I can't believe we're refinancing...again

[simpsongal]

Again....is anyone else??  We did last year to a 20yr at 2.89%....we looked into it February when rates dropped again but they wouldn't deal w/our HELOC. This time we're looking at a 20 yr at 2.375%.  It's not  huge savings, but we think it makes sense (dropping ~$200/mo on our payment, only adding a year, minimal closing costs, lower rate saves some money in the long run).  We're keeping the HELOC rather than adding it to our mortgage, which actually costs a little extra, but we want to pay it down more quickly and us it for more projects.

[Susie]

It's only been 2 months since we purchased at 2.75% for 30 years, so I know I should just sit on my hands on this one.  But a small part of me is tempted to look.  

We bought with 5% down, because we didn't sell our old house until a month later.  Now that we have, I have an extra six figures sitting in our checking account.  The plan was to pay back what we "borrowed" from our e-fund to do the floors before move-in (done), and put the rest into our new mortgage, hit 78% LTV, recast, and drop PMI.

But now I'm sitting here like... even with $86/month in PMI... does it make sense to put all that cash into a mortgage at 2.75%?

I know it's the roof over our heads and all, I just keep thinking of what better things I could do with the money.  And that's where refi'ing comes in; we had that low appraisal which means we had to put more like 8% down relative to purchase price in order to have 5% relative to appraised value.  If we refi'ed, we'd get an appraisal do-over, and we'd also only need 80% LTV, not 78%.  We'd end up needing less cash to drop PMI than if we stay the course.

But then I come back to, refinancing like 2 months in is absurd, and how many of these gains would be wiped out by closing costs on a new loan.  So we probably won't.

[ohgillian]

It's not crazy, though. I did two refi's back to back in 2020. If the numbers worked, I'd do another one in a heartbeat. For my 2nd refi, the savings were about $10k net -- it felt worth the paperwork for that, to me.

[ssmjlm]

Susie, slight tangent, but would it be worth to put the money into your SLs instead of the house?

I've thought about it, but I would need to shop around, I'm not happy with how our lender fumbled our last refi, they didn't pay off the old loan timely (even though it was the same bank) and underpaid our property taxes, even after I called and confirmed they had the new number from the county.

[RockNVoll]

We're refi'ing again, too. Pulled the trigger a little too early last time as it turned out (April 2020) and went with a 10/1 ARM at 2.875%. We've since broken even on that loan and just locked on a 30-year fixed at 2.75%. Wish we could do it without fees, but guess you can't have it all.

This is our third loan on the house in the three years we've been here. I expect this to be the last one.

[ohgillian]

Jul 22, 2021 13:30:46 GMT -5 spearmintleaf said:

So… how does one refinance? I’ve never done it. I’m with USAA.

You can call USAA directly, ask for the mortgage people, and ask about a refinance to see if the current rates are any better. The person you talk to should be able to do the math on what the breakeven point is (how long it will take to recoup the costs of the refi). 

But. In my experience, USAA doesn't have great rates. So if you want a better rate, you may have to shop around. I worked with a mortgage broker and I'd be happy to PM you his contact info. Basically he shops rates for you, and gets paid by the mortgage companies, not by you.

Or, for my first refi I used LenderFi, which was recommended on her. Just go to their website.

Tl;dr: Call your current lender; or use a broker; or find a better rate yourself online and apply online that way.

[lessel]

Susie We were in a similar situation after closing in 2019 and then rates dropping in 2020. We had to wait until we had 6 payments on the mortgage before we could refi. Not sure if that was just our specific bank or what. But might give you a bit of wait and see time.

This post is making me look at rates again and wondering if another refi might not be a half bad idea. Hmmmmmm

[ellipses84]

Jul 22, 2021 13:30:46 GMT -5 spearmintleaf said:

So… how does one refinance? I’ve never done it. I’m with USAA.

You’ll want to talk to a mortgage broker or shop around for companies advertising refinance and what their current rates are. There’s not much downside to it. It takes some paperwork time, you need an appraisal, but you can save a lot of money to way more than cover the fees if the interest rate is lower than what you are paying now.

You need to consider the term. If you are 10 years into a 30 year mortgage in your forever house and you refinance into another 30 year, you’ll be paying it off for an extra 10 years. A lot of people refinance to 15 or 20 years, or they do 30 years with a plan to pay extra every month knowing they don’t “have” to. A mortgage broker can provide all the different options to you to compare.

We had a refinance fall through but I don’t know anyone else that has happened to. We didn’t know about the issue until underwriting and it was not quick to fix. It had to do with a VA Loan refinance and a screw up with gov’t records. We ended up keeping the original mortgage, then selling the house a year later so we never bothered to try to refinance again.

[Susie]

Jul 22, 2021 12:55:05 GMT -5 ssmjlm said:

Susie , slight tangent, but would it be worth to put the money into your SLs instead of the house?

