Should I back out of mortgage refinance?

[emanon1501]

My current loan is at 4% with 207K remaining. I have an opportunity to refinance it with the same bank at 2.99%, but with the closing cost (no cash out) the new balance will be 215K. I will save around 200 a month. What are your thoughts on that? Also, they want me to sign the below form. I have refinanced several times, but I never signed forms like this below. I lost the formatting when I copied it and pasted it here. What are your thoughts on this? I am consulting with a layer on this next week, but I want to hear your thoughts.

NOTICE CONCERNING REFINANCE OF EXISTING HOME EQUITY LOAN TO NON-HOME EQUITY LOAN UNDER SECTION 50(f)(2), ARTICLE XVI, TEXAS CONSTITUTION: III. Forms and Disclosures 1 of 1 Return to Top Document #r3640-A 03/28/2018 YOUR EXISTING LOAN THAT YOU DESIRE TO REFINANCE IS A HOME EQUITY LOAN. YOU MAY HAVE THE OPTION TO REFINANCE YOUR HOME EQUITY LOAN AS EITHER A HOME EQUITY LOAN OR AS A NON-HOME EQUITY LOAN, IF OFFERED BY YOUR LENDER. HOME EQUITY LOANS HAVE IMPORTANT CONSUMER PROTECTIONS. A LENDER MAY ONLY FORECLOSE A HOME EQUITY LOAN BASED ON A COURT ORDER. A HOME EQUITY LOAN MUST BE WITHOUT RECOURSE FOR PERSONAL LIABILITY AGAINST YOU AND YOUR SPOUSE. IF YOU HAVE APPLIED TO REFINANCE YOUR EXISTING HOME EQUITY LOAN AS A NON-HOME EQUITY LOAN, YOU WILL LOSE CERTAIN CONSUMER PROTECTIONS. A NON-HOME EQUITY REFINANCED LOAN: (1) WILL PERMIT THE LENDER TO FORECLOSE WITHOUT A COURT ORDER; (2) WILL BE WITH RECOURSE FOR PERSONAL LIABILITY AGAINST YOU AND YOUR SPOUSE; AND (3) MAY ALSO CONTAIN OTHER TERMS OR CONDITIONS THAT MAY NOT BE PERMITTED IN A TRADITIONAL HOME EQUITY LOAN. BEFORE YOU REFINANCE YOUR EXISTING HOME EQUITY LOAN TO MAKE IT A NON-HOME EQUITY LOAN, YOU SHOULD MAKE SURE YOU UNDERSTAND THAT YOU ARE WAIVING IMPORTANT PROTECTIONS THAT HOME EQUITY LOANS PROVIDE UNDER THE LAW AND SHOULD CONSIDER CONSULTING WITH AN ATTORNEY OF YOUR CHOOSING REGARDING THESE PROTECTIONS. YOU MAY WISH TO ASK YOUR LENDER TO REFINANCE YOUR LOAN AS A HOME EQUITY LOAN. HOWEVER, A HOME EQUITY LOAN MAY HAVE A HIGHER INTEREST RATE AND CLOSING COSTS THAN A NON-HOME EQUITY LOAN. I have received a copy of this notice concerning extensions of credit defined by section 50(f)(2),article XVI, of the Texas Constitution this day of , 20 . Homestead Owner #1 I have received a copy of this notice concerning extensions of credit defined by section 50(f)(2),article XVI, of the Texas Constitution this day of ,20 .

[Jluke]

8k in closing costs?

how is that broken down? Escrow included??

also do you have a home equity loan too?

need those details but I would say no to this as presented

[amarowsky]

old "rule of thumb" I used to hear was : Do NOT refi unless you are getting >2% reduction benefit. (8k closing costs seems like treason, although I only skimmed). I'd say skip the refi.... (be careful in Texas too. Very little regulation, so make sure they're not screwing you. The law is on the side of those w/ money there, so be careful!)

[Snicks]

I personally didn't buy into the refinancing. I know people who were doing that many times. Instead make extra payments on your mortgage and just pay it off early. You will save far more than refinancing.

[myrdale]

I personally didn't buy into the refinancing. I know people who were doing that many times. Instead make extra payments on your mortgage and just pay it off early. You will save far more than refinancing.

I think it just depends on personal strategy, but that is assuming there is thought put into it.

For my mortgage, I financed $101,000 at 6% for 30 years.

Five years later, I refinanced the remaining $52,000 at 4% for 30 years. I don't remember how much the refi cost, but I don't believe it was a significant amount.

