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Time to Refinance Mortgage?

Home Mortgages and Home Buying Time to Refinance Mortgage?

  • Avatar hightower 
    Participant
    Status: Physician
    Posts: 1484
    Joined: 12/07/2016

    I’m considering refinancing, but I just don’t feel like it, lol.  I’ve done it several times before and it’s just a pain in the rear.  I am interested in cash out to consolidate my last student loan and to go from a 15 year to a 30 year for lower monthly payments.  Definitely don’t need to, but it would be nice to simultaneously get rid of a $340/mo student loan payment and drop my mortgage payments by about $600 a month.  Problem is that we’re considering moving somewhat soon-ish, but we’re not sure on that.

    #227137 Reply
    Lordosis Lordosis 
    Participant
    Status: Physician
    Posts: 1807
    Joined: 02/11/2019

    I am quickly learning what a pain  it is.  I am in NY and I guess the 1% tax you pay when you originate a mortgage applies to refinances as well.  Even though I can drop my rate by more then 1% it might not be worth it.

    “Never let your sense of morals prevent you from doing what is right.”

    #227152 Reply
    CordMcNally CordMcNally 
    Participant
    Status: Physician
    Posts: 2806
    Joined: 01/03/2017

    I am quickly learning what a pain  it is.  I am in NY and I guess the 1% tax you pay when you originate a mortgage applies to refinances as well.  Even though I can drop my rate by more then 1% it might not be worth it.

    Click to expand…

    Your break even point would basically be after the 1st year. I’m assuming the 1% tax is on the amount you refinance. If so, just think of it as getting a 1% reduction in the interest rate for the life of the loan that starts in a year (with the 1% tax plus the new interest rate basically being the same as your old rate).

    “But investing isn’t about beating others at their game. It’s about controlling yourself at your own game.”
    ― Benjamin Graham, The Intelligent Investor

    #227159 Reply
    Lordosis Lordosis 
    Participant
    Status: Physician
    Posts: 1807
    Joined: 02/11/2019

    Turns out there is a way to avoid the tax.  Requires the owner of the loan to do some paperwork.  So if you go with another bank there is little chance the original bank is going to process it for you and you are screwed.  (No professional courtesy)  SO I am somewhat stuck with the bank I started with.  They are willing to bring me down from 4.375 to 3.375%.  I am 9 months into the mortgage and have 316K left on it.  I am still waiting on what the closing costs will be.

    The rate reduction will bring my payments down $150/mo  so I can be recouped in 2 years if the closing costs are under $3600.

     

    2 questions;

    Does it make sense to put the closing costs into the loan?  Basically loaning ~3K at 3.375 to invest in taxable.  Anything I am missing here?

     

    I am 9 months into the term.  I can reset it to 15 years or make it 14 years.    I am inclined to reset the term because I can always pay more if I wanted to get out earlier.

     

    Thanks for the help.

    “Never let your sense of morals prevent you from doing what is right.”

    #227532 Reply
    CordMcNally CordMcNally 
    Participant
    Status: Physician
    Posts: 2806
    Joined: 01/03/2017
    Does it make sense to put the closing costs into the loan? Basically loaning ~3K at 3.375 to invest in taxable. Anything I am missing here?

    Click to expand…

    I would just pay the closing costs out of pocket. Would you take out a loan at 3.375% with the sole reason to invest the money in a taxable account?

    “But investing isn’t about beating others at their game. It’s about controlling yourself at your own game.”
    ― Benjamin Graham, The Intelligent Investor

    #227544 Reply
    Lordosis Lordosis 
    Participant
    Status: Physician
    Posts: 1807
    Joined: 02/11/2019

    That is what I was thinking.  I would not take out a loan with the purpose of investing it.

    “Never let your sense of morals prevent you from doing what is right.”

    #227558 Reply

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