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FuzzWuzzy
FuzzWuzzy HalfDork
1/8/20 10:24 a.m.

Looks like rates dropped again, which has me looking at refinancing.

My current loan is a VA loan for 30 years @ 4.125% APR. Original loan amount was for $205,000, P&I is $993.53/mo. Loan originated in 6/18. Current remaining is $197,330.

Not a bad deal and it's still fairly new, but damn do I like saving money.

Looked at the Zillow refinancing  calculator and there's a lender, AimLoan, which is offering a VA IRRRL for 30 years @ 3.024%. Would supposedly cut my payment down to $832/mo. I shot them an email to get what the actual cost to me would be if we were to do this.

Is a 1.1% decrease in the loan rate and around a $160/mo decrease in the monthly payment worth it? I'll still pay extra in to it, but having wiggle room is always nice.

z31maniac
z31maniac MegaDork
1/8/20 10:35 a.m.

How much is it going to cost to close the new loan?

I checked on this back in December, I'll need to come out of pocket about $4500 to refinance. Since we hope to only be in our house another 2-3 years, I don't think it makes sense for us at the moment. If rates continue to drop and we decide we want to stay a little longer, we may go ahead and do it sometime later this year.

mtn
mtn MegaDork
1/8/20 10:35 a.m.

Watching. I can't find a good calculator that includes the PMI that we're paying now. Guess I'll have to build my own in Excel. 

volvoclearinghouse
volvoclearinghouse PowerDork
1/8/20 10:39 a.m.

We're considering a refi soon. Rates are steady and don't look to be heading lower this year.

Watch out for "promo" teaser rates and hidden fees and points. Excel has a really good tool for calculating mortgage terms that gives a ton of info. Pm me if you'd like a copy of the spreadsheet I made. You can use it for any length loan, too- not just a 30 year mortgage.

Also, might want to check out a 20 year note if you can swing it. Might be able to really cut the interest rate and the total interest paid over the life of the loan.

Another thing to mind is the LTV- when you have at least 20 pct equity in the house it can eliminate PMI and get you a cheaper loan.

mr2s2000elise
mr2s2000elise Dork
1/8/20 10:44 a.m.

I have 3 properties at 3.625 currently. All ARM, expiring in 3 more years.   Applied for 2 investment properties yesterday, got 3.75-3.99 from 3 banks.  Hoping to wrap up a few short sales soon. Deals are out there, still if you look hard. 

FuzzWuzzy
FuzzWuzzy HalfDork
1/8/20 11:35 a.m.

In reply to z31maniac :

Since it's the VA IRRRL, I believe it's something like 0.5% of the loan, but still reached out to them to get actual numbers.

frenchyd
frenchyd PowerDork
1/8/20 11:47 a.m.

In reply to FuzzWuzzy :

I'm doing a refi right now but I'm just above the cut off for a Conventional and need a Jumbo which bumps rates up another point. 
We're dancing around trying to find enough cash to buy down the Mortgage to go conventional and save the point because we'd like this to be our last refi before retirement. 

spacecadet
spacecadet SuperDork
1/8/20 12:09 p.m.
FuzzWuzzy said:

In reply to z31maniac :

Since it's the VA IRRRL, I believe it's something like 0.5% of the loan, but still reached out to them to get actual numbers.

Just looking at amortization if you could refi for less than 2 grand, probably worth doing right now, 

looks like a half point would save you about $850-1000 a year in interest. 

and you appear to be paying a bunch extra on top of your principal every month if you've paid off $6k extra over the past 6 months.  

Mazdax605
Mazdax605 UberDork
1/8/20 12:29 p.m.

I'm not savvy with finances, and when to do this or that, but we are 12-13  or so years into a 25 year mortgage that we refinanced back when the fixed rate was 3.50 percent. When we bought the house in 05 we had a 30 year fixed mortgage, but then refinanced at 25 years with this rate. Taxes in my town have gone through the roof, so now the $1700 or so mortgage payment(taxes,insurance,etc included) has risen to a smidge over $2000 a month. We have all sorts of equity in the house I'm sure, and could use some cash to do a bunch of upgrades/updates, but there is also the specter of our oldest graduating from HS in June. He doesn't know what he wants to do, but he did like the technical college we checked out a few months back. I have no idea how we'd pay for it though. I'd love to help him out, but as it is we're struggling with my wife quitting her job to go nanny for my sister. Then my sister took an extra month off with maternity leave, and decided $7 an hour was what she'd pay us after promising $10 an hour. Family sorta sucks sometimes. I'd rather not eat up all of the equity, and would hate to add a ton more years to the mortgage, but I'd also like to lower my payment. Not sure what to do. Wife getting a better job would probably make the most sense, or another job, perhaps? Wish me luck,lol.

