moppet2003

Conventional Refi

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Hello. Just wondering what our chances at refinancing would be. The background: current loan in dh's name only, 6.25% on balance of $164,300 with 18 months into the loan. No PMI, but have a 42 month pre-pay penalty which has 2 years left. Current payment is $1314 but going up to $1381 because of increased taxes and insurance. Loan never late, not even one day. DH's credit is good with Menard's balance of $126, never late and high balance around $475 and Target Visa with balance around $3500 and never late and limit of $8500.

My credit has a few dings: judgement #1 in 2003 and satisfied in 2005 and #2 in 2005 and satisfied in 2006. Medical collection from 2004 that's in dispute and one from 2006 that's paid. Also have from judgement #2 the jdb still reporting that's it's satisfied in full, but will drop from CRA's 1/09.

I'd like to get our payments lowered, but don't know if we have any options~ anyone got any suggestions? Thanks.

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What did it appraise for last? What state are you in? Income? Which is more important to you....lower payment, rate, or the security of a 30 year fixed?

Obviously in a perfect world we would like all three, but if you had to pick which would it be, in order. :)

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I think that you should stay put on your loan. You won't be able to get a low enough interest rate to make it pay off for you. When you add in closing costs and the fact that you will now take a 28.5 year loan and have a 30 year loan is just one more thing against the idea.

Charles

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We're in MN and almost 2 years ago it appraised at $250,000 but they value has dropped to around $205,000 now and our combined income is $72,000. I know we're in a good position but was just curious if a refi was feasible at this time. Say, ball park figure on what it costs to buy down the interest rate? Thanks.

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We're in MN and almost 2 years ago it appraised at $250,000 but they value has dropped to around $205,000 now and our combined income is $72,000. I know we're in a good position but was just curious if a refi was feasible at this time. Say, ball park figure on what it costs to buy down the interest rate? Thanks.

There used to be a general rule that one point would buy the rate down one quarter of one percent, but now that mortgages are sold in bundles, there is defintely great disparity to that claim. One point is equal to one percent of the mortgage amount, so each point (if you paid all closing costs out of pocket) would be about $1,600. Theoretically, it would take four points to lower your interest rate by one percent, so that would be about $6,400 just to lower your interest rate by one percent.

A rate reduction on today's pricing to get a 5.25% mortgage would be very close to 4 points, but would lower your payment by $102.00 per month. Now in order to break even, you would need to recuperate the finance costs. At today's market rates, the $6,400 would be divided by $100.00 (monthly savings), giving you a break even point at 64 months on the rate buydown only. But wait........ there's the origination fee (how brokers get paid, underwriting fee and a host of other fees that would easily run towards $5,000 or so, which would also require an additional 50 or so months to recuperate, so all told, it would take 11 or so years to get back the costs of refinancing. This is (as Charles has already stated) defintiely not a good move at this time.

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How good are you at managing money? Stay where your at if you can't say "very".

Call your mortgage company and see what their policy is on canceling your escrow account. That is why your payment is going up. You didn't have this option when closing the loan. It would have cost you more. Different companies have different policies on canceling.

When you get your escrow refund, set up a high yield savings or short term CD. Do the math to figure out where you need to be when it's time to pay the tax man. Even at the poor rates now, imagine your return over 30 years. You can see why mortgage companies encourage them.

This is not for everyone. You must be disciplined with your money.

Do you know anyone in the mortgage business near you? They see the wide range of insurance quotes. I can tell anyone in my area the best place to go.

A guy came to see me last week. There was no benefit in refinancing, but he saved $100 per month by changing insurance companies. Good luck.

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