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Refinance now?? #2994723
08/09/19 05:24 PM
08/09/19 05:24 PM
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Belchfire1 Offline OP
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We're only 2 years in on our mortgage 4.00% and are looking to refinance at 3.75% locked rate, no points. The property value has increased 100k (speculative until appraisal but also conservative based on neighborhood comps) We have an FHA and would be able to get out of the PMI ($300 or so a month, we will keep paying the same each month, so we can pay down the mortgage a bit quicker) crap we're currently paying. I'm no expert but this seems like a good idea. Any thoughts from the armchair pros on here?

Cheers, Belch

Re: Refinance now?? [Re: Belchfire1] #2994725
08/09/19 05:32 PM
08/09/19 05:32 PM
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ifallalot Offline
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If you have an FHA loan you can do a "FHA quick refinance" that will allow you to drop the points without getting an appraisal.


My entire existence is a failed gotcha
Re: Refinance now?? [Re: Belchfire1] #2994741
08/09/19 06:11 PM
08/09/19 06:11 PM
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I just closed on a construction loan at 3.875%.
Thought that was pretty good.

I'm no expert - but what will the closing costs be for the refi and how does that compare to the overall 0.25% savings?
I assume its probably in your favor but thats what I always remember hearing when talking about refi.

Last edited by HatterasGlass; 08/09/19 06:11 PM.
Re: Refinance now?? [Re: Belchfire1] #2994755
08/09/19 06:30 PM
08/09/19 06:30 PM
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Pancakes15 Offline
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You know refinancing costs you more money in the long run right? Sure your monthly payments are lower but your entire term starts over and guess what? If before you refinance every payment you were making lets say 80% was going towards interest and 20% to principal, after you refinance 95% of your payment is going to interest and 5% to principal. These numbers are rough, but you get the point. Your payments go down but you're further delaying how long it takes to make actual payments towards your principal.

Banks aren't in the business of making less money for themselves.

Plus you add in all the refinance fees.

Never....refinance.

Re: Refinance now?? [Re: Belchfire1] #2994767
08/09/19 06:55 PM
08/09/19 06:55 PM
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Pancake is very wrong. Makes sense to refi when you run the numbers and they come out in your favor. Short term, like under 5 yrs, probably not worth it.

If you can get 2% lower, you make up the costs in about 3 yrs.

.25% not really worth it though unless you go to 10/15 yr from 30 yr. Look up finance calculators and figure it out for yourself.

https://www.nerdwallet.com/mortgages/refinance-calculator

Last edited by Driftcoast; 08/09/19 06:56 PM.
Re: Refinance now?? [Re: Driftcoast] #2994772
08/09/19 07:09 PM
08/09/19 07:09 PM
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Pancakes15 Offline
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Originally Posted by Driftcoast
Pancake is very wrong. Makes sense to refi when you run the numbers and they come out in your favor. Short term, like under 5 yrs, probably not worth it.

If you can get 2% lower, you make up the costs in about 3 yrs.

.25% not really worth it though unless you go to 10/15 yr from 30 yr. Look up finance calculators and figure it out for yourself.

https://www.nerdwallet.com/mortgages/refinance-calculator


How long would someone be working at a bank for that came up with a way for them to make less money?

Go look at an amortization sheet and tell me how you don't spend more money over 30 years when you start your term over refinancing.

Re: Refinance now?? [Re: Belchfire1] #2994806
08/09/19 08:18 PM
08/09/19 08:18 PM
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Fritzo Offline
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Pancake has a point but you can make up for that differences by including additional "principal only" payments from time to time, or possibly switching to a bi-weekly payment rather than monthly.

Like he said, analyze the amortization table for the two options for the best comparison.

Add that $300 PMI payment to the amortization table for your current loan until you're under 80% LTV (I think this is when you're release from insurance) and compare apples to apples.

savings accounts suck, I'm not sure how much to invest in index funds, but I feel like I'm saving 3.75% on my money every time I do a principal-only payment.

Last edited by Fritzo; 08/09/19 08:19 PM.
Re: Refinance now?? [Re: Belchfire1] #2994807
08/09/19 08:21 PM
08/09/19 08:21 PM
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rts265 Online content
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get rid of the PMI - no brainer.

Re: Refinance now?? [Re: Belchfire1] #2994816
08/09/19 08:45 PM
08/09/19 08:45 PM
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Similar vein what math does a PMI make sense?

Sure, 20% down is brutal on your cash but at the same time why are you buying if you can’t stomach it?

Re: Refinance now?? [Re: Belchfire1] #2994817
08/09/19 08:49 PM
08/09/19 08:49 PM
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Originally Posted by Belchfire1
We're only 2 years in on our mortgage 4.00% and are looking to refinance at 3.75% locked rate, no points. The property value has increased 100k (speculative until appraisal but also conservative based on neighborhood comps) We have an FHA and would be able to get out of the PMI ($300 or so a month, we will keep paying the same each month, so we can pay down the mortgage a bit quicker) crap we're currently paying. I'm no expert but this seems like a good idea. Any thoughts from the armchair pros on here?

Cheers, Belch


I'm a mortgage guy -- PM me. If you're not paying points and getting out of the FHA loan (MI for life) it's a good deal based on current rates. But I think it's gonna get better . . .

Re: Refinance now?? [Re: Ranga] #2994820
08/09/19 08:52 PM
08/09/19 08:52 PM
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I can't lend in CA, but will be glad to give you my $.02

Re: Refinance now?? [Re: rts265] #2994832
08/09/19 09:35 PM
08/09/19 09:35 PM
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Belchfire1 Offline OP
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The removal of the PMI is the main driver. We can afford the mortgage and will continue paying the same amount every month, but the $300 something in PMI will go towards principal each month.

Re: Refinance now?? [Re: sd_101] #2994874
08/09/19 11:30 PM
08/09/19 11:30 PM
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Originally Posted by sd_101
Similar vein what math does a PMI make sense?

Sure, 20% down is brutal on your cash but at the same time why are you buying if you can’t stomach it?

Have you looked at home prices lately?

People don't walk around with $250k in liquid cash


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Re: Refinance now?? [Re: Belchfire1] #2994875
08/09/19 11:30 PM
08/09/19 11:30 PM
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Originally Posted by Belchfire1
The removal of the PMI is the main driver. We can afford the mortgage and will continue paying the same amount every month, but the $300 something in PMI will go towards principal each month.

Which means you gain more equity. Do it, its a no-brainer


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Re: Refinance now?? [Re: ifallalot] #2994968
08/10/19 11:40 AM
08/10/19 11:40 AM
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Yes, do it. I refinanced twice in 3 years. Mortgage payment dropped $475 altogether.

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