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Enough equity to refinance from physician mortgage to traditional?

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  • blippi
    replied
    zillow has a refinance calculator

    Leave a comment:


  • TXDoc21
    replied
    Is there a good site to punch in the numbers to be able to calculate the back of the napkin math? I feel like I’ve seen a spreadsheet or website mentioned on the board before.

    Leave a comment:


  • Zaphod
    replied
    Do you think it will get you a better rate? That hasnt necessarily been true for at least 7 years. What are the actual benefits?

    That is physician to standard, obviously a change in available rates is automatic. But the distinction in loan type is pretty meaningless.

    Leave a comment:


  • NumberWhizMD
    replied
    We did similarly this year. Bought in 2018, refinanced from 30-year to 15-year and dropped our rate from 4.75% to 2.125%. We had the appraisal waived (despite the increase in home value). However, the lack of paying for an appraisal didn't really change anything, as there were other fees with the refinance. We got our escrow refund from our original lender, which basically made up for the pre-paids with the new loan.

    You can easily plug the numbers to determine how much you will save and when that break-even point is.

    Leave a comment:


  • nomindforfinance
    replied
    We just did this. The difference in interest rates from when we purchased in 2019, plus getting a better interest rate for the improved loan to value were worth it to refinance even though we only bought 2 years ago. We went from a 4.5% physician jumbo loan to a 2.785% jumbo. We had done a lot of renovations to the house, so that plus the increase in market value took us from a 95% loan to a 50% LTV. We used better.com and they even offered credits towards their fees. Most of our closing costs were just prepaid interest, taxes, escrow adjustments, etc. which is money you are actually going to pay eventually anyway, and you usually get to "miss" a payment after the closing, so that's part of it. The actual loan fees including appraisal were maybe $2,000. We will break even within a few months.

    Leave a comment:


  • Marko-ER
    replied
    Crunch the numbers. I was in a similar situation over a year ago, and my back of the envelope (or rather napkin) gave me an ROI/break even point of about 18 months. I went from a 15 year physician loan with 5% down at 3.6% to a standard 15 year term loan with cash-out to 20% appraised value at 2.125% APR. With over 1% difference in APR it's a no-brainer, especially if you are going to get cash out for other uses. You may surprise yourself, real estate values in lots of the country -- unfortunately not so much in my area -- have skyrocketed.

    One possible wrinkle: there was talk of an extra 0.5% APR fee on any mortgage that gets refinanced and assumed by Sallie/Freddy -- most of them are these days. Make sure to ask your mortagage officer.

    https://www.forbes.com/sites/advisor...h=1674f44627cc

    ("adverse market finance fee" -- they are certainly creative with the euphemisms of finding ways to get money out of your pocket)

    Leave a comment:


  • Ozarka
    replied
    Not too much downside if you plan on staying in the house long enough to "break even" on the upfront costs of switching. I'm certain there will be other closing costs associated with it than just an appraisal.

    Leave a comment:


  • blippi
    replied
    Thanks for the advice. Definitely aware there can be other loan fees, just wondering if there are downsides to trying for traditional first (e.g. have to pay for a second appraisal from another bank if it doesn’t appraise high enough and i end up with a physician loan refinance).

    Leave a comment:


  • Tim
    replied
    Originally posted by VentAlarm View Post

    You’ll likely have to get an appraisal either way. It’s only a couple hundred bucks.
    More costs than just appraisal. Take a look at your last closing statement.

    Leave a comment:


  • VentAlarm
    replied
    Originally posted by blippi View Post
    Originally bought a home with a physician mortgage. I don’t yet have 20% equity of the original appraised value, but it seems quite possible that the increase in home prices locally might now get me there (it will according to Zillow estimate, if worth anything). Would of course like to refinance to a traditional 20% mortgage if that will get me a better rate, but would this require having to pay for an appraisal that I would otherwise avoid and may turn out unfavorable for equity (or other potential risk)?
    You’ll likely have to get an appraisal either way. It’s only a couple hundred bucks.

    Leave a comment:


  • Enough equity to refinance from physician mortgage to traditional?

    Originally bought a home with a physician mortgage. I don’t yet have 20% equity of the original appraised value, but it seems quite possible that the increase in home prices locally might now get me there (it will according to Zillow estimate, if worth anything). Would of course like to refinance to a traditional 20% mortgage if that will get me a better rate, but would this require having to pay for an appraisal that I would otherwise avoid and may turn out unfavorable for equity (or other potential risk)?
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