I've thought about it, but I would need to shop around, I'm not happy with how our lender fumbled our last refi, they didn't pay off the old loan timely (even though it was the same bank) and underpaid our property taxes, even after I called and confirmed they had the new number from the county.

SLs are the one place I wasn't thinking of putting it.  Our interest rates range from low 2%'s to 4.5%.  So yeah, some are higher than our mortgage, but not awful.  

The thing that gets me about SLs is that once you put the money into SL payoff, you're never, ever, ever getting it back, no matter what emergency happens.  You invest it, you can pull it back, maybe with a tax hit (as long as the market has done ok).  You put it into real estate, you can always sell, if not for 100%, at least for something.  But you put it into SLs, and... it's completely gone.  We were aggressive about our SLs for a bunch of years, but now that we're down to smaller numbers (low $40ks each) and lower rates, we've really cooled off on paying them off.

[aspentosh]

Oh man, I hadn't even thought to look again. We re-fi'd to a 20 year last September at 2.875%. May need to look into this.

[ssmjlm]

Susie, makes sense, I wasn't sure where they were currently, but at low rates, it's definitely not something I would rush to pay off either at this point.

[melmo1122]

Thanks for the reminder I started to refi last summer and then my basement flooded and that has been a headache trying to get it fixed.

Just locked in at 2.115% 15 year.

[hbomdiggity]

I can’t remember what the term is, but my sister was able to get her bank to just lower the rate vs refinance. Saved her the hassle and closing costs and extending the term. I guess the incentive is that they keep the loan vs you taking it elsewhere.

[chpmnk1015]

We refinanced to 2.375 for 15 year last july... I haven't looked too much since then and I'm tempted but since I'm unemployed at the moment I'm trying not to look lol.
Still rounding up payments though so we pay a little extra off each month

[puppylove64]

Susie I agree with the student loans. If I died tomorrow, they can’t really come after my heirs for student loan money. I’d rather have it in cash or a house that my heirs can have.

[simpsongal]

Jul 22, 2021 13:30:46 GMT -5 spearmintleaf said:

So… how does one refinance? I’ve never done it. I’m with USAA.

check out better dot com. Girls on the local dc board like it. I’m using Wyndham - Costco works with them

[Accountingcat]

simpsongal, melmo1122, what banks are you getting these rates at??

[simpsongal]

Jul 22, 2021 18:28:34 GMT -5 Accountingcat said:

simpsongal, melmo1122, what banks are you getting these rates at??

I think they went up yesterday (we locked in the morning). I worked with a broker from Wyndham on my last refi and he was the one that reached out to ask if we wanted to refi.

[wildrice]

Hmm, maybe we should? We just bought in May 2020 but our rate is 3.5%. We have great credit but only put 5% down.

Based on comps we probably have far more than 5% equity, though IDK if we're quite up to 20% yet.

How much are closing costs on a refi, generally? I feel like we just paid a fortune to close last year and although we have no plans to move, I can't really say that we know this is our forever home either.

[sandandsea]

I just started the process today. Going to a 15 year at 2.25% from 3.625% 30 year with almost 15 years left. The break even on closing costs is 8 months and we’d save a lot more in interest over the life.

[sadlebred]

Would you refi from a 30 year 3.5% to a 30 year 2.75% if you refi'ed the middle of last year? The "break even" on the first refi was 36 months. This one would be similar, so I feel like I would "lose" nearly $8000-9000 (total for both) in closing costs paid up front between both loans. Sadly going to a 15 or 20 year is not possible on one measly salary.

[RockNVoll]

Jul 22, 2021 22:39:31 GMT -5 sadlebred said:

Would you refi from a 30 year 3.5% to a 30 year 2.75% if you refi'ed the middle of last year? The "break even" on the first refi was 36 months. This one would be similar, so I feel like I would "lose" nearly $8000-9000 (total for both) in closing costs paid up front between both loans. Sadly going to a 15 or 20 year is not possible on one measly salary.

Is there an option to do a no-cost refi for a slightly higher rate like 2.875% or 3%?

[melmo1122]

Jul 22, 2021 18:28:34 GMT -5 Accountingcat said:

simpsongal, melmo1122, what banks are you getting these rates at??

I put my info into bankrate and Interfirst came up with the best rate. I’ve never heard of them but they have great reviews and called me within 30 minutes and gave me a loan estimate on the phone. Low fees and no points. Also waived appraisal.

[simpsongal]

Jul 22, 2021 22:39:31 GMT -5 sadlebred said:

Would you refi from a 30 year 3.5% to a 30 year 2.75% if you refi'ed the middle of last year? The "break even" on the first refi was 36 months. This one would be similar, so I feel like I would "lose" nearly $8000-9000 (total for both) in closing costs paid up front between both loans. Sadly going to a 15 or 20 year is not possible on one measly salary.

