Question by julie: Questions about refinancing home mortgage? i put this in the wrong section?
with the fed cutting the rates so low, now would be a good time to think about refinancing right? my mortgage interest rate is currently 6.25 fixed, i think we owe about $ 95,000 on it. my husband and i have excellent credit, and we’ve been in our home for 5 years. would refinancing lower our monthly payment significantly, how much does it cost to refinance?
oh weve also paid our mortgage through march, so how would that work if we did decide to refinance
Best answer:
Answer by lolly
This is the right section
http://www.bankrate.com/brm/calc_vml/refi/refi.asp
Enter your numbers here.
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Now is a good time to refinance. I hear rates could be as low as 4.75%, so it is definitely worth refinancing. Refinancing will lower your payment, but something to consider is reducing the # of years on the mortgage to a 15 or 20 year, the payment difference is not that much, but the difference in what you pay out in interest over the life of the loan is HUGE!!
In regards to your mortgage being paid thru March, just lowers the amount of the payoff at the time you close and lowers the amount you need to borrow in order to refinance.
Start shopping rates with your bank institution first, credit unions are great. You want the best rate, but you also need to consider the closing costs involved.
We were in the middle of locking in 4.875% for a refinance today when rates went back up. We’re hoping they’ll go back down. Like you, we’re at 6.25%. The closing costs I was quoted today were about $ 3500. Our payment would reduce by about $ 130 per month, so it would take us 27 months to recoup upfront closing costs. We plan to be in our house for more than that so it will be worth it for us to refinance.
You should use some mortgage calculators (try bankrate.com) to see how much you’ll save per month and how many months it will take you to make up those costs. Then decide if you will be in your home long enough for it to be worth it.
As for what you’ve paid upfront it may depend on how its been allocated. If its sitting in an escrow account you’ll get a refund.
Get a 1st that is a HELOC instead of a 30 yr. With this you can leverage your savings and checking float every month to pay off your home fast and still have access to funds in case of emergency- you cant do that with a 30 year mortgage. You can payoff your home in as little as seven years and save tons of money with a home ownership accelerator HELOC.