refinance mortgage

[phantom]

I wonder how much of your current payment is PMI? I'm guessing that it's more than $365. Keep in mind that once you get 20% equity, the PMI can go away, while LPMI will be there for the rest of the length of the loan. If PMI is more than $365 of your current payment, you're essentially trading lower payments later for lower payments now.

[thomasdan]

I wonder how much of your current payment is PMI? I'm guessing that it's more than $365. Keep in mind that once you get 20% equity, the PMI can go away, while LPMI will be there for the rest of the length of the loan. If PMI is more than $365 of your current payment, you're essentially trading lower payments later for lower payments now.

I believe it's $271 per month.

I just don't know when i'll hit my 20 % equity. base on the chart, its going to take me 9-10 years.

[riverwed070707]

so i called the lender regarding the Lender paid Mortgage insurance.

She stated that the lender will pay out the PMI for me and wipe it out so i don't owe it anymore. But with doing that, i'll have a higher insterest rate of 4.125 instead of around 3.75. But the 4.125 is still better than what im getting now on my current loan of 4.481% which saves us 365 dollars a month on our mortgage. Ideally i wish i had put 20 percent down. but Its unrealistic in my situation and thats another topic.

But your NOT SAVING $365 YOU'RE JUST PAYING INTEREST TO BORROW IT LONGER. THIS IS NOT A GOOD DEAL. I don't get how when you look at the total interest paid and cost of the loan at repayment you can still be considering this! Its like saying "I see I currently am looking to repay $628k on my house but I think I'd rather pay $630k instead"... I'd be looking to find a new bank if they are honestly telling you this is a good deal. Its bad advice that only supports their best interest.

Not a single person has told you this was a good refi. Did you come here for advice or just to convince us you already know the answer?

[riverwed070707]

Another perspective. Since you are concerned about timing and that rates may go up, consider this.

If you keep the loan as is until you reach 20% equity in 9 years (assuming no extra payments) in Aug. 2024 you will have a loan balance of $283k and will have paid $131k in interest. If you refinanced at that time to a 15 year loan at 5.5% (assumption that rates went up) you'd still finish out your loan 4 years early and paying $264 in interest... not as substantial of savings as if you refied to a shorter term now, but point being even with a higher rate and waiting 10 years to refi, it still works out better. There is no rush - wait until you can see a big enough savings to make it worth it.

If you're dead set on refi'ing now, skip the LPMI and get the 3.7 rate.

Numbers on 3.7 rate: this repayment mortgage for $360,000.00, over 30 years, will cost you $1,667.22 a month.In taking out this loan, you'll pay a total of $240,197.81 in interest. The true cost of this loan is $600,197.81

[Jluke]

Numbers on 3.7 rate: this repayment mortgage for $360,000.00, over 30 years, will cost you $1,667.22 a month.In taking out this loan, you'll pay a total of $240,197.81 in interest. The true cost of this loan is $600,197.81

You won't find any better advice than this! It's good to have the numbers to support these kinds of decisions.

Again, the bank is out to make money off of you. they'll dangle that $365 savings to blur your view. kind of like a car salesman giving you a monthly payment and not the total price of the car.

[thomasdan]

Thank you for all your feedback

My wife and I crutch numbers last night. And we're probably going to skip the refi.

I wont be able to get the 3.75 % because i dont have enough equity. They lender said that i can only get that if i at least 20 %. which i dont.

I have a couple question though. In the future if my wife and I decided that we wanted to move in 10 years but had a chance to refi in the next year to save money on monthly mortgage. Do you do it then?(we live in southern CA)

this might sound stupid. But if Im in 5 years of a 30 year loan and paid $50k in interest already, Then decide to refi and my loan reset to 30 years. What happens to all the interest i'd already paid?

[Jluke]

Thank you for all your feedback

this might sound stupid. But if Im in 5 years of a 30 year loan and paid $50k in interest already, Then decide to refi and my loan reset to 30 years. What happens to all the interest i'd already paid?

You'll end up paying 35 years of interest and your principal/interest ratio will reset.

Best to refi to a lower term 20, 15-year or nothing at all.

Stick with the current loan.

IF you really want to refi down the road, put extra towards the monthly payments now. again the amortization schedule is a very useful tool for hypotheticals... you pay more now, you'll have a lower loan balance if down the road you want to refi (plus saving interest along the way).

With extra payments you are paying a lower rate without the refi.

[tripods68]

What I'm afraid of is if I wait till 20 % equity however short or long it takes me, the interest rate is going to be higher than what my current rate is.

Maybe you shouldn't refinance at all if you can't do a 15 year mortgage, or at very least minimum put down 20% to avoid PMI.

[myrdale]

A basic rule of thumb is to not refinance unless the new rate is 1% or greater difference. Going from 4.481% to 4.175% is only about 0.3%, it really seems to be pretty negligible.

I am not at all familiar with LPMI so I can not make any recommendations to it, other than that it sounds fishy.

I would concentrate on getting the principle to the 20% mark. At that point I would request they drop the PMI. If they refuse, I would shop around for another lender.

[snafu]

Should I guess your goal is to decrease your monthly housing payment since the action your bank proposes adds to your over-all cost? If your goal is to reduce the huge sum you will pay out over the term of your mortgage, you'll find a way to make extra payments directly to principal. If you get an income tax deduction for interest paid to mortgage, calculate that benefit and plan to submit that sum when you get your rebate. Find small savings in various categories to create direct-to- principal payments. Go through the house room by room, shelf-by-shelf, cupboard-by-cupboard and identify the items you no longer use, no longer need, no longer serve you.

Take a photo and list for sale on Facebook sell page, Craigslist or hold a yard sale. Add those proceeds to the direct-to-principal payment. The added benefits are free'd up space, reduced clutter and blessing someone else who can use and enjoy.
Using a meal plan helps reduce grocery costs; taking lunch from home is healthier, frees up around $ 8. daily, ...grasping at straws but there is potential to save significant sums if you can get to 20% equity.
[PMI $ 271. x 12 = $ 3,252. x 120 months = $ 32,520.]

Finally, I suggest you visit a Credit Union to see if they can give you a better contract. They have potential to give a version of 'cash back' based on their client based annual profit.