Refinance revisited

I was contacted by a few companies about refinancing, which cause us to go into refinance revisited mode. It appears that we can still get a rate of 3.125% for a 15 year fixed for the remaining balance with very little closing costs ($2,500 or less). I’m going to give Quicken Loans a call just to see what they can do for us, and check if they’re closing can be very quick and painless.

Will the refinance costs add onto the mortgage, absolutely not or I wouldn’t consider refinancing. And since we’ll be getting a month or more “grace period” before the new mortgage starts we’ll use that to pay the closing costs.

Since our first mortgage was a higher rate (8%) back in 2000, I’d say things are looking pretty good.

It would lower our monthly required payment by $340/month but I’d keep it on the same schedule. Even with paying extra on a new mortgage, it will allow us to pay an extra $205/month on the new mortgage AND save $135/month more outside of retirement accounts.

We’re not locked in yet or 100% sure it is in our best interest since I want to see the effect on our income taxes since there would be literally just over $2,500/yr less in mortgage interest that we’d pay. Luckily they’ve locked in the $1,000 child tax credit until our oldest two are 17 years old anyway, which will be perfect even if they decide to drop that down at that time (although very unlikely then).

So, what kind of rates, ARM or fixed, have you managed to achieve throughout the years for your mortgage?

Update: The refinance doesn’t seem to be in our best interest, since the appraisal came in much lower than it really should have (thanks to someone who sold of their home for less than it was worth to get out faster due to high property taxes and anticipated higher property taxes).

Final update: The refinance worked out in our favor eventually. We told them we had given up because the closing costs were too high because they were wanting 5 months of property taxes up front from us. The reworked the numbers at closing worked out to slightly over 1 current month’s mortgage payment, but pushed the first payment out 2 months. I am going to analyze if it would make any sense to pay the extra 2 years off prior to the scheduled final payment or simply let it ride and invest the difference between our current mortgage and the new mortgage (payment dropped by $330/month!).

This entry was posted in budget, budgeting, Income Tax, spending plan. Bookmark the permalink.

3 Responses to Refinance revisited

  1. Pingback: JimmyO

  2. Pingback: Where to keep your savings | Rich In The HeartRich In The Heart

  3. Apparently this seems to be catching on, since “awindycitygal” is doing the same thing. :-)
    http://awindycitygal.wordpress.com/2013/03/31/my-final-mortgage-refinancing-hopefully/

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