I think the 'rule of thumb' is it's worth it if you shave a .5%.  It may be worth talking to a broker and getting a loan estimate to look at the numbers.  We've considered refi's in the past and walked away b/c we just didn't like the numbers.

[ohgillian]

Jul 22, 2021 10:42:20 GMT -5 simpsongal said:

Again....is anyone else??  We did last year to a 20yr at 2.89%....we looked into it February when rates dropped again but they wouldn't deal w/our HELOC. This time we're looking at a 20 yr at 2.375%.  It's not  huge savings, but we think it makes sense (dropping ~$200/mo on our payment, only adding a year, minimal closing costs, lower rate saves some money in the long run).  We're keeping the HELOC rather than adding it to our mortgage, which actually costs a little extra, but we want to pay it down more quickly and us it for more projects.

Can I ask what this bolded means? We are considering a HELOC for the first time to finance some renovations at a second house and I'm basically just at the very beginning of learning about them. Thanks.  

[ohgillian]

This thread prompted me to look at rates online and then email my mortgage broker to see what's out there. We already did 2 last year, but no need to leave money on the table.

[pierogigirl]

Jul 22, 2021 19:03:35 GMT -5 wildrice said:

Hmm, maybe we should? We just bought in May 2020 but our rate is 3.5%. We have great credit but only put 5% down.

Based on comps we probably have far more than 5% equity, though IDK if we're quite up to 20% yet.

How much are closing costs on a refi, generally? I feel like we just paid a fortune to close last year and although we have no plans to move, I can't really say that we know this is our forever home either.

We just did in the spring and our closing costs were about $2000 (local bank that already held the mortgage).

[simpsongal]

Jul 23, 2021 10:52:25 GMT -5 pierogigirl said:

Jul 22, 2021 19:03:35 GMT -5 wildrice said:

Hmm, maybe we should? We just bought in May 2020 but our rate is 3.5%. We have great credit but only put 5% down.

Based on comps we probably have far more than 5% equity, though IDK if we're quite up to 20% yet.

How much are closing costs on a refi, generally? I feel like we just paid a fortune to close last year and although we have no plans to move, I can't really say that we know this is our forever home either.

We just did in the spring and our closing costs were about $2000 (local bank that already held the mortgage).

I don't know why/how it varies but ours are around $2200 this time too.

[simpsongal]

Jul 23, 2021 9:06:27 GMT -5 ohgillian said:

Jul 22, 2021 10:42:20 GMT -5 simpsongal said:

Again....is anyone else??  We did last year to a 20yr at 2.89%....we looked into it February when rates dropped again but they wouldn't deal w/our HELOC. This time we're looking at a 20 yr at 2.375%.  It's not  huge savings, but we think it makes sense (dropping ~$200/mo on our payment, only adding a year, minimal closing costs, lower rate saves some money in the long run).  We're keeping the HELOC rather than adding it to our mortgage, which actually costs a little extra, but we want to pay it down more quickly and us it for more projects.

Can I ask what this bolded means? We are considering a HELOC for the first time to finance some renovations at a second house and I'm basically just at the very beginning of learning about them. Thanks.  

When you have a HELOC, it's a loan related to/against your mortgage.  So if you want to keep that HELOC line of credit open (and usable, like a credit credit), the mortgage company refinancing your loan needs to "subordinate" it - which basically means do some due diligence to look at those loan terms and agree they're fine w/accepting that credit line against the mortgage.  There's usually a fee for subordination and time b/c lawyers are involved.  I think our mortgage refi company charges $300 and our HELOC company charges $200 - it also takes 30 days (so $500 to keep it open).  It took longer to subordinate loans last year b/c so many people were refinancing, and there's a time pressure to get a refi done (rate locks only apply for so long).  So the HELOC is a wrinkle that makes refinancing a little more expensive and annoying.  We also would have gotten a higher lender credit towards our closing costs w/o the HELOC.

The other option w/a HELOC is to roll that amount into a mortgage refinance.  So our HELOC is about $40K, we could tack that amount onto our mortgage and refinance for the balance outstanding on our mortgage plus the $40K.  The HELOC would close and goes away.  One of the  benefits is the mortgage is likely fixed and HELOC isn't.  A lot of people do this.  We just don't want our mortgage any higher (or our payment), we don't want to amortize that HELOC amount over 20 yrs, we're hoping to pay it down ~next yr.  Some folks would probably advise the latter approach, we just don't want to do it.

I hope that helps explain it

[farmvillelover]

We refi'd last May or June 2020 and got 2.625 for a 15 year but just closed 2 weeks ago at 1.99 at a literal no cost loan (through Owning.com), couldn't resist. Saves a few hundred a month. Was a no brainer!