us money. But anytime after 4.5 years and it was the right choice.


hottub
Florida State Fan
Member since Dec 2012
933 posts

re: Is mortgage refinancing worth looking into for me?
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


tenderfoot tigah
LSU Fan
Red Stick
Member since Sep 2004
4598 posts

re: Is mortgage refinancing worth looking into for me?
I just knocked 9 years off of my loan for $200 a month. It saves me over 200k!


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Tiger Prawn
LSU Fan
Member since Dec 2016
12616 posts

re: Is mortgage refinancing worth looking into for me?
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


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TD SponsorTD Fan
USA
Member since 2001
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baldona
Auburn Fan
Florida
Member since Feb 2016
10249 posts

re: Is mortgage refinancing worth looking into for me?
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.


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slinger1317
Houston Astros Fan
Northshore
Member since Sep 2005
3425 posts

re: Is mortgage refinancing worth looking into for me?
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.


UpstairsComputer
LSU Fan
Prairieville
Member since Jan 2017
633 posts

re: Is mortgage refinancing worth looking into for me?
You would likely want to refinance the HELOC in. Just guessing the rate is much higher than 3.5ish you should be able to get. What's the value of the house? Out of curiosity, how did you pick up a 40k HELOC 1 year into the mortgage?

On another note, check out this other thread going on... MT Thread

Thinking about it, there's likely going to be at least one more "freak out" by the mortgage market. If you can hold off before the refi, there's really only 3 scenarios that could happen: 1) rates go up (not likely) 2) rates meander 3) rates continue to fall. Bond market says they'll fall so that's how I'd bet.


slinger1317
Houston Astros Fan
Northshore
Member since Sep 2005
3425 posts

re: Is mortgage refinancing worth looking into for me?
I would like to keep HELOC and mortgage separate, I will probably pay it off in the next 12-14 months. My HELOC rate is prime + one halp point.

Value of house is around $500K, I have a line of 250K with about 40 against it.


UpstairsComputer
LSU Fan
Prairieville
Member since Jan 2017
633 posts

re: Is mortgage refinancing worth looking into for me?
I'd be lying if I said I had any experience doing what you're asking, but I'd imagine with that level of equity and your credit it should be doable even if it means the actual steps include closing one HELOC and opening another. And I'd expect it to be doable in one closing.


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FishinTygah84
LSU Fan
LA
Member since Dec 2013
1261 posts

re: Is mortgage refinancing worth looking into for me?
quote:

I just refinanced and was in pretty much the same position of the OP. Bought my house last year had 4.7 over 30 years. Closed on refi last month. Got down to 3.6 over 29. They ditched the PMI. (and im not at 20% equity) Saving me $150 a month. Cashed out $1500 through closing. And didnt have a September mortgage payment. OP just ask your mortgage provider or whoever to run the numbers. See if they add up and make sense for you. My house is at least a 10 year home for us if not longer (planned at least) and getting ahead on our actual mortgage due to closing cost and such will take 4.5 years. So if we were to move next year then it would have cost us money. But anytime after 4.5 years and it was the right choice.


Literally felt like i was reading my own story. down to interest rate and timeline.

crazy


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tirebiter
LSU Fan
ATL
Member since Oct 2006
6370 posts

re: Is mortgage refinancing worth looking into for me?
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.


DownSouthTiger
LSU Fan
downsouth
Member since Jan 2005
2348 posts

re: Is mortgage refinancing worth looking into for me?
I am looking into refinance now also as I finished building our house last year. At the time rates were up alot so I am in a 30 year at 5%. I called Lending Tree because I see the ads all over and they have Quicken/Rocket call but they are still saying best rate is 4.3% when I see discussion of everyone getting under 4%? Does anyone have suggestions on companies to call? I have 800 credit and 150k equity in the house also.


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