Refinance

[Jody Treadway]

We're testing the waters now ourselves. Currently making additional $2k principal payment each month with a 30 year/4.25% rate. House is set to be paid for in 6 more years.
Curious what benefits we'll see from a sub 3% 15/20 term while making same additional payments.
Seems like a good time to make the plunge...

 

[thecj3man]

I am making spreadsheets trying to figure it out myself to see how it pans out. I got a 15 year loan 5 years ago at 3.375 and have been paying additional each month. It should pay off in about 6-7 years if I keep paying the extra. Depending on the rates that I see available, it looks like a wash to lower the monthly payment but pay a longer term.

 

[awheelterd]

Got approved for 2.5 this week. As long as they can find comps I should be good to go. This is through bb&t. Lucky for me our bookkeeper and her husband just sold their house 3 miles away last week and I feel like theirs is comparable to ours size and acreage wise.

 

[RatLabGuy]

We're testing the waters now ourselves. Currently making additional $2k principal payment each month with a 30 year/4.25% rate. House is set to be paid for in 6 more years.
Curious what benefits we'll see from a sub 3% 15/20 term while making same additional payments.
Seems like a good time to make the plunge...

Its hard for anyody else to do wthe math without knowing the actual numbers - try out that spreadsheet link that was posted awhile ago (can't recall if this thead or the other, too lazy to search)

But I'm guessing that 2k is > the normal payment now, e.g. > 50% of your total monthly pay-in.
If so, and you're only 6 years away at that rate and want to keep the same target end date, then I suspect that dropping the interest rate is not going to make a massive difference once you account for the closing costs.
Even if the drop were 1.5%, if half your payment now is extra then its functionally 0% applied to the remainder, meaning the effective drop in loss is half that or 0.75%. Which is not nothing but could take 4 years to recoup closing costs depending on the actual amount.

 

[Jody Treadway]

Spoken with 2 lenders since my post.
Both said by the time I pay CC (EVERYONE pays them, just hidden) and other fees, I am better off to keep paying extra on the principle each month.
We are on pace to have it paid for in 74 months. Even with refi down to 10/15 yr and adding additional each month, they said it would be a wash.
I can't see a reason they WOUNDN'T want my $$$.

Of course, the lower monthly payment, less additional principle payment, would be a bonus. But the amount it is now isn't a burden.
Gonna stay with what I have

 

[RatLabGuy]

Spoken with 2 lenders since my post.
Both said by the time I pay CC (EVERYONE pays them, just hidden) and other fees, I am better off to keep paying extra on the principle each month.
We are on pace to have it paid for in 74 months. Even with refi down to 10/15 yr and adding additional each month, they said it would be a wash.
I can't see a reason they WOUNDN'T want my $$$.

Of course, the lower monthly payment, less additional principle payment, would be a bonus. But the amount it is now isn't a burden.
Gonna stay with what I have

This is what I suspected.
The only reason for you to do this would be if you're willing to switch long term strategies and put that $$ into the market on a gamble of a higher rate of return, at the cost of the house payoff being farther out.

 

[UTfball68]

Correct...woulda probably been a 2.875-3% rate with a sub-$15k increase in valuation...or so I'm told. For $525, figured it was worth it...especially considering what houses in my neighborhood have been selling for.

Good news...my waiver was resubmitted with neighborhood selling prices, and was approved. Moving forward with a close date scheduled for 12/1.

 

[Ron]

Spoken with 2 lenders since my post.
Both said by the time I pay CC (EVERYONE pays them, just hidden) and other fees, I am better off to keep paying extra on the principle each month.
We are on pace to have it paid for in 74 months. Even with refi down to 10/15 yr and adding additional each month, they said it would be a wash.
I can't see a reason they WOUNDN'T want my $$$.

Of course, the lower monthly payment, less additional principle payment, would be a bonus. But the amount it is now isn't a burden.
Gonna stay with what I have

you can cover your cc with lender credit and still get a lower rate.
you do you...and the diff is minimal. but a good creative lender could save you a few dollars. but its probably an insignificant amount in your personal situation.

 

[jeepinmatt]

Spoken with 2 lenders since my post.
Both said by the time I pay CC (EVERYONE pays them, just hidden) and other fees, I am better off to keep paying extra on the principle each month.

