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PHBT: should I refi the mortgage?


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#1 LeftyMPfrmDE

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Posted 10 March 2020 - 08:20 AM

Need some advice. Looking at my credit union loan rates, they are offering a 15 year fixed rate at 2.875%. Currently 2 years into a 20 year at 4.25%.

Doing the math, it'll be pretty much the same payment with taxes and insurance included. Dont plan on selling anytime soon. Plan on rolling the closing costs on the loan, and the break even point would be 14 months.

What says the brain trust?
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#2 DieselGopher

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Posted 10 March 2020 - 08:35 AM

That looks like a winner to me. I’m looking at going from 3.5 down to 2.75, credit union has really low fees so looking like it will be worth it.
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#3 Sidney Porter

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Posted 10 March 2020 - 08:41 AM

The rule of thumb is it makes sense if you save 100 basis points on the rate
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#4 dagomike

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Posted 10 March 2020 - 08:42 AM

I’m thinking rates will be going down before up. If you’re not in a hurry, it might pay to wait.
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#5 SnowMan

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Posted 10 March 2020 - 08:47 AM

If you're planning to stay longer than 14 months you really have nothing to lose?

I’m thinking rates will be going down before up. If you’re not in a hurry, it might pay to wait.

I was reading this morning that there are structural reasons why rates can't go much lower. They may stay low for a while, but slightly under 3% is a pretty rigid floor.


On edit. The article I was reading specifically referenced for 30 year loans. Other flavors can go a bit lower but at the end of the day it's a defined spread from the 10 year t bill.

Edited by SnowMan, 10 March 2020 - 08:52 AM.

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#6 AspenLeif

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Posted 10 March 2020 - 09:35 AM

I would def refi with that new rate, as compared to your old rate.   


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#7 davelew

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Posted 10 March 2020 - 09:48 AM

I'm looking at a 2.5% refinancing with $3K closing costs.  It will save me $153 per month in cash flow, with an extra $116 per month going to principal instead of interest.  By my accounting, that saves me $194 per month (+$153 in lower mortgage bill, +$116 in more principal each month, -$75 because the lower interest means a smaller mortgage interest deduction in my taxes).

 

In general, I jump all over any investment with a 78% annual rate of return.


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#8 davelew

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Posted 10 March 2020 - 09:55 AM

Need some advice. Looking at my credit union loan rates, they are offering a 15 year fixed rate at 2.875%. Currently 2 years into a 20 year at 4.25%.

Doing the math, it'll be pretty much the same payment with taxes and insurance included. Dont plan on selling anytime soon. Plan on rolling the closing costs on the loan, and the break even point would be 14 months.

What says the brain trust?

 

Per $100K on the mortgage:

 

with 216 months left on a 4.25% note, for every $100K borrowed you pay $309 in principal and $354 in interest for a $664 mortgage bill per $100K borrowed. 

Over the life of the loan, you will pay $41,883 in interest.

 

With 180 months left on a 2.875% note, for every $100K borrowed you will pay $445 in principal and $240 in interest for a $685 mortgage bill, per $100k borrowed.  Over the life of the loan you will pay $23,225 in interest.

 

So by my calculations the 2.875% mortgage costs you $21 a month in cash flow, and gets you an extra $18K over the next 18 years.


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#9 CinnaDolphin

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Posted 10 March 2020 - 10:12 AM

$$$
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#10 Dave

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Posted 10 March 2020 - 11:15 AM

Do it and pay a little extra principal every month to save even more in interest


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#11 Patrick C.

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Posted 10 March 2020 - 12:38 PM

I'm looking at a 2.5% refinancing with $3K closing costs

 

15 year, or 10?  I'm looking at 30 to keep my interest deduction up :)

 

Not seeing anything amazing yet- first guy that got back to me was around 3.5% which is only 0.375 below where we are now (but on an ARM that can change in 7 years).


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#12 davelew

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Posted 10 March 2020 - 12:46 PM

15 year, or 10?  I'm looking at 30 to keep my interest deduction up :)

 

Not seeing anything amazing yet- first guy that got back to me was around 3.5% which is only 0.375 below where we are now (but on an ARM that can change in 7 years).

 

 A 15 year.  I've got a shady mortgage guy I've used in  the past who has the offer.  The last mortgage I got through him was with Wells Fargo, where you had to open a checking account with at least $1K in order to get the best rate-- except that's illegal in my state, so he showed me how to start applying for the account to get the best rate, and then never finish.  Like I said, he's a little shady, but so far he's only screwed over banks and has not screwed me over.


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#13 Dave

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Posted 10 March 2020 - 01:48 PM

  Like I said, he's a little shady, but so far he's only screwed over banks and has not screwed me over.

 

But your name is on the paperwork   :devil:


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#14 dondewey

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Posted 10 March 2020 - 08:44 PM

I got like a grand back a closing if I was a Costco member for my last refi. Unlike the hardened criminals here, I actually paid for a membership.
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#15 davelew

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Posted 10 March 2020 - 08:45 PM

But your name is on the paperwork :devil:


...And they jack booted thugs haven’t come for me yet. My guy has always steered me on the right side of the law. Not far on the right side, more like adjacent to lawbreaking, but still in legal territory.
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#16 DieselGopher

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Posted 15 March 2020 - 03:47 PM

Feds just cut rate to basically 0%
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#17 Julius H Gardetto

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Posted 15 March 2020 - 04:35 PM

...And they jack booted thugs haven’t come for me yet. My guy has always steered me on the right side of the law. Not far on the right side, more like adjacent to lawbreaking, but still in legal territory.


You don't need a criminal lawyer, you need a criminal lawyer.
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#18 Sidney Porter

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Posted 22 March 2020 - 02:13 PM

If you loan is with a big bank, low ltv and good credit you might want to hold off. I think they will be offering easy modifications to lower the interest rate. Volume is high and with the virus they have staffing issues. No reason that they don't come out with rate modification offerings. Small banks might have a harder time pulling these together.
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#19 Patrick C.

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Posted 30 March 2020 - 10:05 AM

Got an e-mail from one of the guys I'm dealing with that is at 3.25% for a 30 year cash out refi, keeping the LTV below 75%.  If this goes through I'll be happy.


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#20 LeftyMPfrmDE

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Posted 03 April 2020 - 04:56 AM

Well, everything is in motion; the credit union called me to tell me the underwriting is complete, and just gotta wait for paperwork to sign.

Ended up with a 15 year term, at 3%, with closing costs rolled into the loan. Didnt have to get an appraisal; which saved a cool $350.

Originally, I though my break even point for the closing costs would be a little over a year, but, looks like 8 months. Sweet. The new payment ended up being $40 more per month, so not a burden by any means.
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