Home loan refinance question

[GrantMeThePower]

Last year i refinanced my home loan and saved about 400 bucks a month.

The rates have come down yet again and I can do another no cost refinance and save another 160 bucks a month.

My question is, does anyone know how this would affect my credit score? I know that running credit often makes your credit take a hit, and I'm wondering if it would adversely affect my credit if i re did my mortgage two years in a row.

Anyone?

TIA

 

[SandEagle]

what's your SSN? I can look this up for you.

 

[spidey07]

It's not going to affect your credit score.

Also remember that when you are doing this refinance you are resetting your amortization tables so you may actually be LOSING money even though your monthly payment is less. It's a trap a lot of people fall for.

 

[GrantMeThePower]

It's not going to affect your credit score.

Also remember that when you are doing this refinance you are resetting your amortization tables so you may actually be LOSING money even though your monthly payment is less. It's a trap a lot of people fall for.

I don't understand this. Could you explain?

 

[Gibson486]

It's not going to affect your credit score.

Also remember that when you are doing this refinance you are resetting your amortization tables so you may actually be LOSING money even though your monthly payment is less. It's a trap a lot of people fall for.

yup, you are resetting your mortgage and starting over on your term...in the short run, you save 100 a month, but you reset your terms, so in the long run, you could spend more money...

 

[BlahBlahYouToo]

I don't understand this. Could you explain?

you've paid a bunch of interest up front already.
say you have a 30 year and you're 3 years into it. if you refi to another 30, you're paying another 30 years of interest, with most of that towards the beginning of the term.

look at the amortization table. do the math.
look at how much interest you paid the past 3 years, then how much you'll be paying the next 30 years at the new rate. factor in refi costs (free in this case).
then compare to how much it will be if you did not refi (simple mortgage calculator to see how much you pay over 30 years).
factor in how long you expect to live in the house.
see which scenario costs the least.

 

[GrantMeThePower]

Wow. I'm really an idiot! hahaha.

I assumed that they were transferring the loan, not getting a whole new 30 year loan.

What you're saying now makes great sense. Its just hard to really figure out how long I'll be here. I originally bought the place thinking I'd stay for 5 years. That was 6 and a half years ago and I don't see myself moving withing the next 3 or 4 years...

 

[endervalentine]

you've paid a bunch of interest up front already.
say you have a 30 year and you're 3 years into it. if you refi to another 30, you're paying another 30 years of interest, with most of that towards the beginning of the term.

look at the amortization table. do the math.
look at how much interest you paid the past 3 years, then how much you'll be paying the next 30 years at the new rate. factor in refi costs (free in this case).
then compare to how much it will be if you did not refi (simple mortgage calculator to see how much you pay over 30 years).
factor in how long you expect to live in the house.
see which scenario costs the least.

One way to 'stay ahead' of the refi, is to refi to the lower amount but keep paying the same monthly amt. if not more, this will help you catch up to the interest you've paid before. The two caveats is that you don't get penalize for pay extra to the principal and second is that you have not had your original loan for that long ... anythign longer than 5yrs will make it hard to catch up. as blah said you can look at the amortization table for the raw #'s.

 

[Apple Of Sodom]

yup, you are resetting your mortgage and starting over on your term...in the short run, you save 100 a month, but you reset your terms, so in the long run, you could spend more money...

Yes, but this can be offset by paying more on the mortgage itself. For example, if you are saving $100 a month then put that towards your principle. You will end up paying your home off way ahead of schedule and save a lot of interest. Of course, this takes discipline.

The rule of thumb is to only re-fi if you are saving a point or more on interest.

 

[spidey07]

Yes, but this can be offset by paying more on the mortgage itself. For example, if you are saving $100 a month then put that towards your principle. You will end up paying your home off way ahead of schedule and save a lot of interest. Of course, this takes discipline.

The rule of thumb is to only re-fi if you are saving a point or more on interest.

That's a good rule of thumb.

Another good rule of thumb is to put that different in interest payments into the market because at these incredibly low rates you WILL make more in the market than the 4.5% interest that is tax deductible.

Start building your wealth and making your money make more money for you. Just say no to paying extra on a mortgage.

 

[BlahBlahYouToo]

That's a good rule of thumb.

Another good rule of thumb is to put that different in interest payments into the market because at these incredibly low rates you WILL make more in the market than the 4.5% interest that is tax deductible.

Start building your wealth and making your money make more money for you. Just say no to paying extra on a mortgage.

4.125% for me, woohoo!

 

[TwiceOver]

That's a good rule of thumb.

Another good rule of thumb is to put that different in interest payments into the market because at these incredibly low rates you WILL make more in the market than the 4.5% interest that is tax deductible.

Start building your wealth and making your money make more money for you. Just say no to paying extra on a mortgage.

Ummm... I 100% will? I don't think that is guaranteed.

 

[GrantMeThePower]

Another good rule of thumb is to put that different in interest payments into the market because at these incredibly low rates you WILL make more in the market than the 4.5% interest that is tax deductible.

What do you mean by that Spidey? The stock market?

 

[spidey07]

Ummm... I 100% will? I don't think that is guaranteed.

Over the long term is always goes up. You could get guaranteed rates of return higher than the interest in bonds if you want 100% guarantee.