They are "correct" but wrong. Closing costs are hidden, yes. But they are built in to the rate. People who are getting 2.75-3% rates right now are probably getting lender credits and not paying anything. People who are getting 2.5% or less are probably buying points and/or paying closing costs or at least not getting a credit. So what the lenders really mean to say is "we will get it out of you one way or another, its just a matter of paying it up front or in the long run".

In your case, with a 4.25% rate, you should definitely refi at the lowest possible rate that has no closing costs. And by no closing costs, I mean fees. The homeowners insurance and property taxes should not be part of the math because you will pay those regardless, and you will be credited back from your current escrow, so its a wash.

 

[jeepinmatt]

Ignore everything I said above because:

Currently making additional $2k principal payment each month with a 30 year/4.25% rate. House is set to be paid for in 6 more years.

Of course, the lower monthly payment, less additional principle payment, would be a bonus. But the amount it is now isn't a burden.
Gonna stay with what I have

Sounds like you're baller enough that we should be asking you what to do instead of you asking us

 

[UTfball68]

Ignore everything I said above.


Sounds like you're baller enough that we should be asking you what to do instead of you asking us

I would still think that the math would track at a lower rate, and nothing out of pocket...his monthly would be lower and the extra principal applied would pay off even faster.

 

[rcalexander105]

Ignore everything I said above.


Sounds like you're baller enough that we should be asking you what to do instead of you asking us

I would still think that the math would track at a lower rate, and nothing out of pocket...his monthly would be lower and the extra principal applied would pay off even faster.

Both of these were along the lines of what I was thinking as well.

I mean, $2k OVER principal per month

I should have learnt to install gears instead of going to school to get my edumakation

 

[Ron]

I should have married a suga momma

FIFY

 

[Jody Treadway]

Ignore everything I said above.


Sounds like you're baller enough that we should be asking you what to do instead of you asking us

No other debts, no kids, no child support, scholarships, good investments
A streak of luck helps too.

 

[jeepinmatt]

I would still think that the math would track at a lower rate, and nothing out of pocket...his monthly would be lower and the extra principal applied would pay off even faster.

Yes. If there's no closing costs, and he's already paying more than the minimum payment, then basically all you are doing is lowering your interest rate and shifting what proportion of your actual payment goes towards the minimum payment. If the refinance loan length is exactly the same as the remaining time on your current mortgage, then you are literally just lowering your interest rate and amount of interest paid.

 

[RatLabGuy]

Just locked in at 2.5% for 30, $1900 in points/origination fee. Found out later after the full app I qualified for appraisal waiver so that makes total closing fees like $3k.
Through Better.com
Ive had an account set up w them for awhile, its nice bc they show you a full rate table of your options based on your loan, credit score, etc for different rates, points, lengths, etc.

Theres definitely room to haggle on the fees. They called me yesterday just to confirm where i stand, at that time a 2.5% had like $3900 in orig fees. I told them flat out, I'm waiting for it to go down to $3k.
Well later i get a text, "will you lock today at $2999? I never responded.

Looked today, it had gone down more on its own, now said $3050 for that 2.5.
They called me again "just to check", i told em im waiting for quotes from several others (true). "No more bs, just tell me the lowest you'll go on that orig fee and stop wasting both our time."
Looked back into my account and *magically* it now says only $1900....

They claim their time to closing is only about 35 days. I doubt it, we'll see.

 

[jeepinmatt]

Just locked in at 2.5% for 30, $1900 in points/origination fee. Found out later after the full app I qualified for appraisal waiver so that makes total closing fees like $3k.
Through Better.com
Ive had an account set up w them for awhile, its nice bc they show you a full rate table of your options based on your loan, credit score, etc for different rates, points, lengths, etc.

Theres definitely room to haggle on the fees. They called me yesterday just to confirm where i stand, at that time a 2.5% had like $3900 in orig fees. I told them flat out, I'm waiting for it to go down to $3k.
Well later i get a text, "will you lock today at $2999? I never responded.

Looked today, it had gone down more on its own, now said $3050 for that 2.5.
They called me again "just to check", i told em im waiting for quotes from several others (true). "No more bs, just tell me the lowest you'll go on that orig fee and stop wasting both our time."
Looked back into my account and *magically* it now says only $1900....

They claim their time to closing is only about 35 days. I doubt it, we'll see.

Good job man.

