Refinance??? - Clearwater,FL

We dropped , I think, 2% when we refi'd a few years ago...went from a 30 to a 15 then paid it off quickly. Payment was basically the same. No ARMs!!! And DON'T roll things like credit card debt, car loans, etc. into a refi!

There is a whole mess of math. :) Pretty much for it to be worth your time and money you need to drop around 1 to 2% depending on your balance and term left. We just refinanced at 3.5%. The fees were under 1,000 but we had to bring more to the table to fund our escrow. Had we had an escrow on our old mortgage pretty much the same amount would have been refunded after the payoff.

We took our thirty and reduced it to a 20 and pay 300 less so we are putting that to extra payments so we are looking at 10. :)

Yeah I agree with Tracy, ARMs are bad but at under 4% you would have to be an idiot to go with an ARM, don't be an idiot! :)

Dawn that is the norm unless your credit is a mess. When we were closing they locked someone into a 3.1% I joked, we are done, if rates go lower than this dogs and cats will be living together.....

I refinanced about a year ago. We have a 4.75% because I had to finance more than the value of the home so we couldn't get the best rate. Our fees were right about $1,200.00. I went through Quicken.

The only advice I can offer is to be sure that your ducks are all in a row and your income to debt ratio is good. Mortgage loans are not as easy to get as they were years ago. I jumped through hoop after hoop and was ready to commit suicide or homicide - I just hadn't decided which - lol!

If you have good income to debt ratio, good credit scores and your house values at or above the balance left on your loan, you should be in good shape.

I've had a few people I know refinance and got into an adjustable rate mortgage. It turned out to be very very bad. They started off with low interest rates and they jumped up. Now they can't afford the house payment and never know when it will go up again. ARM = bad. That's all I can offer.

C.:

The general rule of thumb in refinancing is to drop from 1.5 to 2 percentage points and know that you will be staying in the house for at least the next 5 to 7 years.

You will have to pay for an appraisal up front (anywhere from $350 to $500). You can roll the closing fees into the loan so you don't have to go to the table with any money.

Call your local bank and ask them what their rates are. Keep in mind if you are serious - in order to give you the best quote - they will HAVE to run a credit report to make sure your credit is good. So I would check my credit report just to see what it says before you go to re-fi.

I would STRONGLY advise you NOT to combine this refinance with any credit card debt you have. Especially if you are an habitual credit card user - as paying everything off with the mortgage only to charge it up again doesn't do anything for you.

If you or your husband have served in the military - check with USAA and check out their rates. They can be .5% less than banks.

DO NOT do an "ARM" (adjusted rate mortgage). Stick to a straight fixed loan. Especially if you are NOT prepared for the balloon payments that happen at intervals with the ARM.

GOOD LUCK!!

As a general rule if the % rate will drop more than 1% with no points, you should refinance. I'm not sure the type of fees you paid with an FHA loan, you typically need to pay a fee for the loan, title search, appraisal fees and attorney fees.

No I haven't refinanced lately, but it's something I really should do.

Also keep in mind that your probably paying PMI. If you have over 80% equity in your home, you won't need make that monthly payment anymore.

Jo got a super deal - hopefully you can too.

There are a lot of "deals" going around, but you have to fork over money for an appraisal fee upfront, even if you end up not qualifying, just so that you know.

Make sure you have a really good credit score before going in.

Oh, and about what Tracy said - boy, I agree. I can't imagine why ANYONE would have an ARM right now. The rates are too low. Maybe I'm missing a justification in my head, but I think an ARM now would be crazy!

Good luck!
Dawn

We recently refinanced. We've been in our house about 4 1/2 years and were able to switch from a 30 year to a 15 year without changing our payment. It's definitely something to look into.

Call a couple of local banks. Actually, I would call credit unions or small local banks. Find out their fees and what information they need. The gal at our bank told us that if we wanted to talk to a couple of banks we should do it at about the same time. Multiply checks of your credit score can lower it a bit, but if you do them within a short period of time I guess it either doesn't or to doesn't right away.

