I just bought a house with an interest of 6.625% and?

Question

a mortgage amount of $417,000...I only made 2 payments on my house. My mortgage broker called and said interest rates are dropping and asked if I wanted to re-fi. Interest rate will be somewhere between 6% and 5.85% and closing costs around $2000 (no hidden charges)

should I go for it?? thanks for your input.

I had a 30-year fixed. Thanks!

Thanks for your answers so far...I get a savings of $170 per month or $2040/year. So in 1 year I'll get my money back on the refi...

Answer 1

I have not done the math but this does not seem like a really great deal. You do the math....I think there is a calculator on the web which allows you to find out just how much you can save, if any. I would also ask the broker to show me the numbers and give me a guarantee, in writing, that the numbers will not change at closing time. There are some very unscrupulous lenders out there. beware

Answer 2

If you can really do this for the costs of $2,000 in fees and no more and the interest rate will really be 6% or less then this will save you approximately $2,600 in interest per year.

However is there a prepayment penalty on your loan? If there is that prepayment penalty will be in the neighborhood of $12,000.

Also is this a mortgage broker that you have a long time realtionship with?

I have noticed that mortgage brokers have become very good at changing the terms on you at the last minute at the day of the sign off.

The loan that you thought that you were going to get is not the loan that you actually get. The loan that you actually get is a ridiculously over priced monstrosity that is nothing like the loan that you were promised.

I recommend that you hire a real estate attorney to represent your interests and read all of the documents for you and tell you what they really mean.

That will very likely save you thousands of dollars and it does not cost all that much to hire the attorney.

Be prepared to walk out on the title officer and take all of the documents with you if the terms at the sign off are not exactly what you were promised.

That is what I did recently when I refinanced my own home and the mortgage broker changed the terms on me on the day of the sign off to terms that were extremely unfavorable to me.

My 4.75% fixed loan that I had been promised had all of a sudden morphed into a 9.75% adjustable monstrosity.

This was a loan that I obtained by calling on the online ads to refinance your mortgage.

I grabbed the loan documents right out of the title officer's hands and walked out of the title company and cancelled the transaction.

Needless to say the title officer and the mortgage broker were extremely upset with me, but not as upset as I was with them.

I went back to the bank where I have my checking and savings accounts and was ofered a true 30 year fixed at 5.75% or a true 15 year fixed for 5.25%.

I chose the 15 year fixed because of the lower interest rate and I could afford the larger payments and I would have the loan paid off sooner.
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Answer 3

I highly doubt it is really your mortgage broker, It may be your bank, but likely not your broker. They would not call you and ask you to refi, and if they did, they could not do it for a $2,000 flat fee on a $417,00 loan amount 2 months after you bought it. You are probably getting solicitation calls like most home owners do right after a refi from telemarketers that will say anything. Have you called your broker to actually find out if they really are the ones calling? I would be shocked to find out it was really them.

Even if it is them, you cannot get 5.875% unless you meet conforming criteria and have 20% down. You will need a Fico above 700 and $83,000 down payment in addition to closing costs. If you just bought it, even if you put 20% down, any equity will have been absorbed by your first closing, escrow fees, REALTOR commissions (contrary to popular believe the buyer pays those as they are financed into your mortgage) and depreciation.

The short answer: Keep what you have.
If you want to break it down yourself you can do it here: http://wefixrates.com/tools/CalcRefi.htm

Answer 4

No. Remember that yor morgage broker is a SALESMAN and he is trying to make another SALE. HE gets paid if you refi and what you get get out if it? This will NOT be accurate becasue I do not know what closing costs were rolled into your present loan, what your insurance and property taxs are but it will be close enough for comparision purposes.
Let's say that your current loan is for 30 years fixed rate of 6.625% on a loan amount of 417K..that equals a payment of $2670.10 WITHOUT the added costs I mentioned. IF you refi 417K at 6% for 30 years....your new payment would be $2500.13. which is a difference of $169.97 and if the refi costs you $2000.00 then it would take 2 years to breakeven. But what if the are "nice " to you and roll this into the loan? You would refi 419K and your payment would be $2512.12 and that would take another year to payoff.
And again these numbers are NOT Accurate. I am sure that there are other costs associated with refiing the house and to realy know you need to do what I just did and run the numbers. And this does not take into consideration the time value of money, how long you plan on keeping the house, what your tax rate is, and a few other things that will affect the bottomline.
Usually you need a rate difference of almost 2 points to justify a refi and it's costs.

Answer 5

You may profit from that but rates haven't gone down that much in 2 months. If you refi try different mortgage brokers and banks.

Answer 6

we just purchased a home also in pa and after being in the home 6 months the bank called and asked if we wanted to refinance but i read and wasnt told my bank put a prepayment penalty on the loan if i refi or paid off the loan it would be 3%within the first 18 months and 2% for 18 months after .Check see if you would get penalized for prepayment .

Answer 7

I'd be a little leery on this one - something doesn't sound right. If it's such a good deal for YOU, what does the broker have to gain from it?