Anyone refinance during this mess? What rate did you get?
- Thread starter CLUB215
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Oh this is all about long term strategy. We have been overpaying since we bought the house.
I had been paying my 30 as if it was a 15 for the past couple years and in May I refinanced from 3.875% on a 30 to 3% on a 15. Required payment increased slightly, but it's a decrease from what I had been paying. I missed the sub-3% rates, but I'm good with 3% on a 15. This will probably be my last mortgage.
No.
Lots of financially naive people think the singular factor of "a lower monthly payment" makes money sense. (which is what many lending agents solely focus them on)
It might. It might not.
If it doesn’t make money sense then they shouldn’t do it. Like I posted. You’re welcome.
Making biweekly mortgage payments means paying half of your monthly mortgage payment every two weeks for a total of 13 (vs 12) full mortgage payments a year. This allows you to pay off the mortgage faster, save on interest and build equity faster. Draw back is you are making an extra payment each year so you have to budget/plan accordingly.
Whatever. I'm simply informing you that many lenders ONLY push the lower payment per month, and gloss over the total amount cost difference when pushing new loans. Remember, the lender generally only makes money on the closing fees, and then resells the loan off to someone else. Just like the car salesman's commission.
Lots of people do not understand this.
my bad I just doubled checked and its actually 2.3... GreenState.
I don’t know how many times I’ve had to explain this, but interest doesn’t “start over”. Interest is calculated daily based on how much you owe.
unless you are adding on to your balance when you refi, you are paying interest on the exact same dollars you owed before.
few mortgages are held to maturity. But if you are worried about extending your payment period, just apply your payment savings to the principal each month.
unless you are adding on to your balance when you refi, you are paying interest on the exact same dollars you owed before.
few mortgages are held to maturity. But if you are worried about extending your payment period, just apply your payment savings to the principal each month.
If you take a principal that was to be paid over 25 years and refi to another 30 year, with the same rate you'd pay more interest overall.
Why would anyone refi in that scenario? Your payment difference would be negligible.
The interest schedule "starts over".
Which means when you refi to the same 30 yr schedule (and, yes, at a slightly lower amount, based on the amount you refinance), the fraction of your payment going to interest starts over. And in the first 1/3rd of your loan, most of your money goes to interest on the loan, not paying down the principal.
Ergo, if you borrowed 100k at 4.5%, then refi to another 30 yr at 3%:
- You already paid $40k in interest (~$60k total)
- You still owe about $80k
Over the next 10 yrs you'll pay another $21k in interest and have only paid down another $20k in principal.
You still own $60k on your "new" 30 yr loan, and you've already paid that much in interest. Pay the rest of that out, and you end up paying $80k in total interest on the original 100k loan + new 80k loan.
Ends up being about the same total interest payment as the original 4.5% loan, only you took 40 yrs to pay it off, instead of 30.
If total interest is, worst case, the same, then that's not a big deal, and if you can refi and afford to pay off faster at the original payment, then you will end up paying less in interest.
Again, pay attention to your total loan interest, and what it may be if you can pay off faster at the lower interest rate.
Note that the refi to the "new" 80k loan at 3.5% (1% drop in interest) will end up costing you $10k more in interest (about 90k in interest between the two loans), than the original loan. And, again, that is IF you only pay on the schedule and not pay it down faster.
Why do people get "4-boxed" into bad car loans?
Because they only focus on a monthly payment, and ignore the other aspects, or just don't understand them. And sketchy loan originators make their money getting you to originate a new loan, not by "cutting you an awesome deal".
Rates are still low if you are above 3.5% I would consider it, if you are in an ARM I would consider it, yes check the closing costs you will be charged, look at the payment savings you will receive and see how many months it will take to recoup those fees for a good starting point if its worth it or not.
If you want argue which makes more sense financially, it's easier to justify taking the 30 year loan and investing the difference in the market.
Would not recommend that during a pandemic....
During post pandemic recovery, probably a double bonus
You needn’t inform me of this business, my friend. I’ve made a very good living from it.
People need to do their homework and if refi’ing makes good money sense (which is what I said) they shouldn’t delay. People just don’t do the research to determine their position.
purchased a home at 2.875 30 year. Of course I just checked and now rates are 2.625 do now I'm pissed.
Worth it? I am retired, wife waiting at least 4-5 years. Mortgage $85,000 on home valued at $130,000. Rate is 3.99% from 5-6 years ago. Think we only want to lower monthly payment for when we have no paychecks. Currently paying $815 total.
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Where are you seeing rates that low? I’ve been checking here and they are showing quite a bit higher than that.
https://www.bankrate.com/mortgages/...&refinancePoints=Zero&refinanceLoanTerms=30yr
have you ever thought about reading the posts of others? Or is your main goal just to hear yourself talk?
Having a new home built that is almost complete. Closing two weeks from today. Locked in at 2.75% probably three weeks ago, on a 30-year. Same thing as others said - we plan on paying off early by paying a little more each payment and 2x/month payments. And at the time we locked in there was little difference between a 15 year and 30 year rate.
as I noted I’ll “save” about 400 dollars per month by re-financing. That will allow me to pay off a second investment property (my personal loan, not the mortgage) in two years. Then I’ll go back to paying my mortgage for my personal residence at my pre refi rate
Iowa City. Hills and Green state are both around there.
