Would you refinance in our situation?

[lauren170]

Currently have a 30 year Fixed for $618k at 3.5% (Origination date was July 2015). We have at least 50% equity in the house. Monthly cash flow has been our biggest issue for the past 6 years (since I lost a unicorn job).

We are approved for a 30 year Fixed at 3.0%, which will save us $400 per month.

I was moving ahead with the refinance, but 2 things are giving me pause - 1.) we have a perfect payment history, so should we need COVID relief (my job is okay for now but I can't help worrying) wouldn't it be better to be with a company that we have history with? 

And also, I just read this article: 

seekingalpha.com/article/4261376-why-refinancing-your-mortgage-lower-rate-might-be-bad-idea 

If I did lose my job, our e-fund will only cover a couple of months, but we do have pretty good 401ks, and I read you can borrow without penalty if you're impacted by COVID. So while it sucks, I guess that is our back-up plan.

So WWYD MM?

[madisen]

1) This is considered a Jumbo/Non-Conforming loan meaning it's not backed by FNMA/FHLMC/GNMA so COVID relief rules would be investor/servicer specific and more than likely your history with the company will have no bearing on that...unless maybe it's a credit union because they tend to write their own guidelines, take on their own risks, and service their own loans.

2) I would just run the refi scenario through a mortgage calculator that includes fees in the comparison and let's you know when the breakeven will be and how much interest total you'll pay on both loans. dinkytown.com has great free calculators.

Are you trying to maximize your monthly savings? If not, the 25 year Fixed rate should be the same as the 30 year Fixed rate the lender is offering you (because they go into the same security) and you're not extending your payments another 5 years / increasing interest this way.

ETA: If you're within High Balance Conforming Loan limits, the answer to number 1 is even less dependent on the lender/investor/servicer as they have to follow FNMA/FHLMC guidelines for COVID relief if FNMA/FHLMC own the loan.

[lauren170]

Just to clarify, it’s not a jumbo loan due to where we live.

[lauren170]

Interesting on the 25 year - I will look into that

[imojoebunny]

If the 25 year is not a lower rate than the 30 year, then just pay the $400 you are saving on the new 30 year, and you will pay less overall, while still having the flexibility of the lower payment, if needed. Yes, you are adding ~5 years to your loan, so even at a lower rate, you will pay more interest, if you don't pay it off in 25 years, but that doesn't make it a better deal. I have not found, for us, that refying for a 1/2 point, makes sense with fees and such, more like 1%, but run the numbers for your expected time in the home, and the fees on an online calculator, and make your decision. It is pretty amazing that you can get 3% on a loan of that size, for a 30 year.

[simpsongal]

lauren170, would you mind telling me what company quoted that rate? After seeing your post we started shopping around for a refi too.

[lauren170]

May 9, 2020 13:47:48 GMT -5 simpsongal said:

lauren170, would you mind telling me what company quoted that rate? After seeing your post we started shopping around for a refi too.

Envision Bank in MA, but we started this process back in March during that dip in rates. But here’s what I did: use bank rate to look at all the rates, call the very lowest, get them to quote you and then ask others if they can beat it!

www.bankrate.com/mortgage.aspx?pointsChanged=false&searchChanged=true&mortgageType=Refinance&zipCode=02467&partnerId=br3&ttcid&userCreditScore=740&userVeteranStatus=NoMilitaryService&userHadPriorVaLoan=false&userHasVaDisabilities=false&userFirstTimeHomebuyer=false&userQuickClosing=false&userFha=false&userLowUpfrontCosts=false&userLowPayment=false&purchasePrice=862500&purchaseDownPayment=172500&purchasePropertyType=SingleFamily&purchasePropertyUse=PrimaryResidence&purchaseLoanTerms=30yr&purchasePoints=All&refinancePropertyValue=862500&refinanceLoanAmount=690000&refinancePropertyType=SingleFamily&refinancePropertyUse=PrimaryResidence&refinanceCashOutAmount=0&refinancePoints=All&refinanceLoanTerms=30yr

[starryfish]

FYI we just got 3.125% for 30 years, but had to buy points (cost $2k). It’s worth it for us. We are saving $300 a month Bc our current Rate is 4.375

[Shreddingbetty]

I just got a 3% fixed on a 15 year about 3 weeks ago but my initial rate was 4.375%. I’m going through the same company I have right now and he basically told me If I stay in my house for one year it is worth the refi but that’s a pretty good drop from my original rate. I’m also only 18 months into my orignal loan. I’d see if it really is worth the $400 a month to start over on a 30 year loan. You should be able to run it by a mortgage broker if you are shopping around.

