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Opinions please!!

January 18th, 2008 at 05:07 pm

First off I have to say NO SPEND DAY!! Smile

Okay, with that said, I need some opinions. I know what I think, but have to convince DH, so let me know if I am seeing this wrong. My mortgage broker called today. This is a person I have known for years and trust not to screw me over. He said we can refinance for no cost and that it would save us $50-$70 dollars a month. Now with the job search not going great, this would be welcome money. There is a new bank in town (that have favorable reviews) that is looking for new loans. He said we would have to pay 4 months escrow up front, but our old loan would refund us the escrow money we have in there,and we could then send that money to put toward the new loan. Our interest rate would drop about .25 of a percent. Certainly not earth shattering. We pay no fees or closing costs, just basically sign the papers and make new payments to the new bank. I guess they are giving some sort of bonus to him for new loans, cause I flat out asked him, if it is free for me, whats in it for him?? He just said "oh we still make money". So... thoughts, opinions?

7 Responses to “Opinions please!!”

  1. merch Says:

    I would only do it if you could get the years too. Otherwise you just throw away the interest you just paid

  2. Lynnae @ beingfrugal.net Says:

    I don't know much about mortgages or refinancing. If you refinanced, would it add more years to your loan? If it did, I don't know that I'd do it.

  3. boomeyers Says:

    Yes, it would add more years to the loan, but we are only planning on being in this house for another 10-12 years, not 30!! So that is not a huge factor.

  4. luxliving Says:

    Where are you at -year wise- in the mortgage you've got?

    AND, it seems like A LOT of banks are pushing refinancing currently, there MIGHT be a better offer out there for you. Meaning if it's a sound decision to refinance right now, it shouldn't matter that you go to a different bank down the street if they've got the better deal, unless you just want to support your friends' career especially.

  5. Thrifty Ray Says:

    Proceed with caution. Ask LOTS of questions and in the end, trust your gut.

    $50-70 a month is no savings if it means that you have thousands less in equity in 10-12 years because things were not as they initially seemed.

    With that said, if it is as good as it initially seems, and you can save that money...perhaps you are one step closer to making those "stay at home mom" ends meet.

    Then ask your current holder about prepay penalties..is it an adjustable or fixed rate? Is there any negative amortization? PMI insurance? Balloon payments? etc, etc....

    Ask alot and trust your gut....and maybe you can even get a similar deal with your current mortgage holder if you mention the deal??

    PS...CONGRATS on the no spender...I know you work hard to make those happen!!! Hugs!

  6. M E Says:

    I wish I could remember the rule of thumb about refinancing. However, I am 99.9% SURE that a 1/4 percent interest difference is NOT the rule. I think it needs to be 1% or more.

  7. fern Says:

    Before you decide on this, can you ask your bank if they offer "readjustments?"

    A readjustment is different from a refinance. They are much cheaper (couple hundred dollars) and quicker to do and the paperwork is minimal, but you can only do them with the bank you are with now.(That's why the paperwork is minimal.) And they only let you do it once during the life of the loan. When rates dropped about 9 years ago and everyone in the world was refinancing to take advantage of lower rates, my bank offered the readjustment, i think to hold on to existing customers. I did it, but sure wish i could do it again. It was worth it, and oh, the best thing was, it did NOT set the clock back again like my refinance did. (i did a refinance maybe 2 years after i bought my house, then i did the readjustment two years after that.)

    I think the rule of thumb is that it's worth it to refinance if it's at least a 1/2 percentage point lower.

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