Refinancing house? Who’s done it?

Question

My husband wants to refinance our house that we bought 4 years ago. The length of the loan would stay the same, the only difference would be that our monthly payment would go down. Are there any negatives of doing this? Thanks ladies

Answer

I havent done it yet but have looked into it. The thing to remember is there is often an up front cost associated with refinancing due to fees and such and if that cost is more than youd save over the length of your loan, then it isnt worth doing. Also, you may be in the same length loan, but if you start with a 30 year loan, paid off 10 years of your loan, then refinance back to a 30 year loan you will save $ per month, but will be back at the 30 year mark when you refinance vs 20 year mark (unless youre refinancing to a shorter loan). This can increase the amount of interest in total you have paid over the life of the loan if you dont do the math out beforehand. Last, if you havent met 20% equity on your home and you refinance you will have to pay mortgage insurance. We prepaid our mortgage insurance to get a lower rate on it, so if we refinance before 20% equity we would be stuck paying that again. There are, however, times where it makes a lot of sense to refinance, especially if you will have a much lower rate and not a lot of up-front charges are required. You really just need to do the math to figure out if it makes sense.

Answer

You may not be able to do it if you haven’t been in the home more than 5 years. Also it will change the term of the loan unless you choose a shorter term which would typically raise the payment but lower the rate. What interest rate are you paying and in what state? What’s your term now and how much equity have you built into the house?

Answer

Shouldn’t be. I assume you’ve already looked into what you’re new interest rate will be? You’ll have to pay to have the new loan drawn up but you’ll well more than make that up in what you save with a lower interest rate. You’ll get another hate inquiry on your credit but that usually only hits you 6-10 points and also we’ll worth la lower interest rate. You could save 10s of thousands of dollars over the lifetime of a loan with even just a half a point better.

Answer

I did it a few years ago. Our loan guy called us about 2 years after we brought the house saying we qualified for a refinance that would drop our percentage rate a point which means alower monthly payment. Typically we would've had to pay closing costs but his company was running a "refinance with $0 closing costs!" Special that month. So we literally "bought" a percentage point for free.
I think he still earned comission on the loan which is why he contacted us so it was a win win.

Answer

Typically the drawback is that you have to repay closing costs for the new loan, which is typically  $6-8k at least based on the value of my home. The monthly savings wasn't worth the closing costs in our case. So ask your lender specific questions regarding the closing costs, fees, taxes etc

Refinancing house? Who’s done it?

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