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08-17-2011, 05:29 AM
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Refinance Now?
My wife and I are currently in a condo I purchased about 8 years ago. With mortgage rates so low, I wonder if I could benefit from a refinance. I purchased for $180,000 and financed $171,000 for 30 years on a first-time homebuyer loan through RI Housing, so the rate was low @ 4.375%, but subject to federal recapture tax if I sell before 9 years. We plan on staying another 2-3 years at least before we make a move to another state. Would it be worth refinancing and what type of mortgage would make the most sense?
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08-17-2011, 06:58 AM
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I would not refi for two reasons. 1 - your rate is already very low and you aren't going to get much lower. 2 - 2-3 years isn't enough time to even recoup your cost of a refi for a .5-1 point lower interest. Typically refi isn't recommended unless you plan to stay in the house 5+ years.
What's your house worth now? If anything, I would maybe put some extra toward principal each month to better position you to sell if your value has gone down.
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08-17-2011, 03:42 PM
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I'm currently refiing, but I have a 5.625% rate. I would not refi if I had 4.375, with the exception of going to a 15 or 10 year loan.
__________________
Marcus Tullius Cicero: The budget should be balanced, the Treasury should be refilled, public debt should be reduced, the arrogance of officialdom should be tempered and controlled, and the assistance to foreign lands should be curtailed lest Rome become bankrupt. People must again learn to work, instead of living on public assistance.
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08-17-2011, 03:52 PM
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Do you plan to sell the home or keep it as a rental? If you plan to keep it as a rental and are looking at negative cash flow, you may want to refi to a new 30 to lower your monthly payments and possibly have positive cash flow. That is the only compelling reason I can see as to why you might want to refinance.
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08-18-2011, 12:05 AM
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Refinancing has a lot of disadvantages, you should be contented on your mortgage right now since you have a low rate.
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08-18-2011, 06:09 AM
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I would advise against it unless you are in the position that Petunia referenced.
__________________
Did you learn something from me? Learn even more at my blog: Sunk Costs Are Irrelevant
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08-18-2011, 03:17 PM
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Well, if you aren't sure you will be moving, I would look into it.
Right now you can get a 3.25% on a 15 year. Some are even giving rebates to cover closing costs. Could you swing a 15 year loan? It would allow you to get a lower rate AND pay more principal down. Dawn
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08-18-2011, 05:11 PM
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I think you should see when the break even on the savings versus costs, since you will only staying just a couple more years.
__________________
www.Krantcents.com "Making sense of money"
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