BGOL Homeowners when is it a good time to refinance?

[cli-terminator]

In 2015 I bought my 1st home with an FHA loan. Ever since just over a year ago, I've been receiving letters from companies looking for me to either refinance or sell my home. Today I received a letter stating that my home value may have enough equity in it for me to be able to get out of having to make mortgage insurance payments. I'm assuming that's only possible via refinancing since I'm not at the 20% of the mortgage principle yet. Based on the emails I've received from Zillow and Redfin, my home is estimated to be valued at almost $50K more than I paid for it. While I could definitely use some of the equity in my home to take care of a few things I'm not familiar with what the pros and cons are for refinancing, whether I'd be seeing myself up to fail if I refinance too soon and what to expect as part of the refinancing process Can any of y'all shed some light on this?

 

[jagu]

I don't think you will ever get a lower rate than you did in 2015. What is your current rate and how many years is your loan?

Edit.. I see that you want to get rid of fha mortgage insurance. I need to know your proposed rate in order to tell you if it's worth it.

Also, be careful about taking out equity out of the house unless it's an emergency or you must have something that you don't want to pay cash for.

 

[DiGeneral]

1st thing I would do, is check to see if the refi interest rate is lower than that of your FHA's

 

[Aww Skeet Skeet!]

You gotta crunch the numbers. Refis cost money... How much would you save over your current mortgage if you refi'd? What's the break even point? Are trying to refi into a larger mortgage to cash out the difference?

 

[Varis]

It's a trap yo keep you from paying the house off

 

[cli-terminator]

I don't think you will ever get a lower rate than you did in 2015. What is your current rate and how many years is your loan?

Edit.. I see that you want to get rid of fha mortgage insurance. I need to know your proposed rate in order to tell you if it's worth it.

Also, be careful about taking out equity out of the house unless it's an emergency or you must have something that you don't want to pay cash for.

My rate is at 4%.

 

[cli-terminator]

You gotta crunch the numbers. Refis cost money... How much would you save over your current mortgage if you refi'd? What's the break even point? Are trying to refi into a larger mortgage to cash out the difference?

Yeah I was looking at possibly taking some equity out as well as getting out of paying mortgage insurance payments. Please excuse my lack of knowledge but when you say cost money, are you referring to closing costs or something different?

 

[jagu]

My rate is at 4%.

You can't get better than that anymore. I own a title company and I know this. It won't be worth you refinancing it because the cost of refinancing will be high and your rate is low enough..
Do NOT touch that rate.

 

[Smoke Van Gundy]

Congrats!

Like most of the other posters said what are you trying to accomplish? A refi can save you money in the short term but you also reset your loan. meaning you lose those 4 years. Most companies can walk you through a scenario "if you did this...your new payment would be...and it would save you that."

What they dont tell you is they tack on their fees to the back of your loan and if you do the full term 15 or 30 years you'll end up paying more over the life of it. Have the conversation its free, and weigh out your options vs goals

Good luck

 

[Capo]

If your goal is to pay the house off, you should refi to get rid of the mortgage insurance and then try to just pay that loan. That's if getting rid of the mortgage insurance is really worth it for you. Find a low closing cost loan and only take money out if you need it. I would try to do any refinancing earlier rather than later in the loan so that you can start eating into the principle. Don't do anything without reviewing the hud1 so you can see what they arre charging you. I've seen refinance loans cost people almost $30,000. You've got a good rate though. It probably won't be with it.

 

[cli-terminator]

You can't get better than that anymore. I own a title company and I know this. It won't be worth you refinancing it because the cost of refinancing will be high and your rate is low enough..
Do NOT touch that rate.

What are the typical costs of for refinancing? Are they all up front or over the life of the loan?

 

[black again]

How much is your pmi?

When will it drop off automatically? (prolly in several more years)

You have 4%..is that on a 30, 20, or 15?

What kinda rate would you be looking at now? Can you do a 20 or 15 yr?
How much are they quoting you for closing costs?

Most people roll them into the loan, so you're financing it for the term of the loan..unless you can stroke a check at closing...

So, you need to figure out how soon it would pay to drop it by a refi vs automatically dropping off.

Damn..I used to do this stuff in my sleep..

 

[jagu]

What are the typical costs of for refinancing? Are they all up front or over the life of the loan?

They usually roll it into your new loan. Closing cost on a $100,000 loan is about $6k if you have good credit.

What is the proposed rate?

 

[Dota]

What are the typical costs of for refinancing? Are they all up front or over the life of the loan?

If its a re-finance that's no cost to you then they're adding the closing cost to the back-end of the new loan amount.

 

[black again]

If its a re-finance that's no cost to you then they're adding the closing cost to the back-end of the new loan amount.

That's not a no cost refi. If they're adding the CCs to your loan, you're still paying for it. If they're paying the CCs for you, you're taking a higher rate to offset the costs. On a short am (10 or 15 yr), the CCs rarely paid for themselves.

 

[jagu]

That's not a no cost refi. If they're adding the CCs to your loan, you're still paying for it. If they're paying the CCs for you, you're taking a higher rate to offset the costs. On a short am (10 or 15 yr), the CCs rarely paid for themselves.

There’s really nothing like a no cost refi. Even if they don’t roll it into your loan, they will increase your interest rate well above their buy rate so that they can get their money back.

 

[Lexx Diamond]

You can't get better than that anymore. I own a title company and I know this. It won't be worth you refinancing it because the cost of refinancing will be high and your rate is low enough..
Do NOT touch that rate.

^^^This man speaks mega truths.

 

[cli-terminator]

To be honest I haven't looked into any offers so I don't know what the current rates are. I wanted to educate myself on what I'd be potentially facing before going to the next step. I've never done anything like this and didn't just want to jump into the fire

 

[bgbtylvr]

My rate is at 4%.

That’s a great rate. So it sounds like you just want to get rid of PMI. Not sure if each bank has different rules than mine, but if you pay the loan down below the point they specify the PMI ends there. Ask the bank for specifics.

 

[bgbtylvr]

As someone said, a refi costs. It can be several grand or more depending on the loan amount. If you have the cash to pay every penny of the refi costs, it might be worth it to look into it. Now, getting a rate below 4% is doable
But not really gonna change the payment much unless you get 3% somehow. Don’t even know if that’s doable.

A simple mortgage trick is to pay one extra payment per year; it will take 7 years off a 30 year loan. Double em; 14 years off the loan.

I wouldn’t touch the equity in your new appraisal without a real reason.

 

[black again]

There’s really nothing like a no cost refi. Even if they don’t roll it into your loan, they will increase your interest rate well above their buy rate so that they can get their money back.

Mannnnnnnnn, I used to work with a broker and we did no cost purchases and refis ALL DAY EVERYDAY!

It's true that you'll get a higher rate, if you don't pay your CCs, but there are times you can use it to your advantage.

Back in the day, If I wanted, I'd do a refi for someone and the difference of their paid rate and no cost rate might be 3/8ths...a qtr if I liked you, or you were fam. And since there was no bottom to the market, I could do it for the same client over many years.

I had clients ready to name their kids after me I did so many refis or consolidations, purchases for them...but this was a while back..

The beauty, IMO, of mortgages is that it's VERY simple math. What's your potential savings? How long will it take to recoup your investment? Those would be the 2 main questions for the OP.