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post #1 of 14 Old 02-01-2005, 3:28 PM Thread Starter
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When do you refinance?

We closed at 6% on a 30-year mortgage when we built our house 16 months ago. I was referred to bankrate.com by my agent when I asked what the current rates are in my area, and I saw this. My questions are, when does it become worth it to refinance my loan and what potential problems should I look to avoid? I haven't yet done any research on the subject so I wanted to get some opinions before starting.
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post #2 of 14 Old 02-01-2005, 3:52 PM
 
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Re: When do you refinance?

One of the "golden rules" of re-fi is that yo uneed to be saving at least a full point.
There are many considerations, and most of them personal to refinancing.
But just on the surface I'd say that if you're at 6% now, I wouldn't do it unless you need (want) to cah out some.
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post #3 of 14 Old 02-01-2005, 4:00 PM
 
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Re: When do you refinance?

OK at a basic level it is easy:

Numbers are made up,

100,000 loan at 6% if your rate change to 5% your net savings is 1% of 100,000 a year or $1000. Now you can calculate the payback. If the loan cost is $2500 you need to be in the house 2.5 years to break even. Now this is a bit over simplified because it ignores compounding and risk but it will get you close.

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post #4 of 14 Old 02-01-2005, 4:07 PM
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Re: When do you refinance?

Sheep gave you a good example. The longer you plan on staying in the house the more it justifies refinancing. Do the math and you'll be able to decide which way to go.

"It is better to post and risk reposting than to have never posted at all."




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post #5 of 14 Old 02-01-2005, 4:32 PM
 
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Re: When do you refinance?

A 'balloon' payment may be required if you pay off the (original) loan before X time.

I'm getting set to re-fi in April in order to at least knock off my second (or down to a better %). Hopefully we'll be able to re-fi at a higher value (due to the market value continuing to rise), payoff both loans and get a better % on the re-fi.

Hopefully...

Last edited by Haywood; 02-01-2005 at 4:33 PM.
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post #6 of 14 Old 02-01-2005, 4:40 PM
 
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Re: When do you refinance?

IMO, not worth it, especially if there are more than $2k of fees. If I were you, the only way I'd refinance is if I took it to 15 years.
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post #7 of 14 Old 02-01-2005, 4:45 PM
 
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Re: When do you refinance?

I refinanced from 6.2 to 5.1 with no fees whatsoever to me and was with the same financial institution (they actually paid me $150). So it was an easy decision.
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post #8 of 14 Old 02-01-2005, 4:57 PM
 
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Re: When do you refinance?

Quote:
Originally Posted by RRWANTR
I refinanced from 6.2 to 5.1 with no fees whatsoever to me and was with the same financial institution (they actually paid me $150). So it was an easy decision.

Who did you have to blow to get *that* deal?
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post #9 of 14 Old 02-01-2005, 5:04 PM
 
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Re: When do you refinance?

Quote:
Originally Posted by Heavy-Dee
Who did you have to blow to get *that* deal?


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post #10 of 14 Old 02-01-2005, 5:09 PM
 
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Re: When do you refinance?

ER, I know there's different laws and rules between you and us here in Canada, but if you want a professional, unbiased opinion, I sleep with a bank manager every night so if you wish, I can ask her opinion. Feel free to PM me with any details that may be pertinant to your particular case.
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post #11 of 14 Old 02-01-2005, 5:10 PM
 
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Re: When do you refinance?

Quote:
Originally Posted by Newfie TLR
ER, I know there's different laws and rules between you and us here in Canada, but if you want a professional, unbiased opinion, I sleep with a bank manager every night so if you wish, I can ask her opinion. Feel free to PM me with any details that may be pertinant to your particular case.
What does your wife think of that?
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post #12 of 14 Old 02-01-2005, 5:16 PM
 
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Re: When do you refinance?

Quote:
Originally Posted by BDA116
What does your wife think of that?
She's OK with it as long as I keep my back turned to her.

We've been married over 25 years now, so talking about ER's mortage is probably the most exciting thing that will happen in our bedroom tonight!
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post #13 of 14 Old 02-01-2005, 5:25 PM
 
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Re: When do you refinance?

Quote:
Originally Posted by Newfie TLR
She's OK with it as long as I keep my back turned to her.

We've been married over 25 years now, so talking about ER's mortage is probably the most exciting thing that will happen in our bedroom tonight!
Yet she has not smothered you in your sleep, be thankful for the small things...

Must obey the sheep dog
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post #14 of 14 Old 02-01-2005, 5:40 PM
 
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Re: When do you refinance?

Quote:
Originally Posted by Heavy-Dee
Who did you have to blow to get *that* deal?
No blowing involved....just munching


It was when the rates dropped. You could get a better rate if you played closing fees but for me it wasn't worth it. They were offering the deal I listed to current customers in good standing in order to keep them from refinancing with another institution.
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