Refinance?

[bwdlionfan]

I bought my first home a little over 2 years ago. I financed it for 30 years at 5.25%. I have overpaid every month by $300 to help knock the principle down a little faster. Now I am looking at refinancing as I've seen bank rates of 3.5% for 15 years. Using amortization tables, I could overpay this amount by $198 and would be paying the same as I am overpaying now, but it would save me $15,000 and some change over the next 12 years (would pay the house off early from over paying). I'm curious though, have any of you refinanced before? I'm wondering what the closing costs are on refinancing compared to a first time purchase.

Or, do any of you work in banking and need some business, PM me!

[BwdLion73]

I'm not a banker or expert that you may be looking for but I did have my house on a 15 year note and payed it off about 3 years early. You dont know how good that first nights sleep will be.

I would try to steer anyone away from or encourge them to get out of a 30 year note while rates are as low as they are.

[bwdlionfan]

I have talked around with a few places today, looks like I'll be going with lendingtree

[rockdale80]

I bought my first home a little over 2 years ago. I financed it for 30 years at 5.25%. I have overpaid every month by $300 to help knock the principle down a little faster. Now I am looking at refinancing as I've seen bank rates of 3.5% for 15 years. Using amortization tables, I could overpay this amount by $198 and would be paying the same as I am overpaying now, but it would save me $15,000 and some change over the next 12 years (would pay the house off early from over paying). I'm curious though, have any of you refinanced before? I'm wondering what the closing costs are on refinancing compared to a first time purchase.

Or, do any of you work in banking and need some business, PM me!

Yes refinance, but stop overpaying. You are actually losing money. Think of it this way, if you take the amount of money you are overpaying and invest it in mutual funds or an interest bearing account that yields a larger return on your money then you are not maximizing your profit. One payment a year extra will allow you to pay off your home in several years less. I know the idea is to pay it off as fast as you can, but you could take the same $300 a month and invest it to make payments off the interest you collect. Just a thought.

[Manso/V8]

Having your house paid off is a nice feeling. However, you can not access that money unless you sell the house, or borrow against the house.
I would suggest you make sure you have enough emergency savings or a "rainy day" fund to make sure you can continue to pay the house note if you have some type of interruption in income, other big expenses, etc.

If you plan to stay in the that house, or keep it as a rental house, by all means refinance........usually you can add the closing costs in to the new loan.
I don't know how much they would be in your area, call a mortgage broker for an estimate. Just be sure you are going to be in the house, or keep it long enough
to recoup the closing costs. With interests so low, it makes a lot of sense to go to a 15 year mortgage as long as you can comfortably hand the payment.

[rancher]

I can tell you that there is nothing like a paid off house. Dont listen to Rockdale, pay that home off as quick as possible. Go get a 15 year loan, and if you have been paying like you have, you have enough in the house to stop paying PMI insurance that you were being charged. That will save you some dollars there. If you can get a 3.5% do it. Pay that home off. Like Dave Ramsey says, the grass feels so good when the home is paid off. Check around, get several quotes and the best deal. After you pay that home off, then keep paying the payment to yourself every month and build that rainy day fund. Yes, it does rain in eveyones life.

[Old Tiger]

DO NOT REFINANCE!






caps

[AP Panther Fan]

This is a great time to refinance (reduce your amortization to 15 yrs). I would suggest contacting your existing lender first though. Sometimes they can do a simple modification of your note and save you a considerable amount in closing costs.

[bwdlionfan]

This is a great time to refinance (reduce your amortization to 15 yrs). I would suggest contacting your existing lender first though. Sometimes they can do a simple modification of your note and save you a considerable amount in closing costs.

