Closing on our refi tomorrow

[disneysteve]

We are scheduled to close on our mortgage refi tomorrow evening. Quicken Loans makes it quite easy as they will come to your house to do the closing if you want them to. That's what we are doing.

Assuming all goes as planned, by tomorrow at this time, we will officially have a 15-year loan at 3.99% instead of a 25-year loan (17 years, 7 months remaining) at 5.875%. Our monthly payment will drop by about $50 and we will knock over 2 years off the term. We will save thousands of dollars in the process.

I haven't made any attempt to figure out the actual savings. It is kind of challenging since we have made extra payments on our existing loan and plan to continue making extra payments on the new loan. All I know is that we will save money and it will help us get the loan paid off sooner.

[maat55]

I looked at that with my mortgage, but my breakeven was 8 years.

How much were your refi costs?

[disneysteve]

The total we have to bring to the table is $843. Everything else is in the loan. And we'll get more than that back in 2 weeks from the old escrow account. So basically, it is better than even. Also, I made a loan payment after the new loan was drawn up so I know their payoff figure is wrong and I'll be getting some money back from that.

[JoshuaHeckathorn]

Can you quickly share the main reasons why you chose to go with Quicken Loans? I'm gearing up to do a refi as well.

[disneysteve]

Can you quickly share the main reasons why you chose to go with Quicken Loans? I'm gearing up to do a refi as well.

We used them for our last refi in 2003. They are very, very easy to work with. They handle everything online and by fax. They assign you a specific agent who works with you beginning to end so you always have a contact person to deal with. At least in our case both times, they don't inundate you with request after request for every possible document from your bank statements to your high school diploma. I had to fax a couple of things one time: bank statement, pay stubs and declaration page from home insurance policy and that was it. Very simple. They called every few days to update me on the process and also have a website where you can view all of your documents, e-sign the ones that need to be signed and print everything out. Finally, they will do closing at the location of your choice. You don't have to go to some strange office building or title company. They will come to your office, your home or wherever is convenient for you.

Could I have gotten a slightly lower rate elsewhere? Maybe. But I was happy with 3.99% and the ease of dealing with them was worth it even if I could have shaved a couple of tenths of a point off the rate with another company with lesser customer service.

[GREENBACK]

I'm doing the same thing(refi) but am doing it with Everbank. I chose them essentially based on the lowest interest rate for my area. Never refied electronically. It seems fairly effortless though the process isn't quite complete. I'm bundling a HELOC and my remaining mortgage for a total of about 65k over 30yrs.. My plan is to invest the hundreds I'll not be paying.

[disneysteve]

Our closing went off perfectly. The appointment was for 5:00pm. The woman showed up at 4:45 and we were finished by 5:10. It couldn't have been any easier.

Old payment (PITI) $1,364.29
New payment (PITI) $1,312.63
Monthly savings $51.66
Loan term shortened from 17 yr/7mo to 15 yr
Rate dropped from 5.875% to 3.99%

So lower payment, less interest, shorter term. Can't argue with that.

[maat55]

Our closing went off perfectly. The appointment was for 5:00pm. The woman showed up at 4:45 and we were finished by 5:10. It couldn't have been any easier.

Old payment (PITI) $1,364.29
New payment (PITI) $1,312.63
Monthly savings $51.66
Loan term shortened from 17 yr/7mo to 15 yr
Rate dropped from 5.875% to 3.99%

So lower payment, less interest, shorter term. Can't argue with that.

I don't see how you could pull this off without a higher mortgage balance.

[disneysteve]

I don't see how you could pull this off without a higher mortgage balance.

The new loan is actually for slightly more money than the outstanding balance on the old loan.

Old loan payoff was about $85,900.
New loan is for about $89,000.

Despite that, because of the lower rate, we will be paid off sooner and at a lower total cost since more of each payment will go toward the principal.

[NJDebbie]

We are using Lending Tree for our refi. We are going from 5.375% to 3.75% 15 year mortgage. We are financing our closing cost and we'll pay $260 more but it will shorten our mortgage 10 years. We've also made other transactions with Lending Tree and its been painless. DisneySteve, you've done very well with your new loan.

[disneysteve]

One thing that helped speed up our closing and reduce our closing costs is that we didn't need to have an appraisal done because the loan to value ratio was so good. We were borrowing 85K on a house worth about 250K so they waived the appraisal. Otherwise it would have cost a few hundred more.

[maat55]

The new loan is actually for slightly more money than the outstanding balance on the old loan.

Old loan payoff was about $85,900.
New loan is for about $89,000.

Despite that, because of the lower rate, we will be paid off sooner and at a lower total cost since more of each payment will go toward the principal.

Your breakeven is roughly 5 to 6 years. This is ok for someone who intends to stay in the same house that long or longer.

I already had a 20 year note so my payment would not drop more than around 30 to 40 dollars. After fees, my breakeven was roughly 8 years out. I would not have seen a reduction in years due to my loan only has just under fifteen years left.

If I were certain to stay in my home till payed for, I would refi as well.

[rplayman]

I would have shopped around a little more. It may have been easy, but a 5/6 year break-even isn't really a good deal. When your balance is that below $100k, it's normally not that great of deal to refinance, unless you can do it for no closing costs (wells fargo offers this to existing customers).

[maat55]

I would have shopped around a little more. It may have been easy, but a 5/6 year break-even isn't really a good deal. When your balance is that below $100k, it's normally not that great of deal to refinance, unless you can do it for no closing costs (wells fargo offers this to existing customers).

This is why I have not refinanced. They want too much in fees to justify the lower interest on my loan amount. The higher the loan amount, the more you see a benefit, my loan is fairly small, so my benefit is low.

[disneysteve]

It may have been easy, but a 5/6 year break-even isn't really a good deal.

Perhaps, but maybe I'm just looking at it differently. Yes, we paid a total of about $4,000 in closing costs between what we brought to the table and what got added to the loan amount. That will take about 6.3 years to make up through the lower payment. But don't you also have to account for what money will be returned to us when the old loan gets closed out?

In our case, we will get back what is in our escrow account currently - about $2,200. We will also get back about $2,000 because the payoff figure used by Quicken was calculated before we made our November payment. So in the end, in a week or two we will get back that same $4,000 or even a couple hundred more than what we spent in closing costs. And from this point on, we'll be enjoying the lower payment and shorter term. Maybe I'm being dense but I don't really see the downside or why this wasn't worth doing.