[simpsongal]

lauren170,thanks for the info! I ended up calling several brokers this weekend.

For the board, we had a 2012 30-yr mortgage at 3.5% (we owe ~$500K now).
Rates offered were 15 yr, 2.5%, 20-25-30 yr at 2.875% (no points or fees!).

We didn't want to extend the term of our mortgage (even though its the same interest rate for longer terms) and we can't swing the payment for 15 yr, so we're refinancing to a 20yr.

[krystee]

simpsongal can you share who you are refinancing with? We are in a very similar situation and would love to go to a 20-year at 2.875.

[lauren170]

May 11, 2020 9:12:28 GMT -5 simpsongal said:

lauren170,thanks for the info! I ended up calling several brokers this weekend.

For the board, we had a 2012 30-yr mortgage at 3.5% (we owe ~$500K now).
Rates offered were 15 yr, 2.5%, 20-25-30 yr at 2.875% (no points or fees!).

We didn't want to extend the term of our mortgage (even though its the same interest rate for longer terms) and we can't swing the payment for 15 yr, so we're refinancing to a 20yr.

2.875 What?!?

[simpsongal]

May 11, 2020 9:36:05 GMT -5 krystee said:

simpsongal can you share who you are refinancing with? We are in a very similar situation and would love to go to a 20-year at 2.875.

Wyndham Capital (found them via one of the big places but called around).  Apparently rates just started bottoming our Friday.

[sadlebred]

May 11, 2020 10:47:00 GMT -5 simpsongal said:

May 11, 2020 9:36:05 GMT -5 krystee said:

simpsongal can you share who you are refinancing with? We are in a very similar situation and would love to go to a 20-year at 2.875.

Wyndham Capital (found them via one of the big places but called around).  Apparently rates just started bottoming our Friday.

Interesting...for what I need their rates are higher than almost anywhere else.

Disclaimer: I am in the middle refinancing with a rate hopefully being locked in this week with another bank.

[pinkalicious]

May 11, 2020 9:36:05 GMT -5 krystee said:

simpsongal can you share who you are refinancing with? We are in a very similar situation and would love to go to a 20-year at 2.875.

I’d be happy to help you out...I can refer you to a few trusted mortgage brokers and you can check rates with them (since we’re in the same general area). PM me if you’d like!

[aspentosh]

Ugh.

I keep wondering if we should refinance. Our minimum payment right now is ~$1750 with a 3.625% loan (taken out in 2015). We overpay by $500 per month because we can, but I don't love the idea of a 15yr because then we'd HAVE to.

Our broker email us a no cost refi at 3.125% today but it doesn't seem like that's a great rate based on what I see here. And it only ("only") drops our payment by $320. I can't tell if it's worth it and if we'd cut off that much time by refinancing.

[madisen]

May 14, 2020 11:20:08 GMT -5 aspentosh said:

Ugh.

I keep wondering if we should refinance. Our minimum payment right now is ~$1750 with a 3.625% loan (taken out in 2015). We overpay by $500 per month because we can, but I don't love the idea of a 15yr because then we'd HAVE to.

Our broker email us a no cost refi at 3.125% today but it doesn't seem like that's a great rate based on what I see here. And it only ("only") drops our payment by $320. I can't tell if it's worth it and if we'd cut off that much time by refinancing.

You can ask for a 20yr loan and continue to pay extra if you want.

Also, I don't think anyone should compare rates against others' unknown actual scenarios. Pricing/rates/fees change quite a bit depending on location, risk profile of the scenario, and risk profile of the borrowers. You should be comparing lenders against each other for your particular scenario.

[starryfish]

May 14, 2020 11:20:08 GMT -5 aspentosh said:

Ugh.

I keep wondering if we should refinance. Our minimum payment right now is ~$1750 with a 3.625% loan (taken out in 2015). We overpay by $500 per month because we can, but I don't love the idea of a 15yr because then we'd HAVE to.

Our broker email us a no cost refi at 3.125% today but it doesn't seem like that's a great rate based on what I see here. And it only ("only") drops our payment by $320. I can't tell if it's worth it and if we'd cut off that much time by refinancing.

That’s the rate we got 2 weeks ago. I’m happy with it but our rate was 4.375 from 6 years ago