Which refinance option is more convenient? (See details)?

Question

I'm refinancing my home loan. My credit score: 792
At this point I have no equity in the house. I bought it 2 years ago.

Options:

1) 3 year mortgage at 5.875% (fixed)
Closing costs: 10,000
My monthly payment: approx. $2260

2) 5 year mortgage at 6.125% (fixed)
closing costs: 10,000
My monthly payment: approx. $2320

3) 30 year mortgage at 5.75% (fixed)
closing costs: $7500
My monthly payment: approx. $2500


All the monthly payments are ok. with me.
*********Any suggestions?*********
What should I pay attntion to when refinancing?

Answer 1

Find a new broker.

I don't know what your loan size is, but those costs seem high for anything less than a $500-600K loan.

None of those deals seem very good. With your scores, I'd look at an 80/20 type of structure as well to avoid MI.

I don't believe you're getting good offers here. Keep looking

Answer 2

If you are not the risk-taking type, I would go with option 3. At least you will know what your monthly mortgage payments will be for the next 30 years. It's a good rate and if you have the option of making additional payments towards the principal, you are probably better off this way. However, if you think interest rates could go down again in the next 3-5 years, then go with option 1. This means a bit of a gamble but it might pay off in the end. When you refinance, try to get the option of making additional payments that would be applied directly to the principal. This ensures that any additional money you have can be used on your mortgage and you will lower your amortization period and your total interest.

Answer 3

You need another option without the ridiculous closing costs.

Go with #3, BUT negotiate a lower closing cost. The paperwork is the same for a $100,000 loan or a $1,000,000 loan.

Answer 4

Is this a trick question?

:-)

Pick number 3, you have the stability of a fixed rate. You won't have to worry about where the rates will be or if you have equity in your home in another 3-5 years.

Better safe than sorry!

Answer 5

#3, but just be aware that this rate may not still be available...

and also it's very obvious that the lender is "buying down" your rate so that it is lower.

and it looks like the loan amount is pretty close to 428k, so that would fit your normal conforming guidelines, no problem there.

#3 is a good loan, just make sure that the lender still has it available and make sure they're not lying.

Answer 6

Option 3 is the clear winner, but the payment is wrong. It should be lower than the others, not higher.

Answer 7

For all your mortgage questions

Try

http://www.platinumquestmortgage.com

or

http://www.mortgagerefinancingatlowrate.blogspot.com