 

[Jody Treadway]

I'm admittedly not a spreadsheet/numbers cruncher kind of guy. But when someone who can make $$$ of of me says it's not worth it to him or me, intend to listen.
He essentially mimicked what was said: since we're on track to pay off so early with so much additional to principal, it would be a wash financially. If we were shooting for 3 years or so, maybe. But then the fees/closing costs/etc make it unattractive.
This is through a lender I've financed 4 houses with FWIW.

 

[DSM Turbos]

I'm admittedly not a spreadsheet/numbers cruncher kind of guy. But when someone who can make $$$ of of me says it's not worth it to him or me, intend to listen.
He essentially mimicked what was said: since we're on track to pay off so early with so much additional to principal, it would be a wash financially. If we were shooting for 3 years or so, maybe. But then the fees/closing costs/etc make it unattractive.
This is through a lender I've financed 4 houses with FWIW.

as @RatLabGuy said, I have thrown my numbers through a lot of calculators when I modeled a bunch of scenarios for myself when I was thinking about it before. I don't see it being worth your time either.

If you want me to throw it through some numbers on my stuff PM me, but if anything it might save you 1-2k in the long haul, and to me its not worth it. The only benefit would be if for some reason you couldn't do that 2k extra and something came up and you needed to go back to your standard payment.

 

[jeepinmatt]

I just gave em the go ahead on a quote of 2.5% 30yr fixed refi with $1300 lender CREDIT! I also had the option of 2.375% with about 0.4% in points, but the payback was 8 years and didn't save enough to justify the extra out of pocket. Once i get the paperwork back in a couple hours, ill let yall know if its too good to be true or not

So what I started on Aug 3 has FINALLY come to fruition...

I hope my experience was not the norm. 3 months to close, and then an extra 2 weeks because of idiots who had 1 job and failed to do that job correctly, plus head in the sand communication between banks. Make sure when they send the payoff, the amount is the correct and is equal to the current most recent payoff they requested on the day after closing, not the month old one that didn't include property taxes and most recent payments.

 

[rcalexander105]

So what I started on Aug 3 has FINALLY come to fruition...
View attachment 331168


I hope my experience was not the norm. 3 months to close, and then an extra 2 weeks because of idiots who had 1 job and failed to do that job correctly, plus head in the sand communication between banks. Make sure when they send the payoff, the amount is the correct and is equal to the current most recent payoff they requested on the day after closing, not the month old one that didn't include property taxes and most recent payments.

I'm still waiting...and can't get a reply back after 2 consecutive emails over 1.5 weeks

 

[DSM Turbos]

So what I started on Aug 3 has FINALLY come to fruition...
View attachment 331168


I hope my experience was not the norm. 3 months to close, and then an extra 2 weeks because of idiots who had 1 job and failed to do that job correctly, plus head in the sand communication between banks. Make sure when they send the payoff, the amount is the correct and is equal to the current most recent payoff they requested on the day after closing, not the month old one that didn't include property taxes and most recent payments.

Mine was sold on the day the first payment was due. Get ready for it. It was a pain with it getting sold on the first payment date, when I pay on like the 3rd or something. Crazy that yours took so much longer than mine.

 

[ghost]

I have started mine. Going to roll two into one. Refinance $67K and lower my payment $200/month. 2.9% rate for 15 years. I'll then have a $650/month rent check that can go towards the new mortgage. Plan will be to make the payment and an additional $400 payment per month. I've looked for a calculator to figure out what that will do for time line on paying it back but can't seem to figure it out.

 

[awheelterd]

About halfway through my paperwork. Confirmed 2.5 on a 30yr with bb&t. They will sell it to Freddie Mac/Fannie Mae, but will service it for the life of the loan so that is nice.

 

[jeepinmatt]

Mine was sold on the day the first payment was due. Get ready for it. It was a pain with it getting sold on the first payment date, when I pay on like the 3rd or something. Crazy that yours took so much longer than mine.

This is not unusual. I refinanced with Entegra/First Citizens at the beginning of the year, and it was immediately bought out, even though the closing attorney swore up and down that First Citizens never sells them and it was good I was going that direction. Honestly I don't care as long as it doesn't cost me anything. In fact, the refi was initially through Entegra, who merged with First Citizens while we were doing paperwork, so it was initially Entegra after closing for like a day, then First citizens for a week, then Freddie/Fannie. Only reason I knew it had changed hands was because I got a letter in the mail saying it had been paid in full and I was like "I hope this is a fortunate error "