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  • Another Refinancing question

    hi all,

    My current remaining loan amount is approximately 405,000 @ interest rate of 3.6250. My monthly payment is around 3700. I was looking to reduce my monthly payment to have some additional cash in hand. I have no other loans and maximize all my retirement accounts.

    The house is valued at 850,000. We have been in this house for about 4 years.

    I got a quote from my lender ( haven't shopped all around).

    Here are the numbers for 30, 20 and 15 year loans. The closing costs are approximately 8000 dollars ( which includes 3400 dollar to buy 0.8 % of points).

    3.250% for 30 years at monthly payment of 2500
    3.375% for 20 years at monthly payment of 3000
    3.125% for 15 years at monthly payment of 3600

    We intend to stay in this house at least for the next 5 years, maybe more. But who can look that far ahead.

    Would you folks go for any of the above to reduce the monthly payment? Or are the closing costs too high. I expected a better interest rate but maybe I am mistaken. My ideal scenario would have been to get a locked rate of sub 3 for 15 years - while paying somewhere close to 3000 dollars. Is that wishful thinking?

    Should I shop around more or these rates are legit?

    Thanks in advance.

  • #2
    The rates seem to be on par. But I'd still shop around. Closing costs seem a little... "costly".
    "Oh look another bajillion point declin-Ooooh!!! A coupon for pizza!!!!" <--- This is what everyone's IPS should be. ✓✓✓

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    • #3
      yeah your closing costs are way too high. the rates sound reasonable though

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      • #4
        I agree that the closing costs seem high. You can plug it into a refinance calculator to see where you stand after 5 years. I would continue to shop around.

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        • #5
          I'm a high risk kind of guy, but I think rates are going to continue to drop in the next 3 months. Fed's dropped rates to 0% and mortgages rates went up. They just started to drop a little the last 2 weeks. I think in the next 3 months, they will get down to 2.75 as demand drops off. Since your refinancing, you could take a bird in hand now, or play with some fire and wait it out for a better rate. Your call. (Also ditto from above, closing costs seem high). Rates in line with what I have seen offered locally. I would expect closing costs to be 3-4k.

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          • #6
            Originally posted by Jack_Sparrow View Post
            Fed's dropped rates to 0% and mortgages rates went up.
            That's because mortgage rates typically follow 10 year treasury notes and not the short term interest rate.

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            • #7
              Originally posted by CordMcNally View Post

              That's because mortgage rates typically follow 10 year treasury notes and not the short term interest rate.
              Yep, I also predict 10 yr note declines. Also Mortgage rates are based on bank risk and supply and demand to some extent. As soon as Virus hit, I bet a bunch of people who were going to wait till April/May to list, panicked and put their house on the market, not to mentioned the swoon of people looking to refinance. So demand is really high or at least was. In 3-4 months, 10yr note will be about the same but demand won't be there IMO driving down rates.

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              • #8
                Thanks all.

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