I would pay extra not to stay with my current lender(Chase Bank). I actually worked for them for 3 weeks one time and got up and walked out of the job, but I opened an employee account while I was there and still have it because it has every possible perk and it's free for life since I worked there at one time.... granted I don't use it because I hate them so much! I had Bank of America for years before I worked there and have had them for years since I quit at Chase... never once had a problem... my wife on the other hand opened a Chase account when they were offering some $150 credit for opening an account with direct deposit. Every month they came up with a new fee to hit her with. One month it was "you must have $25 automatically set to transfer to savings each month to be free" when we were manually transferring more than that.... anyway, we've closed her account, we closed my IRA I had with them, and now we're hopefully going to move this mortgage somewhere else.

Last year my mortgage also went up by $40 something due to the escrow account, they never sent a notice, so my automatic mortgage payment wasn't enough to cover it (even though I over pay the principal each month by $300)... that overpayment was dedicated to the principal, so I got hit with all kinds of fees because I didn't pay enough on the escrow. Finally I got that reversed, but regardless.... I hate Chase Bank!

[rancher]

Depending on how much you owe vs how much the house is worth, some lenders will let you take care of your own escrow. I have done that in the past, sure makes life easier. Also check to see how much you are paying for PMI insurance on your loan, with the extra you are paying, that should come off also. I bet all of this will save you close to $200 a month in payments. Best of luck, keep us informed, been there,done that and paid my share of stupid tax.

[rockdale80]

I can tell you that there is nothing like a paid off house. Dont listen to Rockdale, pay that home off as quick as possible. Go get a 15 year loan, and if you have been paying like you have, you have enough in the house to stop paying PMI insurance that you were being charged. That will save you some dollars there. If you can get a 3.5% do it. Pay that home off. Like Dave Ramsey says, the grass feels so good when the home is paid off. Check around, get several quotes and the best deal. After you pay that home off, then keep paying the payment to yourself every month and build that rainy day fund. Yes, it does rain in eveyones life.

Every word I said is true.

You are losing money... but hey, that is your money and if you want to throw it away then go for it.

[LH Panther Mom]

We've used the same mortgage company through one purchase in Lubbock, that they offered us an interest savings option (drafted 1/2 payment every 2 weeks instead of us sending a check monthly), a purchase in LH (built new), and two refinances. With the last refi, hubby actually looked around at other places and we decided to stay with them. It was a very smooth process and we've been pleased with them over the years.

[50 yard line fan]

If you're in Brownwood, have you tried Texas Bank or Citizens? I prefer to deal with a local bank over a national bank.

I financed with Citizens 12 years ago on a 30yr note at 8+%. Refinanced about a year later because rates dropped "as low as they'll ever be" but I had to trim some years off the note to get this rate though. Ended up with a 20yr note at 5.75%. Refinanced yet again about 2 years later and we are now on a 15yr note at 4.125%. Over the past 12 years, my monthly payment has only gone up $20+/- month from the 30yr note to the 15yr note. I will end up having the house paid off in 18 years instead of 30 and will have saved roughly $145,000 in interest.

With that said, I agree with Rockdale. Refinance, but don't overpay. Refinancing will shave the years off your note quicker than a monthly overpayment. Also agree with AP Panther Fan, now IS a great time to refinance.

[Old Tiger]

banks making people think refinancing is a good thing is the reason our economy went from meh to crap, fact.

[rockdale80]

banks making people think refinancing is a good thing is the reason our economy went from meh to crap, fact.

There were plenty of reasons the economy took a nosedive. Derivatives, over leveraging of bank capital, CBO's and their faulty credit ratings, merging of retail and investment banking, over-valuated home prices, etc. were all the primary culprits, but actual mortgage refinancing played a smaller role. The sole reason it played a role at all was because home prices were increasing and speculators only envisioned prices trending upwards. Homeowners found their home value skyrocketing and had enormous amounts of equity in their home. They were refinancing and taking secondary mortgages so they could get cash back out of their home. Banks were more than happy to oblige and utilized option-ARMS to people that wouldn’t normally qualified for secondary mortgages and refi’s, and the accuracy of the loan documents were rarely , if ever, checked.

The difference between 2007 and today is today people aren’t refinancing because they are trying to cash out of their property. They are refinancing because they want lower payments.