Refinance home after only 1 year?

Question

I know there are many topics on this subject, but I need input on my situation. I just bought a home a year ago and I think I got swindled. I notice now there are many high amount loans with monthly payments lower than mine. I owe 84,000 on my home which when I purchased they said is only worth 89,000. I checked lending tree and got some good offers but not sure what to do. I plan on living there for about 5 years or so. I'm at a 6.625% fixed 30 year loan now. Any suggestions?

Answer 1

We did a refi on our home after only one year, but that was because we had two mortgages and neither the taxes nor the insurance was included in the payments. I don't think there are any true and hard rules regarding the time limits for refinancing.

Good luck!

Answer 2

It doesn't sound like your rate is that high, and it's fixed. Fixed rates are generally higher than ARMs, because there is no risk that the rate will go up when the interest rate changes (make no mistake, ARMs are designed to go up when they adjust, not down). Don't believe everything you see on TV and the Internet, the rates you see will not likely be good for the duration of the loan, sometimes they are only good for a few months. And the payments they quote may cover only the interest, and will therefore spike in a big way when the interest only period expires. From what you say, there is nothing that leads me to believe you got swindled in any way. As for whether or not you can refinance, you can technically refinance any time you want. But you will have to pay some fees and probably closing costs to do so. Plus, it's possible that your current loan has a prepayment penalty, meaning that you pay a fee if you pay off the loan before a set period of time, usually 1-3 years. You're probably best off just sitting tight.

Answer 3

At 6.625 fixe dyou had better stay where you are. Your best options is to pay it off earlier if possible. If not that than consider paying so much a month on the principal.(200, 100 a month or even 50 ) . This would add up over the years.
I know a guy who owed about the same amount. He had paid off a car note and decided to keep the car. He barrow 35 grand and applied it to the principle and finance it 5 years as if he was paying a car note. Even with a higher interest rate he came out ahead. But fixed 30 year at 6.25 is good as it comes righ now.

Answer 4

The 6.625 rate is really not all that bad. You could probably not beat that rate in todays market by the time you paid the fees for obtaining a refinance. Also most loans have some sort of a prepayment penalty if you pay them off within the first couple of years. So check your loan documents and see if you have a prepayment penalty. Your original loan probably has some private mortgage insurance either built into that rate or you pay it extra because it sounds like you have a less than 80% loan to value ratio. And if the value of your place is only $89,000 any new financing would have to have private mortgage insurance too. Sometimes lenders will advertise no PMI but it is really built in then in the form of a higher interest rate if you do not have at least 20% equity interest. Speaking of your higher payments, most likely you have an impound account for taxes and inurance and when lenders quote payments they might not necessarily be including taxes and insurance in their initial quote.

Answer 5

I agree with Veronica and also want to add that you may want to look into an Adjustable Rate Mortgage (ARM). The interest rates are lower than a 30 year fixed. I only suggest this because you mentioned that you will be in your home for about 5 years. The adjustable rate mortgage is fixed for a certain period of time like 5 years then adjusts ever year after that, typically no more and no less than 2 points. It's better to sell or refinance when the fixed period is over (unless rates drop again).
From my experience Lending Tree is ok but I would go to someone locally (mortgage broker not a bank) so that they can explain everything to you face to face. Mortgage brokers work with many lending institutions and a bank only has their institution. A mortgage broker's job is to find the best rate for your situation. Also, it's typically not worth refinancing if the interest rate is not at least a point lower. 6.625% is a great rate for a 30 year fixed but do look into the ARM's if you are interested.

Answer 6

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RE :Refinance home after only 1 year?
I know there are many topics on this subject, but I need input on my situation. I just bought a home a year ago and I think I got swindled. I notice now there are many high amount loans with monthly payments lower than mine. I owe 84,000 on my home which when I purchased they said is only worth 89,000. I checked lending tree and got some good offers but not sure what to do. I plan on living there for about 5 years or so. I'm at a 6.625% fixed 30 year loan now. Any suggestions?
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Answer 7

You're probably at a pretty damn good rate where you are now, since rates are going back up, and most big loan companies like lending tree (when it comes down to actually putting the loan together) will pull out on loan amounts under 110k before they are finalized.

But, if you are able to find a lower fixed rate loan, or if you are certain you are going to sell your home in the next 5 years, you can try a balloon loan, which start out with really low rates (sometimes as low as 4%) but increase every year. Its up to you, yes you have owned it long enough to refinance, although if there is some sort of stipulation in your current loan you may not be able to, but that is uncommon and highly unlikely.

Have you added any equity to the home since you've bought it? Simple things like landscaping, paint and carpet, new kitchen cabinets, these things can add thousands to the value. Not to mention that the values of homes goes up just due to growth in the area, so I would go ahead and have it appraised again, taking out a loan for under the value of the home (although companies will try to get you to take out a full equity loan) can result in very nice interest rates.

If it were me, which it is not, i would watch the market closely over the past three years, and read up on furture predictions.

From what i have gathered theyre expecting prices to drop, and rates to increase. Its either a good time to sit still, or to jump on a better offer.

Answer 8

if your only living there for 5 years you would be wasting your money to refinance. i would check around for lower interest rates. they are out there just look. if you can afford a larger payment i suggest cutting that 30 year to a 15 fixed.when you decide to sell you will get more cash by paying more.add 50 or 75 bucks to each monthly payment. this will lower your mortgage amount significately over the course of 5 years. also i suppose you have pmi and when you get 20% or more off your balance you can drop it leaving that to go to your outstanding balance. your interest rate is rather high but i would look at other mortgage companies to get at least a percent or more drop.never refinance when your only getting 1/2 or 3/4 percent reduction.would be better if you could get at least 1 1/2 percent or more.

Answer 9

You should check first if you have a prepayment penalty first. That is usually a term during which you will be charged by the lender if you payoff your loan sooner than agreed on. If there is no prepayment penalty, then go for it. It cannot hurt to refinance and if your house went up in value, then you could pull that equity out. If you are planning on living there for five more years, it is a good idea to have the smallest possible monthly payment. Don't worry about the interest rate. Good luck.

Answer 10

A Realtor could probably answer your question in a couple of minutes. I would advise you to ask a real world Realtor rather than asking amateurs on the Internet.

I'm not a Realtor, and I'm not familiar with your contract but it's my understanding that a mortgage can be refinanced at any time. Essentially, you'll be buying your house from yourself! You will be taking out a new loan to pay off the old one early. If the fees involved are small and there is no prepayment penalty, it could make sense to do so.

But, again, check with a licensed professional Realtor. A Realtor probably wouldn't charge you for a short consultation. Be sure to take your mortgage contract with you.

Answer 11

As others have told you, you have a good rate, and it will cost you to refinance. For just 5 years, it wouldn't be worthwhile to do. Remember anytime you consider a refinance to make sure you are comparing apples to apples. You can get a very low monthly payment if you choose to do an interest only loan, but it will never be paid off. Be careful.