Our bank charged a flat fee of $1200 (and that included the appraisal, the transfer or title and all those fees). We had enough equity that they were able to roll that into our mortgage. They also rolled in our escrow account, as taxes would be due before we received the refund on our previous escrow.

Your going to get slightly different deals from different banks and credit unions, so make some phone calls, ask some questions and see what you're looking at. It is definitely worth asking.

We did this about 1.5 years ago and went from 6 something percent to 4 something percent. We were able to drop our years remaining from 26 to 20 and have about the same payment. We paid the closing costs out of pocket (about $2,500) because we didn't want to increase our loan balance. I'm thinking about doing it again because the rates are lower and maybe we could get down to a 15-year mortgage. We were in a situation where our balance was slightly over the value of the home (and still are there). I would definitely recommend it because if you can keep your payment about the same and reduce the years you will owe, you will be able to build equity so much quicker!

I didn't read through the other responses but I JUST did this about an hour ago - similar situation to yours. FHA, originally 5.875% and have had it for 4 years. We have Bank of America and there were different rates based on how many points (money) you want to pay at closing. Because we are trying to save for an addition, I wanted $0 out of pocket money. With the new streamline loans, you should be able to refinance for a lower interest rate and pay nothing. We ended up lowering our interest rate to 4.5% and are paying nothing out of pocket and will be saving $190 a month!!!! We could have gone down to 4.25% (paid $20 less per month) but would have had to bring around $500 to the closing. We could have had it even lower - like 3.75% and paid the full 3-5K out of pocket for closing, but like I said we didn't want that.

No appraisal and no documentation at this time. Previously we needed three months salary, bank statements, etc and to me it was a pain!

Other than being on the phone for an hour, it was the smoothest, most well instructed/advised conversation I've had about mortgages in a long time!!

Now I can't wait until we can put an extra $190/month into our renovation fund!!!

Can't really help you. But DH and I have decided that with less than 5 years left on our mortgage, we're not going to do it. As long as we can make the payments. And now that he's self-employed, we're not sure we'd qualify anyway.

And at the risk of sounding old. . . . when we bought our first house in 1990 we paid 11% interest! And were thrilled to refinance after a few years down to 8%. So our 5% isn't so bad to us. It's all relative.

Everyone has some great advice. Most loans are fixed. The best thing to do after you do your research and get to the loan stage is know what your offer is. Make sure you get the Truth in Lending form that provides all the info for fees and other charges for the loan. There are a lot of fees now so make sure there are no junk fees.

Yes, an ARM can be bad, depending on what you get. We refinanced in 2003. Yes before we lost equity. The loan is a 5/1 arm. We adjusted in 2008 for the first time. Then we adjust every 6 months, tied to 6 month libor. We went up the first time, then down and down or the same ever since. If you know what you are getting into, you can be smart....even with an ARM.

I just looked into refinancing my FHA loan. I took it out October 2009. I would have dropped my rate from 5% to 3.5%, but my mortgage insurance premiums from FHA would have doubled, plus having to put 1.75% of my loan down for closing in premiums. If you took out your loan before June 2009, you should be ok and won't have such a hefty premium increase. You may even get a decrease. You can have a mortgage broker run the numbers for you. FHA requires you to pay those premiums for at least 5 years until your loan to value ratio is at least 78%. That five year clock resets if you refinance.

I am aggressively paying down principal and should hit 78% in the next 3 years. So for me, even though I would save in interest, it would have taken me about 5 years to make back the increased mortgage insurance costs. My payment would have only gone down about $35 a month. I am just continuing to put extra in principal and am on track to have my loan paid off in 17 years. If there isn't a lot of equity built up in your home, those mortgage insurance premiums will eat up a lot of the savings you'll get with having a lower interest rate.