Four years later, it was paid off.

My plan was to keep my monthly payment as low as possible (hence sticking with the 30 year model), while making extra payments.

Where my payment was $650, and I'd usually to a little more than double at $1,500 per month, suddenly I was paying quadruple the payment when it was reduced to $400 at the same $1,500.

In general, don't refinance for less than 1% change in interest rate.

Don't refinance for more than what the mortgage is for. You want to pay off credit cards? DON'T do it with you're mortgage. You want a new kitchen? DON'T do it with your mortgage. The only possible exception I would consider would be something like needing a new roof or some serious plumbing or electrical issues. Even then I'd not like it.

[disneysteve]

I personally didn't buy into the refinancing. I know people who were doing that many times. Instead make extra payments on your mortgage and just pay it off early. You will save far more than refinancing.

Paying extra is fine, but paying extra will save you far more at a lower interest rate as even more of your payment goes to principal.

We refinanced a couple of times. It saved us thousands of dollars. We never would have paid off the loan as soon as we did if not for that.

[bjl584]

8K in closing seems high
I'd shop around then maybe do some calculations on how much paying extra would save you.
It might not be worth it to refi.
Or at least, it might be worth it to see what other lenders have to offer

[amarowsky]

pay that sucker off w/ every dollar you have. Then take a HELOC on that bad boy. So when paid off (or if you have good equity after payments) you'll be able to summon up to 80% value of your house at a simple 2.5-3.5% rate at the stroke of a pen/check or debit card.

Hard to put a value on that low interest (albeit variable to prime rate) for that high of a line of credit. mine serve as a back-up-emergency fund (or a properly coiled spring of cash that costs nothing to maintain, for when opportunity comes knocking at my door)

[Snicks]

pay that sucker off w/ every dollar you have. Then take a HELOC on that bad boy. So when paid off (or if you have good equity after payments) you'll be able to summon up to 80% value of your house at a simple 2.5-3.5% rate at the stroke of a pen/check or debit card.

Hard to put a value on that low interest (albeit variable to prime rate) for that high of a line of credit. mine serve as a back-up-emergency fund (or a properly coiled spring of cash that costs nothing to maintain, for when opportunity comes knocking at my door)

Pay it off to take out a loan against it? Why?

[myrdale]

I am afraid we may be answering the questions you didn't ask.

When I first read your post my eyes glazed over trying to go though the legal stuff you included. Reading back though it now, this is what I gather:

There are two types of loans, "Home Equity Loans" and "Non-Home Equity Loans".
Home Equity Loans give you a certain level of protection, primarily the lender has to have a court order to foreclose.
Non-Home Equity Loans do not have this protection, the lender can foreclose without a court order.
Non-Home Equity Loans let the lender come after you.
Non-Home Equity Loans may have other shenanigans.
Non-Home Equity Loans may be cheaper.

Honestly it just sounds like they are asking you to sign off on a disclosure so they can show you were aware of you're options.

In addition to refinancing your home, are you asking for an additional loan? Is this about covering the outrageous $8k closing cost?

[Snicks]

I must be in the minority. I don't like to borrow against my paid off home.

[disneysteve]

I must be in the minority. I don't like to borrow against my paid off home.

We opened a HELOC a few years ago because I needed 15K spur of the moment for an insurance policy premium (one shot deal). Once we paid that off, I kept the line open. Last year, they tried to charge me a $65 annual fee. I called and said to either waive the fee or close the account. They waived it. This year, same thing. I called again and told them to close the account. I don't want to have to do that every year.

[LivingAlmostLarge]

My first condo we had a HELOC 1st loan mortgage. The more we borrowed the more we paid, but we had it like a checking account and paid less interest by putting every dollar to do. Now i'm getting a bit old and don't want to bother tracking heloc rates and trying to maximize every dollar. I too almost refi in August but then Chase said "oh we'll give you 2.875% for your mortgage please don't leave us." I was like oh okay since it was a free "refi" from 7/1 arm to 30 year fixed no extra amortization. It was .125% less than my 7/1 for free so why not?

[parafly]

I would back out of it assuming you have good credit. Those closing costs for a 2.99% 30 year fixed loan are outrageous. You can find much better out there.

Just a quick look on bankrate.com, you can get a 2.875% 30 year fixed loan for a refinance with zero points and zero upfront costs today.

[CameronAlsop]

In my opinion, borrowing is a very inconvenient thing, especially if you borrowed from a loved one.