Refinance Now?

[kbrisson]

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?

[riverwed070707]

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.

[maat55]

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.

[Petunia 100]

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.

[danieldroga]

Refinancing has a lot of disadvantages, you should be contented on your mortgage right now since you have a low rate.

[Slug]

I would advise against it unless you are in the position that Petunia referenced.

[dawnwes]

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

[krantcents]

I think you should see when the break even on the savings versus costs, since you will only staying just a couple more years.