Refinancing question

Mazeroth

We purchased our house about 6 months ago and since then the prime has dropped twice that I can remember. We locked in at 6.5% (which I was reluctant to do) but the house we found was perfect and we practically stole it. We financed it through a good friend of my brother who gave us a quarter point off for free which took away a good chunk of his commission. What I was wondering is if you can refinance through the same bank that you got the load through and skip all the closing costs associated with getting a mortgage? I know that sounds crazy but if it saves the bank from losing your loan it would seem like a viable option. If that is indeed nonsense about how much would closing costs be on a refinance of $150k.

Lastly, do you think the interest may drop again and think I should wait before refinancing? I know 6 months is pretty crazy but if I could drop my rate by 0.5% that would save me about $70 per month, which adds up.

Thanks!

Shizelbs

Research how much all the broker fees and all that would cost you up front. Might be better in the long run to just dump that into your house payment and shorten the duration of the mortgage. Thats just a wild guess though.

Interest rates are pretty low to begin with. I'm not sure what they'll do, but I wouldn't count on them going much lower.

Polkersince85

I think mortgages are tied to the long bond not the prime rate. The prime is interbank money. I remember the Carter recession when mortages were 16%.
IMO, the rate you have is great as long as it is fixed. You could check and see if your bank will refi for free. You may just be better off paying additional principal every month if you plan on being there until it is paid off.

shack

If it is directly from a bank that maded the loan originally, asking for a rate reduction is a viable option. They may say no but they may say yes. If it has been sold as a package into the secondary mortgage markets (financial institutions buying large blocks of mortgages) it will probably be a little more difficult. They may offer you a lower rate for a fee and it may or may not be very competetive. Never hurts to ask. Beware of the fees that may make it a marginal deal and really not worth the time and effort.

sda2mike

I'm a Mortgage Broker. My advice is to stick with what you have. You didn't mention how much you put down. Even so, I know the Ohio real-estate market has been slow, like everywhere else. 6.5% is a good rate, assuming it's Fixed for 15 or 30 years. You're having the 'shoulda-woulda-couldas'. Everybody does;).

disneyjoe7

I always thought that you couldn't lower it by 1% then it wasn't worth the cost to do it.

daboyz

Me thinks they will go down again. But,if you're saving $70/month and say closing costs are in the $750 range then go for it. You make your money back in less than a year. We refie'd the old house 3 times and were only in it 7 yrs.

vlam

As other have mentioned, you need more information but I would not re-finance for .5% unless there was a very low to no cost refinancing.

You need to ask yourself:

1. How long do I plan to keep this loan?
2. What is the total cost to refinance? (Appraisal,title search, all fees associated with the loan).

Now there are other reasons to refinance, even at .5% if you are:

1. Consolating your other debts.
2. Having trouble naking the mortgage payments.
3. Want that big vacation (that's the worse reason in my case!)


If your focus is on the monthly payment amount, then refinancing may be appealing but it doesn't always result in a saving in the amount of interests you ultimately pay.

For example. I think in your case of a $150K loan at 6.5% and refinancing it to 6.0%, you do save quite a bit of interests over ENTIRE LIFE of the loan but you can also save interests by making a 1 time lump some of say $3000 during the first year of your loan (of course you have to look at your particular loan in details).

Remember that refiancing from an existing 30 year to 30 year is not the same. In your case, it's 29 1/2 to 30 years so of course your payment is automatically lowered.

Don't blindly chase the rate. You have to look at all the variables.

auto_pilot

sda2mike wrote: »

I'm a Mortgage Broker. My advice is to stick with what you have. You didn't mention how much you put down. Even so, I know the Ohio real-estate market has been slow, like everywhere else. 6.5% is a good rate, assuming it's Fixed for 15 or 30 years. You're having the 'shoulda-woulda-couldas'. Everybody does;).

I work in the lending business as a mortgage consultant...I watch the fixed rates fairly close...and 6.5% sounds pretty good. The only way to get a lower rate is to pay points to buy down your rate. Depending on loan amount, that make sense cost wise, for the little you will save in payments.

I say...if the payment works...I couldn't justify financing costs to a mortgage (meaning increasing your loan amount to pay for all fees) w/out a substantial amount of savings. Unless you need cash out...which is a whole different conversation.

SKsolutions

Apples to Apples loan, negotiate rates and fees first, then ask to roll in the costs. Do the math to make sure the straight rate and the roll-in rate are similar. You can cut the cost of any closing/refi, by finding a closing attorney that will do a simple refi for 2 or 3 hundred instead of the 5-8 hundred. . . that usually comprises the largest cost component.

sda2mike

SKsolutions wrote: »

Apples to Apples loan, negotiate rates and fees first, then ask to roll in the costs. Do the math to make sure the straight rate and the roll-in rate are similar. You can cut the cost of any closing/refi, by finding a closing attorney that will do a simple refi for 2 or 3 hundred instead of the 5-8 hundred. . . that usually comprises the largest cost component.

i'd say title insurance and other title co. fees will be the biggest hit on your settlement statement.
you're 6 months into your loan, without debt consolidation or any other cash out benefits, I see NO reason to refi. If you were my customer, I would tell you the same thing.