I've posted in the forums previously about a house that we own that we no longer live in. My family moved 3 1/2 years ago, and the house has been on the market and unsold ever since. We owe about $105,000, and my best guess is (with input from our Realtor) that it's worth somewhere between $95,000 and $105,000 at this time. The house is located in a small villge in the northern part of Michigan. The list price on the house is $109,900, which when Realtor commissions and closing costs are added in, puts us about $4,500 in the hole.
One week ago, we had new renters move in. They are interested in buying the house, but are not in a financial position to do so right now. We struck a deal with them to remove the house from the market for 12 months. They are paying $100 per month above what we asked for rent in exchange for us removing the house from the market (we had been asking for $800 in rent, and they are paying $900 per month.) Also, when the 12 months is up, the (presumed) $1,200 they've paid in addition to the rent will be put toward a down payment.
So ... on to my question. Would it be a good idea for us to refinance our loan while we wait? We are paying $6.25% interest. The original amount borrowed was $120,000, and we are paying $738/mo. Int + Prin.
There is of course no guarantee that our renters will buy the house in July 2012, but I'd like to use 12 months as my planning horizon.
Over the next 12 months, I will pay $6,500 in interest on the loan as it currently is.
If I were able to refinance for 5.25% (one point lower than current), I would save $158/mo. in mortgage payments and $1,000 in total interest payments, assuming a 30 year refi.
Or we could refi at a 20 year payoff, keep our payments approximately the same, and bite off more principal each month.
What are mortgage rates these days? What can I expect for closing costs? Clearly, I don't have 20% Loan to Value.
Any thoughts would be appreciated.
Thanks
One week ago, we had new renters move in. They are interested in buying the house, but are not in a financial position to do so right now. We struck a deal with them to remove the house from the market for 12 months. They are paying $100 per month above what we asked for rent in exchange for us removing the house from the market (we had been asking for $800 in rent, and they are paying $900 per month.) Also, when the 12 months is up, the (presumed) $1,200 they've paid in addition to the rent will be put toward a down payment.
So ... on to my question. Would it be a good idea for us to refinance our loan while we wait? We are paying $6.25% interest. The original amount borrowed was $120,000, and we are paying $738/mo. Int + Prin.
There is of course no guarantee that our renters will buy the house in July 2012, but I'd like to use 12 months as my planning horizon.
Over the next 12 months, I will pay $6,500 in interest on the loan as it currently is.
If I were able to refinance for 5.25% (one point lower than current), I would save $158/mo. in mortgage payments and $1,000 in total interest payments, assuming a 30 year refi.
Or we could refi at a 20 year payoff, keep our payments approximately the same, and bite off more principal each month.
What are mortgage rates these days? What can I expect for closing costs? Clearly, I don't have 20% Loan to Value.
Any thoughts would be appreciated.
Thanks
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