Is there any reason for us not to refi?

[stephm0188]

We purchased our house in May of 2011. 4.75% interest rate.

We were conditionally approved for a refi down to 3.25%. It would take our balance from 199K to 208K and save us just under $200 a month. Quoted around $50 for closing costs.

We plan to be in this home long term. We also believe based on comps for the neighborhood that it's worth more than 208 so I don't feel we'd be underwater.

Any reason not to do it?

[Deleted]

Why are you increasing the mortgaged amount?

[stephm0188]

Feb 21, 2013 15:02:42 GMT -5 flygirl said:

Why are you increasing the mortgaged amount?

It's a VA IRRRL. We do have the option to pay out of pocket, or we can roll it back into the loan. It would take the mortgage back up to where it was two years ago when we purchased and we'd be paying interest on the CC at a rate of 3.25%.

We're paying down debt and student loans and feel that instead of paying cash for closing costs, it would be better suited going toward some of the high interest rate cards. The additional $200 a month would allow us to pay down debt, and once that is out of the way we can throw it back into the principle on the mortgage.

[aurora]

Honestly that sounds like a lot of closing costs for a refinance. We were able to go from 4.875% to 3.375% last year with our mortgage broker paying 100% of closing costs, so I'd do a little more shopping around if I were you.

Also, by increasing the principle so that you can pay down other debt you are paying on your CC's for 30 years instead of just a few (albeit at a lower rate) and turning unsecured debt into secured debt.

[sjh722]

$9K sounds really high to me for closing costs, unless you have insanely high property taxes and are setting up another escrow account or something like that. I would shop around - lots of lenders do VA loans.

eta: I am assuming that by cc you mean closing costs and not credit cards when you're talking about rolling something into the loan amount.