Should I refi now, or wait

yllus

Elite Member & Lifer
Aug 20, 2000
20,577
432
126
Good Rule of Thumb

A good rule of thumb is that if interest rates are 1/2% to 5/8% lower than your current interest rate, it may be a good time to consider refinancing a home mortgage.

I don't quite get refinancing (never done it), but isn't there a catch along the lines of you'll be starting at the "beginning" of the loan again, meaning you're going to be paying the interest part first?
 

Rage187

Lifer
Dec 30, 2000
14,276
4
81
$800 a year or month? They say it is not worth it unless it is a full percentage point.
 

Rage187

Lifer
Dec 30, 2000
14,276
4
81
Good Rule of Thumb



I don't quite get refinancing (never done it), but isn't there a catch along the lines of you'll be starting at the "beginning" of the loan again, meaning you're going to be paying the interest part first?

Different on a 15 year. The first year, 1/3 goes to princible, the next year kicks up to 40%. We are in year 3 of a 15 year and half goes to princible.
 

spidey07

No Lifer
Aug 4, 2000
65,469
5
76
Good Rule of Thumb



I don't quite get refinancing (never done it), but isn't there a catch along the lines of you'll be starting at the "beginning" of the loan again, meaning you're going to be paying the interest part first?

Yes. It resets your amortization tables which is why it's not always a good idea to refinance, you could wind up paying MORE even if your rate is lower. But being as OP's only a year in that pretty much negates that angle. If he was 10 years in on a 15 then absolutely don't refi.
 

highland145

Lifer
Oct 12, 2009
43,973
6,334
136
on 100k currently will pay $35.8k in interest.
@3.8 you'll pay $29.1k in interest.

Edit: That's for the full 14 years.
 
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Epic Fail

Diamond Member
May 10, 2005
6,252
2
0
Yes. It resets your amortization tables which is why it's not always a good idea to refinance, you could wind up paying MORE even if your rate is lower. But being as OP's only a year in that pretty much negates that angle. If he was 10 years in on a 15 then absolutely don't refi.

You are only talking about the total sum of money, you really should do an NPV analysis of a loan.

And if you don't want to restart the loan, you can always make prepayment on a 15 year loan to shorten it to 5 year.
 

OCGuy

Lifer
Jul 12, 2000
27,224
36
91
It isnt costing you only $800, you just dont know it.

Yes, you should. Rates are amazing.
 

L1FE

Senior member
Dec 23, 2003
545
0
71
I just refinanced by having the broker roll all the fees into points on the APR. No up front costs and you still get a lower APR than without refinancing. Win-win.
 

SandEagle

Lifer
Aug 4, 2007
16,809
13
0
OP, thanks for this thread! didn't know rates were this low. I JUST called and re-fi'd my 30 (25 left @ 5.9%) to a 15 yr @ 3.875%. I have a 2nd mortgage so my payments stay the same, but I pay $300 less a month in interest. should be able to recoup costs in 8 months. they rolled $2000 in fees/costs into the mortgage though. was that too much?
 

spidey07

No Lifer
Aug 4, 2000
65,469
5
76
Why would anybody roll the fees into the mortgage? You're paying interest on something that has zero value or return. Don't do that.
 

OCGuy

Lifer
Jul 12, 2000
27,224
36
91
I just refinanced by buddy that I sold a condo to in September down to 4.5 percent; from 5.375;. I paid all his fees and still made $7K on the deal.

Win-Win. :)

Basically anyone who is sitting in the 5+ range, with good credit and 20+ percent equity should think about refinancing.
 
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sjwaste

Diamond Member
Aug 2, 2000
8,757
12
81
Anyone telling you the amortization resets isn't entirely accurate. You can refi and some lenders will allow you to keep your current schedule. We refi'ed 1 year into a 30 year mortgage and kept the remaining # of payments the same.
 

mizzou

Diamond Member
Jan 2, 2008
9,734
54
91
I have a six percent loan, i think its a no brainer for two full points down but anything less u got to balance closing costs , and what yourloan futureis. I plan on saving up andpaying loan off early within five or six years..if i fail to do that i will fail epicly passing up on a easy 1 point reduction. 25 years left on mortgage
 

yllus

Elite Member & Lifer
Aug 20, 2000
20,577
432
126
Anyone telling you the amortization resets isn't entirely accurate. You can refi and some lenders will allow you to keep your current schedule. We refi'ed 1 year into a 30 year mortgage and kept the remaining # of payments the same.

What does the lender get out of the deal? Upfront transaction fee?
 

OCGuy

Lifer
Jul 12, 2000
27,224
36
91
^ He must be talking about a loan modification with the servicer he already had. Your loan starts at whatever term the Note says, which is going to be 40, 30, 25, 20, 15, or 10 years.
 

FP

Diamond Member
Feb 24, 2005
4,568
0
0
I just refinanced by buddy that I sold a condo to in September down to 4.5 percent; from 5.375;. I paid all his fees and still made $7K on the deal.

Win-Win. :)

Basically anyone who is sitting in the 5+ range, with good credit and 20+ percent equity should think about refinancing.

Not always.

If you are refi'ing a non-recourse loan you could be losing that protection.

Don't listen to ATOT. Go talk to an attorney or financial planner who has your best interest in mind.