Mortgage refi question

[Zaximus]

Anyone in the business that could answer a couple of my questions about whether I should refi or not?

 

I have a modest little townhome that me and wife want to stay in, since it's below our means and we have no reason to upgrade just yet.

 

I'm looking into refi and I'm not sure it's worth it and I don't think the company(s) would tell us.

 

Right now I owe 113.5k on a 124.5k loan at 6.5% interest.  I also pay about $72 in pmi a month, and also taxes.  I've paid about 90 months out of a 360 month (30 year) fixed mortgage.  So about 7.5 years.

 

 

Company I'm working with (quicken loans) is offering me a 4.99% interest rate on a new 30-year refi.   They want to send an appraiser out and the guy is hoping it'll be worth at least 118k since he's putting in for a 115k loan, and if it's not I'll just have to bring the difference to the table.  

 

The only thing is my monthly PMI is going to DOUBLE from 72 to like 140 so my monthly payment will really drop only about 90 bucks.  Honestly the monthly isn't a huge worry for me, it's the long term, and I'm not sure this is worth it because of the PMI increase and the fact I'm already 7.5 years in?  I know at 80% left on the loan you can get the mortgage company to drop PMI but I'm not sure I'd get to it quicker with the refi.   I'd probably still pay what I'm paying currently, which would be $100 to principal more than required (under new loan).  Quicken will cover all the fees, and I have to put $500 good faith down (for appraisal and other things).

 

Any ideas would be helpful, I've checked out calculators but I'm not sure I trust I'm using it correctly or looking at it right.

[Panthro]

You need to put in 20% to avoid pmi. It's well cease add soon as you get to that 20% unless it's an fha then your are stuck paying for 5 years

[Zaximus]

You need to put in 20% to avoid pmi. It's well cease add soon as you get to that 20% unless it's an fha then your are stuck paying for 5 years

 

Right, trying to figure out if I get to that 20% quicker by staying on my path or going this route. 

[Panthro]

Well how much will you save with the refi per month? Will it offset your pmi increase?

Also if you owe 113 and your th appraisers for 135 your pmi should disappear

My wife and I bought our home two years ago and it had gone up 20% but I'm stuck paying fha pmi for another 3 years

[Zaximus]

Well how much will you save with the refi per month? Will it offset your pmi increase?

Also if you owe 113 and your th appraisers for 135 your pmi should disappear

My wife and I bought our home two years ago and it had gone up 20% but I'm stuck paying fha pmi for another 3 years

 

I don't think the appraisal will go to 135, I'm thinking 115-120k.   After p%i, pmi, and taxes I only save about 90 bucks on the new payment, just double PMI and resetting to 30 years worries me.

[Happy Panther]

Anyone in the business that could answer a couple of my questions about whether I should refi or not?

 

I have a modest little townhome that me and wife want to stay in, since it's below our means and we have no reason to upgrade just yet.

 

I'm looking into refi and I'm not sure it's worth it and I don't think the company(s) would tell us.

 

Right now I owe 113.5k on a 124.5k loan at 6.5% interest.  I also pay about $72 in pmi a month, and also taxes.  I've paid about 90 months out of a 360 month (30 year) fixed mortgage.  So about 7.5 years.

 

 

Company I'm working with (quicken loans) is offering me a 4.99% interest rate on a new 30-year refi.   They want to send an appraiser out and the guy is hoping it'll be worth at least 118k since he's putting in for a 115k loan, and if it's not I'll just have to bring the difference to the table.  

 

The only thing is my monthly PMI is going to DOUBLE from 72 to like 140 so my monthly payment will really drop only about 90 bucks.  Honestly the monthly isn't a huge worry for me, it's the long term, and I'm not sure this is worth it because of the PMI increase and the fact I'm already 7.5 years in?  I know at 80% left on the loan you can get the mortgage company to drop PMI but I'm not sure I'd get to it quicker with the refi.   I'd probably still pay what I'm paying currently, which would be $100 to principal more than required (under new loan).  Quicken will cover all the fees, and I have to put $500 good faith down (for appraisal and other things).

