Refinancing drama :( vent

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anonymous user
Registered: 12-31-1969
Refinancing drama :( vent
11
Thu, 10-11-2012 - 11:00am
Hey team DSG, Well my dreams for refinancing our temporarily on hold :smileysad:. We got the good faith estimate and the closing cost are about 6000. Of that1600 is due to having a second mortgage for 3500. So h and I decided to wait until we have that loan taken care of. I am bummed because I don't like to sit back and wait when I know we could be saving money on interest. However, we will get three pay checks in November and I want to put 2000 towards that loan. H doesn't seem to want to put so much towards it, he is more comfortable paying things slowly. We could also look at refinancing the car again with our bank and put the rest on the car loan which would be a good deal since the rate is 2.99. When others have refinanced how much were your closing cost? I know it is important to shop around for the rates as well as closing cost. It is such a pain though because they don't make the closing cost fees readily available. The other annoying part is we are not really sure of the value of our house and how much equity if any we have. We are still paying pmi insurance even though we have paid off 20 percent because we have always assumed that we were underwater or at least w/out 20 percent equity with the housing crash. Which feels again that we are throwing money down the drain. So, now I am thinking of just paying the 350 for us bank (the owners of our mortgage) to do a appraisal to at least see where we are at. Does anyone know if you do an appraisal with one bank if the other banks will use it or if they want their own if we are able to refinance later? So, many complicated decisions, I am really annoyed with banks right now and how much money they make off us with interest even when it is a "good" rate. Feel free to tell me what you would do if you were in my shoes. Thanks for listening to my rant!
iVillage Member
Registered: 07-24-2001
Fri, 10-12-2012 - 1:15pm

I was being told the general rule of thumb in this economy is that if the interest rate drops by 1% or more, AND if you can shorten your loan life, then go ahead with the refi (but calculate how you are going to pay for the closing costs).

In our situation, it was really a no brainer.  The rate is 3% lower and we shortened the loan by seven years (and there we no closing costs.   It wont really effect our monthly payment .

There are some good calculators on line to figure this stuff 

iVillage Member
Registered: 02-11-2006
Fri, 10-12-2012 - 12:26pm
Thanks for the math help. I really stink at math :smileysad: We are currently 10 years into a 30 year mortgage and do not pay PMI. We plan to be here at least another 9 years. I like the idea of a shorter mortgage term (15 yrs) but we are already stretched so thin we cannot afford a higher monthly payment.
Community Leader
Registered: 08-25-2006
Fri, 10-12-2012 - 11:35am
I also believe it depends what is important to a person at the time. Lower monthly payment or lowering the total cost by the time you have paid off the loan. (Like Happy mentioned)

I recently did similar math when I looked at a car recently. Yea, I could easily save $100 a month in fuel and insurance cost, but I would be back in debt for another 5 years (minus the 16 months I still have on my current rig) It takes a long time to recoup at only $100 a month. I may not have lost any money in the deal, but I wouldn't have really gained, either, as a car has a limted life span.

I can pay off my rig when I get my tax refund, so although I will still have the highter fuel cost, I will no longer have a car payment of $176 a month and more freedom if I choose to trade it in or sell.

Just depends what is important to you at the time.
Serenity
iVillage Member
Registered: 03-15-2005
Fri, 10-12-2012 - 8:47am
Don't forget when you are doing these calculations to add in what you have already paid.

Your payment goes down for 2 reasons -- one is the lower interest rate, but the second is that you are stretching out your mortgage. So if you are 5 years in, you need to take into account that you are going from having 25 years left to having 30 years left again.

So when you do your calculations, you have the one for where you are currently without doing anything. And your new one, not only do you need to add the costs once you refi (including the refi), but you need to add in what you've already paid.

Jennifer


 


iVillage Member
Registered: 05-08-2006
Thu, 10-11-2012 - 9:07pm
This is a math exercise. Let's say you have a 30 year mortgage, and you have been paying on it for five years. So you have 25 years left on the mortgage. Say your payment is $2000 per month now. If you did nothing, you will spend a total of $600,000 to pay off your home. Now let's say you could refinance for 15 years, but keep the same payment. You would spend $366,000 (360,000 plus the 6000 refinance costs). You would build equity faster, and if you stayed there for the fifteen years, your loan would be paid off. Now let's say you refinance for 30 years, for $1800 per month. Your total costs for the house would be $654,000 (648,000 plus the 6000 refinance costs). But your monthly costs would go down $200. If you could use that $200 to pay off high interest cards, and you plan to stay in the house for around three years, it might be worth it. if you have any credit card debt, and you don't plan to stay in your home, and you aren't able to lower the number of years you are paying, it might not be worthwhile. There are tax implications to because mortgage interest is tax deductible. It is worth it, in my opinion, to get an appraisal to remove the PMi. A real estate agent might be able to give you an estimate of what your house will sell for - if that is high enough to qualify, then think about spending the money for the bank appraisal.
iVillage Member
Registered: 02-11-2006
Thu, 10-11-2012 - 7:42pm
How do you determine if it's worth it to try and refinance? We talked to a guy at our bank, and he just ran some unofficial numbers and said we would save just under $200/month if we refinanced. But with all the horror stories/closing costs involved, I just don't know if we should get the process started or just wait. We owe just about exactly what the house might sell for, but houses in our neighborhood are not really selling right now. One house 2 doors down was on the market for a year and they just pulled it off without a sale.
iVillage Member
Registered: 07-24-2001
Thu, 10-11-2012 - 6:43pm

I don't have a lot of information, but I am in the process of a refi myself.

Things have gone pretty smoothly for us so far (keeping my fingers crossed), but I've been hearing horror stories from others attempting to refi (including many being turned down for many different reasons).

In our particular situation, we are trying to refi through a local bank that currently holds our mortgage.  We are certainly not underwater on our property (since we've been paying our mortgage for 21 years).  We also have excellent credit (for what that may be worth). We were quoted the following options  for a 15 year fixed mortgage - 2.5% for $1300 out of pocket closing costs; 2.75% for  $650 out of pocket closing costs, and 3.0% for no out of pocket costs.  

Our appraisal went well and the appraiser thought we should not have a problem with our refi.  He did tell me an earfull, however, about how many people AND properties are not qualifying.  He told me that he personally could not pass his own appraisal for his property (because things have gotten much more strict in the last few years).  He really emphasized that things were CRAZY strict now - especially in the area of finding appropriate "comps" for comparison.  

Our bank called me this morning to set up our closing next week.

I'm hoping we don't have any hiccups and I can come back here to report that I'm officially refinanced!

Community Leader
Registered: 08-25-2006
Thu, 10-11-2012 - 2:18pm

I know very little about all of this.  I have only purchased one home (first time home buyers program, brand new construction) and refinanced once (in dire straights to pay pack my parents, so interest and fees were of no concern, I desperately needed cash)

So, my thoughts are.....

What if you simply continue chipping away at your mortages by sending in more to the principal.  My expericence is, in the general sense, that when I get all tied up in knots it is best to step back and not do anything.  Things that are supposed to happen should happen rather easily.  It may not go perfectly, or with out some bumps, but what I hear from you is the feeling that you are supposed to make something happen. 

Leave as is, and keep sending in extra towards your principal.  If refinancing is meant to be, it will fall into place when the time is right. 

My two cents. 

Serenity