Should I refi?

[katieb4tom]

Hi all, I am torn and could use some advice about whether to refinance or not. I am four years into a 30 at 3.625. I’m comfortable with my payment and am working on paying off a HEL of $12k at 4.99% from a kitchen reno and shoring up my emergency fund.

I would love to go to a 15, but am more comfortable with the payment on a 20, quoted between 3.3 and 3.5. It’s not a huge interest drop, is it worth the fees and hassle?

We do hope to begin paying extra on the 30 in the next few years, but I don’t want to miss out on a good opportunity now.

Putting 18% into retirement now. E-fund is low and wouldn’t mind having some extra cash in monthly budget to allow for more flexibility. Any other info needed? Our credit is excellent.

Thanks!!!

[ohgillian]

Have you considered restarting a 30 year? I did that in 2012 when I was about 4 years into a 30 year. With no pre-payment penalty, you might like the extra flexibility that could allow you to pay more on the HELOC.

Also, the mortgage broker should be able to tell you the break-even point for the fees and such. Like, "It will take 4 years 2 months to net even" or whatever.

Finally, azalea mentioned LenderFi on here recently and I got a fabulous rate from them that I got my current lender to match. I would recommend checking with them. Literally the different was:

Wells Fargo 3.625 (LOL no) for a 20 year with no points, yesterday
LenderFI, 3.125 for a 20 year with no points, a few weeks ago. I got WF to match it yesterday and locked the rate.

[Susie]

I wouldn't refi to drop from 30 years at 3.625% to go to 15 or 20 at 3.3-3.5%. I'm generally looking for a 1% or more improvement in order for closing costs to be worth it. You'd be better off dumping cash into paying off that HEL at 4.99% instead of paying for closing costs, and then paying extra as you can on the existing 30 year.

We've refi'ed our house twice. We bought in 2008, 30 years at 6.125%. We refi'ed the first time in 2010, 30 years at 4.375%, and again in 2019, 20 years at 3.25%. It took me a long time to pull the trigger on that 2nd refi because I kept waiting to save a whole 1%.

[imojoebunny]

I have never seen a 20 year rate I would pick over a 30 year or a 15. The rate differential just isn't worth it in any case I ever been quoted. I would not re-fi, generally, unless you can get at least a 1/2% drop, and preferably one percent. Of course, if your mortgage is $80K, your heloc floats, and you won't be able to pay it off anytime soon, it might be worth doing the refi to roll the new kitchen into the mortgage. Hard to say without closing cost and actual numbers, but my answer on what you have given is, Not worth it.

[katieb4tom]

Thanks for the replies. I am leaning toward not worth it too, but wasn't sure that wasn't just me being lazy and not wanting to go through the process. It's a HEL, not a HELOC, so fixed rate and I plan to pay it off shortly, so am not interested in rolling it in to a new mortgage. Total mortgage balance is $165K. I think we will stick with our original plan of getting the other financial ducks in a row, then accelerating mortgage principle payments to reduce our timeline to 20 years or so, but at our leisure. I wouldn't want to extend to a 30 as extra monthly cash is not a must and I am 40, so I don't want the term to last until I am 70.

[freshsqueezed]

I did a 20 year at 3.125 back in September so if you can’t get at least that low with all that’s gone on now it doesn’t seem worth even looking.

[madisen]

It’s worth continuing to look.

Lenders are getting slammed right now and some already can’t handle the volume. One way to slow volume down is to increase margins aka not pass through the entire rate improvement to the consumer some days.

So continue to look daily and at different lenders or a site like bankrate.com