 

Any ideas would be helpful, I've checked out calculators but I'm not sure I trust I'm using it correctly or looking at it right.

 

A few thoughts.

 

4.99 seems really high. Credit issues?

 

Doing a refi into a new 30 means your total mortgage will be a 37.5 year. This means the reduction in payment may not mean that much since in effect you are adding 7.5 years. I would build a spreadsheet. If you want to pm me the details I can make you one.

 

I would compare a 15 year or 20 as you may be better off that way.

 

I think you may be able to shop around for PMI but not sure.

 

FYI I used a local mortgage broker that someone here suggested and they were great

[Zaximus]

A few thoughts.

 

4.99 seems really high. Credit issues?

 

Doing a refi into a new 30 means your total mortgage will be a 37.5 year. This means the reduction in payment may not mean that much since in effect you are adding 7.5 years. I would build a spreadsheet. If you want to pm me the details I can make you one.

 

I would compare a 15 year or 20 as you may be better off that way.

 

I think you may be able to shop around for PMI but not sure.

 

FYI I used a local mortgage broker that someone here suggested and they were great

 

I checked credit in August and I have a 760 credit score and debt to income ratio is pretty good.  I'll gather the info and send to you.   That was my thinking about the years I've already put in.

[Doyle]

I'm not an expert but I have refinanced several times and that does not sound like a good deal.  I've made bad deals so I have experience there.  :jc:

[Big A]

You're missing the biggest part of refi, the fact the loan amortizes. Meaning in a nutshell, the company collects it's interest first so that your first payment is probably 85% interest and 15% principal and last payment in year 30 will be 15% interest and 85% principal. So if you look at your current payment breakdown, you are probably paying close to 60% towards interest right now and by refinancing, even with lower overall payment, you will be paying much more interest and much less principal.

If you can afford an extra hundred every month, so what it would cost to do 15 year loan which should be even lower interest and look at amortization schedule for that. Most people think it's half the time so it must be double, but on reality it's usually like 25% more a month which you are already paying a little extra.

As you probably know, any payment above the monthly payment comes directly off principal, so even an extra hundred a month will add up on such a small loan. As for PMI, not every company charges it, even if you are over 80% L/V so shop around. The current rates are always found on Bankrate.com, so compare you offered to there. Also, try to get it removed by paying down principal with extra payments as much as possible, or try to get a favorable appraisal.

In short, ask for an amortization schedule for loan they are offering you and compare your first payment breakdown to current year 8 payment breakdown and you will probably conclude it's not worth it.

Also when considering any refi offers, ask for total costs including all closing cost and any points. They might try to wrap those info the new loan amount and tell you there are no closing costs when in fact you could be paying super high closing costs are are financing them in your new loan.

[thefuzz]

That's a bad deal.

 

You are effectively starting over, bug not getting enough $$ off per month to do so.

 

I wouldn't refi in this case unless you can swing a 15 year.

 

Also, you could try to get a loan that has no PMI, they are out there.

 

You are already through the worst part of the loan, no way do I start that over again.

[Davidson Deac II]

I would check around, see if you can get a lower rate.  If your credit score is that good, you should be able to even with the rates going up.  Just a quick check shows most banks offering around 4.5%.

 

 

[Anybodyhome]

No way I'd do this deal.

 

You'd be better off in a couple years just by adding another $100 per month to the payment. You'll lose the PMI quicker doing that than refinancing. 

[Zaximus]

No way I'd do this deal.

 

You'd be better off in a couple years just by adding another $100 per month to the payment. You'll lose the PMI quicker doing that than refinancing. 

 

This is what I'm thinking also.  Just make a combined extra payment each year, since I'm like 13k from reaching 80% and saying goodbye to the PMI.

[thefuzz]

This is what I'm thinking also.  Just make a combined extra payment each year, since I'm like 13k from reaching 80% and saying goodbye to the PMI.

 

 

Prices have been rising, it may be worth your while to have it appraised now, you may be closer to 80% than you think.