Datsun310Guy
Datsun310Guy UltimaDork
1/8/20 1:03 p.m.

Paying off my house and being on the other side of this mortgage thing is rewarding but odd in a weird way as I watch you'all discuss this topic.  

I hope to never borrow again for a mortgage but in the end I still budget $800/month for my Illinois property taxes.  

alfadriver
alfadriver MegaDork
1/8/20 1:04 p.m.

FWIW, the best thing we did was actually shorten the mortgage.  Which meant we ended it quite a few years early.  I know you are paying more into it, but it's good to be official.

mtn
mtn MegaDork
1/8/20 1:05 p.m.
Datsun310Guy said:

Paying off my house and being on the other side of this mortgage thing is rewarding but odd in a weird way as I watch you'all discuss this topic.  

I hope to never borrow again for a mortgage but in the end I still budget $800/month for my Illinois property taxes.  

I need to have my assessor come out and appraise my house as a tear-down. Hell, a lot a block away sold for more than we paid for our house 4 years ago and they took the house down immediately.

FuzzWuzzy
FuzzWuzzy HalfDork
1/8/20 1:17 p.m.

In reply to spacecadet :

Whoops! Realized I put in the wrong date. Should be 6/18.

Driven5
Driven5 UltraDork
1/8/20 1:28 p.m.
Datsun310Guy said:

I hope to never borrow again for a mortgage

At today's mortgage rates, I wouldn't not carry a mortgage. I'd cashout refi it to 80% LTV and invest the proceeds.

docwyte
docwyte UberDork
1/8/20 2:04 p.m.

As others have pointed out, look at how much it'll cost to close the loan.  Then weigh that against the monthly savings and how long you expect to stay in the house.

One other thing is that you're also resetting the clock on the mortgage back to 30 years.  So some savings is due to the that.  I don't like lengthening the terms of loans generally.  If your housing market is rapidly appreciating and you plan on moving inside of 5 years, then lengthening the term doesn't really matter.

I did a 15 year mortgage 8 years ago when the rates were absurdly low and I didn't have to pay any costs to refi.  Paying off the house is one of the keys to me being able to walk away early, something to think about for you...

FuzzWuzzy
FuzzWuzzy HalfDork
1/8/20 2:07 p.m.

Loan officer got back to me.

Guaranteed Lender Fees - $459.55
      - Lender fee of $995
      - Lender credit of ($535.45)
3rd Party Services Bank Elects - $504.50
      - Appraisal fee of $450
      - Credit report fee - $49
      - Flood Cert fee - $5.50
3rd Party Services I can elect - $905
      - Lender's title insurance of $350
      - Settlement Agent fee - $555
Recording fees - $270
------------------------------------------------
Total: $2,139.05

They also included the updated APR as of now; 3.101%.

I'll just wait for now, I think.

Adrian_Thompson
Adrian_Thompson MegaDork
1/8/20 2:09 p.m.

We're looking to re-fi our two rentals right now.  Low 3% range is out there for investment properties so really close to 3.0 should be possible for a primary residence with outstanding credit.  We're finding that some lenders don't 'appear' to charge any closing costs other than the inspection and filling fees.  The truth is that they roll it into their % rate and you need to do a case by case assessment on getting mortgage with or without 'declared' fees.  From experience there is no hard and fast rule, it's a case by case basis and in reality the difference, even over the life of the loans are very small.

We got really really lucky early last decade when we managed to lock our primary residence in for 2.675% on a 15 year note.  We literally hit 'the week' rates were that low and have been laughing ever since.  

RX Reven'
RX Reven' SuperDork
1/8/20 2:10 p.m.
Driven5 said:
Datsun310Guy said:

I hope to never borrow again for a mortgage

At today's mortgage rates, I wouldn't not carry a mortgage. I'd cashout refi it to 80% LTV and invest the proceeds.

