Talk to me about refinancing a mortgage

[simpsongal]

DH mentioned that the fed may drop interest rates again and said maybe we could refi. I'm not sure if it would be advantageous for us to ever refinance given our rate. But I'd definitely be interested, esp if it meant we could get money towards a renovation (I know folks usually do HELOCs....is money from a refi an option??)

PDQ: We owe a little over $500K, have 23 years left on a 30 yr mortgage.  We're fixed at 3.5%.  House is probably worth a little over $900K.

DH was talking about refi'ing into a 20 yr mortgage if we could get a lower rate.  But he mentioned we might need to pay points.  I know we'd crunch the numbers, but I'm guessing rates would have to fall a lot.  And is getting money back a thing?  Or do you pretty much need a home equity loan?

[cabbagecabbage]

I am not an expert but my close friend is an underwriter and we talk. I am pretty sure that getting back cash went away with the crash a decade ago. I've refied twice. Once to get a better rate and once to get the lowest payment possible. Mortgage lenders are super busy right now but they will get back to you about all this and a good one will run your numbers for various scenarios.

[sacattack]

We refinanced about 3 months ago and were able to get 2.75% with no points. I was able to use a quote I got from lending tree and shared it with my long term mortgage broker and she was able to match it. As with anything you just need to shop around - every offer and situation is going to be different. At the time we did this they did offer us cash out at closing but we didn't need it so we just did the base amount.

[Susie]

We just closed a week and a half ago on our refi, we had 21 or so years left on a 30 year at 4.375%, and dropped to 20 years at 3.25% with 0.25% points.  I live in a much lower COL area than you do, so our numbers were all smaller:  we owed $198k and the house was worth (by my estimate) $280k.  That made the points a lot easier to swallow for me.  We rolled in closing costs, but there was no appraisal fee (credit union waived an appraisal), and we opted not to escrow taxes & insurance, so we didn't have to pre-fund an escrow account.  Most of our closing costs were the unavoidable title/recordation type fees.  We ended up financing $204,100.  In the end it was not a radical change in our loan, but our payoff date is about a year earlier, we pay a little less every month, we eliminated MIP earlier, and I was able to move our loan from Bank of America (who I hate dealing with) to our local credit union.  Little wins on every front added up to being worth it.

We were not doing cash out, because that wasn't our objective.  The option was available though.  We didn't have as much room on equity as you do, but we could've financed up to 80% LTV since it was a conventional loan.  We are at 72-73% LTV.  

If you were willing to go to a 15 year loan, rates would drop a little further for you, but in general they are not as attractive right now as when we locked in August.  Today our credit union is offering 20 years at 3.625% with 0.5% points, and 3.125% for 15 years, no points.  From when I looked in August, their rates were better than most national lenders.  I'm not sure I'd have jumped at those from where we were at 4.375%, and if I had 3.5% I definitely wouldn't, even to the 15 year.  I guess where I net out is that in theory the refi idea works, but I think rates would really need to drop to be attractive from where you already are.

ETA:  to pp's point about busyness right now -- we closed on the absolute last day of our rate lock, much to my stress and aggravation.  I don't know WTF took so long, we had a 45 or 60 day lock, and there was no appraisal to wait on!  Frustrating.  By the time we got the clear to close we had a week left, and by the time we had a closing date scheduled, we had 48 hours left.  Other than that, the process was really easy.  I was bracing for it to be a lot worse.

[k3am]

We are in the process of a refi. We're going from 4.375% to 3.625% with no points. The rate was the same for a 20 or 30 year loan, oddly enough. We have a jumbo loan, so it's pricier than most. We shopped around pretty aggressively. Most lenders wanted us to pay .9% points for the same rate. We are not cashing anything out. Our monthly payment will drop significantly, but we'll just keep paying the same amount we currently pay (we prepay our current mortgage as well). We'll end up paying our loan off about 9 years faster (closer to 20 years vs the 30 year we're signing up for) and saving a huge chunk in interest over the life of the loan.

Our rate lock was in September, our appraisal in early October, and we currently have no idea of when we actually close.

[k3am]

Also, I have a spreadsheet that I track our current mortgage on - how much interest we've paid, how much we project to pay. I set up another one for each of the proposed terms from various lenders, including what we'd pay out of pocket. In our case, any option would save us significant amounts of money in the long run. It may not be so in yours.

I like this one: www.vertex42.com/Calculators/home-mortgage-calculator.html

[dancingirl21]

We just closed on a cash out refinance in September. We are finishing our basement and used the cash for that. Our rate went from 30 year at 4.375% to 30 year at 3.8%. It would have been lower had we not chosen the cash out option.