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Does it make sense for me to refinace current mortgage?

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  • #16
    Originally posted by Slav4ikMD View Post

    Agreed, but when I did the math I included the closing costs in the new mortgage and basically I would come out ahead about 32k over 15 years. But I totally hear what you are saying.
    Oh I see I thought it was only a 12k difference. Even still I am not sure 32k is worth the hassle and risk. There is always a chance of being forced to move.

    I refinanced last year but my break even point was only 1.5 years.

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    • #17
      That is a significant improvement in rate, I have not done a careful calculation, though I bet you are much better off refinancing if you stay in the home for several years.

      Over 16,000 of your closing costs are costs that you would have with your current mortgage as well (taxes, insurance and interest).

      I just refinanced to a fixed 10 year loan at 2.5%. I had about $250k left on a home worth $500k. Loan costs (A+B+C) were about $1100, recording fees and prepaid interest (E+F) were about $100 and a lender credit of $1200 offset set those costs so I did not have to spend any of my cash. I do not have an escrow account, so prepaid and escrow payments (F+G) were almost 0. I prefer paying my homeowners insurance and property taxes myself.

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      • #18
        Maybe we will see under 2% rates in 12months. The. It will be easier decision.

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        • #19
          $7k in insurance?!? On a 740k house? Am I seeing that correctly?

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          • #20
            Your 800 fees are excessive. Attorney fee for title? That's fluff. Ask for waiver of impounds as a lot of the fees in there aren't fees but anticipated costs asked up front. As a servicer that has history with you those most of those should be minimal and deferred.

            We just closed 15 fixed 2.625 down from 4.00 30yr on 546k refi. 48yo and pulling retirement probably 12 years.

            Point of concern. If youre concerned on an additional 1-2k monthly consistently. You may want to look at your financials a bit more before commit to refi.

            30yr really does give that flexibility and your rate is pretty good anyways

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            • #21
              I would say follow up the megathread on bogleheads it has pretty good info about the lenders etc. I am sure you can do better than what you post in here.
              https://www.bogleheads.org/forum/vie...p?f=2&t=289559

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              • #22
                Originally posted by jhwkr542 View Post
                $7k in insurance?!? On a 740k house? Am I seeing that correctly?
                Hi, yes you read that correctly (except that 740k is the mortgage - house value is around 1.2). A few reasons for why it is so high: 1) we are in an area where most insurers don't want to cover after hurricane Sandy. 2) We are with PURE, which is a more expensive insurer (similar to Chubb) 3) My private practice office is attached to my home and many insurers will not cover if you are doing business out of your home. Having said that, I did have two other lower end carrier options which would cost me half of what I am paying, but I am more comfortable with having (hopefully) more reliable coverage (particularly as it gives me additional piece of mind in terms of business liability coverage like slips and falls.)
                Last edited by Slav4ikMD; 07-23-2020, 03:25 PM.

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                • #23
                  Regarding the flexibility of lower payments on the 30 year mortgage, if you can make decent additional payments on the 15 for a while and something unexpected happens, there is something called a recast. With a recast, they keep the current term of the mortgage, but lower the payments to account for how much you've gotten ahead with your additional payments. Might want to check with your lender regarding whether they offer that.

                  Personally, I am currently refinancing from a 30 to a 15 to get the best rate, not to mention 1% off the current rate. Originally got the 30 year mortgage five years ago for the flexibility of lower payments while making extra payments. After 5 years of extra payments, refinancing to the 15 is actually lowering the payments.

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                  • #24
                    Originally posted by Balance1969 View Post
                    Regarding the flexibility of lower payments on the 30 year mortgage, if you can make decent additional payments on the 15 for a while and something unexpected happens, there is something called a recast. With a recast, they keep the current term of the mortgage, but lower the payments to account for how much you've gotten ahead with your additional payments. Might want to check with your lender regarding whether they offer that.

                    Personally, I am currently refinancing from a 30 to a 15 to get the best rate, not to mention 1% off the current rate. Originally got the 30 year mortgage five years ago for the flexibility of lower payments while making extra payments. After 5 years of extra payments, refinancing to the 15 is actually lowering the payments.
                    Which mortgage company did you use?

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                    • #25
                      Originally posted by ChicSkiier View Post

                      Which mortgage company did you use?
                      Chase. My business accounts are with them and I'm in the private client group, so going through them is the easiest. Other mortgage companies may (or may not) get you better rates.

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                      • #26
                        When I have refinanced, I have gone with no points and no closing costs. This makes every proposal on the same terms. In effect, it shows you in the interest rate how much you are paying for all the other expenses. Then it is just a matter of finding the lowest interest rate.

                        Online calculators found that this was an equal deal to paying the costs if I stayed in the house for a long time. It was just another way to get to the same point. Of course, check the rates versus paying costs and points and use the calculators to see whether you get a better deal by putting more money upfront.

                        Having no fees, points or closing costs also makes closing more efficient. One time we had a lawyer try to add on some fees to his office. I said "this is a no closing cost, no fee loan whatever it is, I am not paying it."

                        If you do find a loan that is a better long term deal paying those costs, then compare to other lenders with the same mix of fees.

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