Worth it to re-fi?

Question

Bought my house 2 1/2 years ago, on a fixed-rate 30 year mortgage.

I'm looking to lower my monthly payments. Should I refinance? With closing costs and rates much higher now, will that lower my payments? I've thought about doing a HELOC, though if you borrow $ to pay borrowed money, that makes little sense.

I'm making good money and can currently afford my mortgage but am trying to plan for a worst case scenario if I get laid off and have a few months b/tw jobs...

Answer 1

Why re-fi if your @ a good rate on a fixed loan ??? You have already paid the most expensive part of your mortgage is the beginning . Plus it will cost you several thousand to refi .If you finance closing cost in your payment your paying on them for the next 30 years. Seems like a no brainer stay put ...

Answer 2

Okay in answering your question keep in mind I am a mortgage lender. You bought your home 2.5 years ago on a fixed rate, good choice. Most likely you have a prepayment penalty of 3 years on this loan. You received this rate when rates were at their all time lowest. Rates have gone up considerably since then. You would be suprised. Depending on what you credit score is and if you feel like being laid off soon is a pretty good chance are your biggest factors. A HELOC is not a bad idea, also keep in mind, would you refi and cash out? You do not have to do the full LTV amount it just depends on what your payoff amount is. If you know your payoff amount subtract that from the value of your home. Take all the debts that you would want to payoff and subtract that also. Now look at the money that you have left, is this enough to make it worth it for you. If you think so then I would contact a mortgage broker, if you have used one in the past and were pleased with them continue on with them again, they love to have their customers come back. If not talk to your friends and get their referrals. Then contact this person and find out what they think you could get off the top of their head. Take that rate and add 2 points, trust me on that I am the lender. Then from that point you can tell if it is truly in your best interest. My sources say no but that is what to do to if you feel you must see for yourself. It was wise and good timing to get a 30 yr fxd, I think that you are really jumping the gun, but I don't have to pay your note, you do. Do NOT get into an interest only or pay option, those only screw you in the end. I hope this helps you see you are much better where you are at but if you need to know yourself these are the most accurate steps I can offer.

Answer 3

Dear Badsinger:

What is your current interest rate? I would recommend that you look really hard at that before you refinance for a cash out option.

If you're making good money and can afford your payment comfortably now, then look at a HELOC instead. The closing costs are minimal and you will only pay interest on what you use. Don't use it if you don't have to.

Now that you've covered your worst case scenario, start planning to save a certain amount of each paycheck for your emergency fund. Should you lose your job, it would be better if you didn't have to go into additional debt to make your monthly payments.

Also, if you are concerned about losing your job, check into the benefits you may have available, like severance pay and unemployment. These are all important factors in your financial emergency planning.

I hope this helps. If this hasn't answered your questions, please contact me at [e-mail].

Best of Luck!

Anne

Answer 4

I think that everyone that has to responded to this wuestion has failed to realize is that you dont know any of the pertinent informaiton needed to give advice..

To elaborate, we dotn know the current interest rate, mortgage program, LTV, ETC...

It could very well be beneficial for you to refinance now, then again it may not be...

The point is that EVERY PERSON IN AMERICA IS IN DIFFERENT SITUATIONS FINANCIALLY... What is a bad mortgage loan for one may be a perfect solution ofr another...

It is pretty easy for people to say "Interest only and option ARMs are bad" THe fact of the matter is that they were designed for a reason...

For instance, wheat about the person that is buying a house, but plans to move in less then 5 years? Or even 7 years?

For this person, especially if it is an appreciating area, they may WANT a program that ofers a low initial rate, and more improtantly, a FLEXIBLE MONTHLY PAYMENT...

If this person isn't living in the house for a full standard 30 year mortgage, then why get a full 30 yr Fixed mortgage?

THe rate is typically higher, and your payment obviously as well.. Programs like option ARMS and interest only allow you flexibility when there are unexpected expenses that come up..(we all have them, car breaks down, kids school clothes, etc.)

When you have these options, at any time you can send extra money to the mortgage to pay principal.. Just because you have a loan that gives you the option to pay less that you cant send more when it is feasible..

Either route the point is that what you need to do is have a licensed professional analyze your situation, financial, credit etc., and advise you on the BEST mortgage option for YOU!

My name is Jason Fry, i work with Providential Bancorp, a nationwide mortgage lender... I would be happy to asist you in a refinance, or at least be able to let you know what options you have...

Feel free to call me at 312-264-6448, or email me at [e-mail]..

Good Luck!

Jason Fry
Licensed Mortgage Consultant
Providential Bancorp
312-264-6448

Answer 5

Don't fall into the that "interest only" loan trap. There are more and more foreclosures happening as all of those people who went for "interest only" for a certain period and now they are in troubled because that period is up and their payments are way more than they can afford. Same thing with 1 yr or 3 yr ARMs. If you bought 2.5 years ago your rate on a fixed mortgage is lower than what a fixed rate would be today unless your credit was not as good as it is now.

Consider putting away as much money as you can to prepare for a "worst case scenario." It is recommended that you have at least a 3 month cushion of mortgage money. If you can do that or more, that's how I'd prepare.

Answer 6

You have many options. If your goal is to lower your payments for few years, no prob. You can get a 2/28 interest only loan or you can get a option arm loan with 1% int rate. Contact me and I tell you how it all works.

Answer 7

I doubt you can get a better interest rate then what you would have gotten 2yrs ago. You don't have much equity in your home at this point. So I would say that it would not be worth it unless your were going to get an interest rate of at least 1.5% lower.

Answer 8

I think you are good where you are. I wouldn't re-fi if I were you.