I have a 30yr fixed 4.93% interest on my 140k home, I currently owe 130k. My monthly mortgage is $1.116. If I refinance, according to several sources, I can lower my monthly bill to the 700-800 range. How is this possible if I would be refinancing at a higher interest rate, around 6%? With my fixed low rate, is there any reason besides a catastrophic event to refinance?
2007-08-29 02:24:58 · 11 answers · asked by Anonymous in Business & Finance ➔ Personal Finance
The $1116 monthly payment includes all insurances and taxes. We did 100% financing, and had to come up with about 2k for closing costs. We've had this mortgage for 3 1/2 years.
2007-08-29 06:01:44 · update #1
Refinancing doesn't seem like a good idea based on the low rate you have. Congrats for getting such a good one. You don't mention how long you've had this mortgage. The longer you have it, the less it makes sense to remortgage since you're into paying more principle and less interest.
2007-08-29 02:33:24 · answer #1 · answered by magnolia 5 · 0⤊ 0⤋
With your low rate I would say DON'T refi. You are currently carrying a rate under 5% which is hard enough to find as is. The add you are talking about sounds like an interest only mortgage, an ARM or a 50yr mortgage. When I used to underwrite loans, I would contact borrowers like yourself to tell them to stay away from what they were doing due to their low rates. Many listened, some didn't and they found themselves trying to get out of a variable rate 2 years later. Although in saying that, your payment seems awfully high for that rate at that amount, I assume you are including your Mortgage Insurance and or taxes. If you owe 80% or less on your mortgage an additional way to save money would be to have your mortgage insurance cancelled. Hope that helps.
2007-08-29 09:32:06 · answer #2 · answered by sljmft 2 · 0⤊ 0⤋
ASK your lender to explain the program you are in vs. what he is offering. Is your current mortgage payment INCLUDING your RE taxes and insurance? Are you in a 15 year mortgage currently and think it is 30 year?
COMPARE apples to apples. The payment of 1,116 does NOT compute at 4.93% interest rate; PERIOD. The payment eitehr includes your taxes and insurance OR you are on a shorter term loan than you think.
Take a look at you mortageg statement from your currennt loan, in many cases it tells you the MATURITY date, how many years away is it? How long have you had the mortgae? Add those two figures - that is the TERM of your loan.
Before I would refinance into WHAT appears to be a higher interest rate, COMPARE. You can NEVER save MONEY buy borrowering at a higher interest rate, not to mention the costs you will incur to close the NEW loan.
Hope this helps and Good Luck
2007-08-29 09:37:54 · answer #3 · answered by Anonymous · 1⤊ 0⤋
As to weather or not you should refinance, you would be the only person to answer that. As far as your 4.9% fixed, put it on a flag and wave it for the world to see. I must ask. When is the last time you wrote an interest rate on your check?
The biggest mistake people make is separating their debt. The whole good debt - bad debt thing. Hey, if it's debt it's bad. I recently dealt with a guy who was carrying $80K in credit card debt averaging 18% interest. He didn't want to touch his mortgage because he had 5.75% - Where is the logic in keeping that loan when his overall debt rate was 14.8% - Can you see where I'm going with this?
Bear in mind I manage the sales department at a Mortgage Bank so of course I'm going to favor debt consolidation over keeping a low-rate mortgage. After all - all you get from your 4.9% is bragging rights.
Here is one thing that stuck out for me in your question. You mentioned you are paying $1,100 and change right now. I'm assuming at 4.9% that payment includes your taxes and insurance? The payment you qouted ($600) either does not include taxes and insurance or it is an Option Loan. These loans are good for a few - bad for most. If it is an Option Loan and that payment does include your taxes and insurance he didn't quote you the "Fully Indexed Payment" he quoted you the "Neg-Am Payment" - Unless you are self-employed or rely on rental income to pay your mortgage or don't have a predictable, steady source of income, RUN. Don't walk, RUN. That loan is only going to get you in trouble.
2007-08-29 09:38:45 · answer #4 · answered by loancareer 3 · 0⤊ 0⤋
If you are near 15 years on your 30 year mortgage, you paid about 70% of the interest. What most consumers do not know is that banks hit you with most of the interest on the first 15 years because that's how they make their money. End of story.
2007-08-29 13:29:39 · answer #5 · answered by Anonymous · 0⤊ 0⤋
sit where you are now anyone saying you would pay less is trying to put you in a ARM adjustable rate mortgage or a pay option ARM both are not a good idea for you now you are where everyone wants to be!
be happy with what you got the grass is not greener anywhere else!
Dont get caught in thier advertising you have a great rate if its fixed anyone trying to get you to refinance should not be in this bussiness and you ll find their borrowers are most likely losing thier houses!
stay in your current loan!!!
2007-08-29 09:54:42 · answer #6 · answered by Anonymous · 0⤊ 0⤋
Well, you start all over again at 30yrs. thats how they lower the payment. Then you get to pay all those lovely fees again.
Later on you'll realize you just screwed yourself if you refinance.
2007-08-29 09:31:45 · answer #7 · answered by el88gringo 3 · 0⤊ 0⤋
Your rate is very low. I wouldn't refinance. There must be some catch to the new deal...maybe its variable, or longer term.
2007-08-29 09:36:29 · answer #8 · answered by hottotrot1_usa 7 · 0⤊ 0⤋
forget it you have too great a deal now -- but to answer your question they will start you all ove again with a new 30 year loan and new fees and charges and all the other tack ons!!!
2007-09-01 18:23:13 · answer #9 · answered by mister ed 7 · 0⤊ 0⤋
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2007-08-29 09:30:12 · answer #10 · answered by Anonymous · 0⤊ 0⤋