I’ve got 90.41% equity in my home now based on today’s average estimated value between Zillow & Red Fin (yes, I check almost every day).

I’m paying 3.625% interest on my mortgage so chances are I’d be far better off carrying a bigger loan and moving the liberated equity into the stock market.

However, I’m 55 and I have no bonds (not too long ago, the standard financial advice was to have the percent of your portfolio that’s in bonds match your age i.e. 55% for me).

Each month, I pay down exactly $1,500 in principle (yes, I work out the math and enjoy hitting the number to-the-penny) so the loan will be paid off in December of 2024 when I’m 59.

Some Nobel prize winning economist (Laffer perhaps) famously said “all dollars are not created equal” meaning that a dollar in the hands of a poor guy standing in front of a Mc Donald’s with a growling stomach starring at the dollar menu is worth fantastically more than a dollar that’s tied up in home equity by some guy that has millions more dollars and is considering moving it into the stock market to squeak out a little more gain.

Added later…

Am I missing something or does it make absolutely no sense to have bonds when you also have loans???

 

Slippery
Slippery UltraDork
1/8/20 3:05 p.m.
mtn said:

Watching. I can't find a good calculator that includes the PMI that we're paying now. Guess I'll have to build my own in Excel. 

What about Karl's?? I really like it:

Karl’s mortgage calculator

sobe_death
sobe_death Dork
1/8/20 3:33 p.m.

FWIW, AimLoan is my current loan servicer, and I have been nothing but happy with the whole process.  In fact, your question has me looking at rates and it would appear that for minimal closing, I could do a cash-out to put in new floors, drop down to a 15-year loan, AND drop to barely above 3.0%APR.  Time for maths...

 

OHSCrifle
OHSCrifle SuperDork
1/8/20 4:03 p.m.

At what point does the borrower's age impact the ability to get a 30 year mortgage? I wondered about that when I refinanced at age 45.

Datsun310Guy
Datsun310Guy UltimaDork
1/8/20 4:08 p.m.
OHSCrifle said:

At what point does the borrower's age impact the ability to get a 30 year mortgage? I wondered about that when I refinanced at age 45.

My F-I-Law had friends get mortgages in retirement.  Of course this guy was a fireman with 2 pensions and wife with 1 pension.  Not sure banks care like the old days.  

mtn
mtn MegaDork
1/8/20 4:18 p.m.
OHSCrifle said:

At what point does the borrower's age impact the ability to get a 30 year mortgage? I wondered about that when I refinanced at age 45.

It never does. That'd be age discrimination, and it is illegal. The only way that it would is when looking at income - a retired person could theoretically have $0 income, which would impact their ability to get any loan whatsoever. But at that point, if they had $0 income, they'd probably have significant amounts of cash, so why would they get a mortgage at all?

 

And the financer shouldn't really care either, as long as their appraiser is worth anything. They'd have a lien on the property, more or less the definition of a mortgage. 

 

 

Driven5
Driven5 UltraDork
1/8/20 4:30 p.m.

In reply to RX Reven' :

You're essentially getting a safe, reliable, and consistent 3.625% return on the extra money you're paying into your mortgage.  If you can find a low risk investment with noticeably better returns, there's really no reason not to do so. However, if you have a low risk tolerance and cannot find anything with better returns that doesn't also carry additional risk, then there is certainly nothing wrong with just keeping doing what you're doing.

That being said, I'd still only being putting extra payments into the mortgage if I had already maxed out (including catch-up) all available tax-advantaged (IRA/401k) contributions first. For somebody 50+ in 2020, this would be $26k for 401k with catch-up plus another $7k for IRA with catch-up. Remember, these accounts may also carry a percentage of bonds or bond funds, either directly or indirectly. So you can get, or may already have, some bond exposure there too.

I would also only do so if I was not carrying any debt with a higher interest rate than my mortgage.

frenchyd
frenchyd PowerDork
1/8/20 7:06 p.m.

In reply to mtn :

I got refi at age 71 they look at your credit score and income. Then check the value of the property. 
Frankly they hope you kick off if there is sufficient equity and they might profit from it. 

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