Mortgage Refinancing ???

[twinkletoes]

Ok, so with all the talk about the economy recently, it got me wondering about refinancing mortgages and how that whole thing works. I have read sooo many articles about refinancing and pulling equity. I know we have some folks in the real estate arena on board as well as those thight might have already went through this process, so I was looking to get some input.

 

1. Is there a better time to refinance than another?

 

2. How long after you've lived in your house should you even consider refinancing?

 

3. Does it really benefit to refinance?/Does it pay to refinance?

 

4. Is it better to try and refinance with your current lender or another one?

 

Any and all info you have would be great. TIA

[samanthag]

My FI is in real estate law. To answer your questions:

1) The best time to refinance is when the interest rates are low. You want to get the lowest interest rate that you qualify for which depends on your credit score.

2) You can refinance whenever you want but it's best to do it when you have 20%-30% equity in your home. Approx 2-3years.

3) If you can refinance to decrease your interest rate and ur able to change the term of your loan you would greatly benefit to refinance.

4) Usually your current lender will give you a lower interest rate but you always want to shop around and also consider the "closing costs" the lender is going to charge and/or any addtl charges you will accrue.

 

Hope this helps a bit. Please let me know if you have any additional questions.

[deleted]

Here are my non-professional answers:

 

1. Is there a better time to refinance than another?

 

Now was a good time for us. Rates are low right now and could rise. But nobody knows. If someone tells you they KNOW what will happen, they are lying. It's all speculation.

 

2. How long after you've lived in your house should you even consider refinancing?

 

We refi'd after 6 months, but it was contingent on getting a new, higher appraisal. It can't hurt to ask/get quotes?

 

3. Does it really benefit to refinance?/Does it pay to refinance?

 

You have to do the math: How much does the refi cost? How much will you save each month? How many months until you break even on the refi cost? Will you live in the house that many months?

 

4. Is it better to try and refinance with your current lender or another one?

 

We chose to go with our original lender, but it can't hurt to shop around for the best quote and the best value.

[NewOrleansbride]

I sell real estate and answer these questions a lot. So here goes:

 

1. Is there a better time to refinance than another?

There's no particular time of the year/ season that is better than any other to refinance. The best time to refinance is when the interest rate is lowest (this is not the same thing as the prime interest rate that you hear about all the time on the news). About a month ago the interest rates were below 6%, they are around 6.5% (maybe lower depending on you loan program/ credit score). All the lenders that I work with are telling me that they anticipate rates to increase over the next few months.

 

2. How long after you've lived in your house should you even consider refinancing?

It depends on how much equity you have in it and why you are trying to refinance. If you pull equity out and have less than 80/20 loan to value ratio you may have to pay PMI (private mortgage insurance). So make sure you ask you lender about that. If you are refinancing because you need to use that money for something, than I think you should consider refinancing (I don't recommend taking a vacation with your equity )

 

3. Does it really benefit to refinance?/Does it pay to refinance?

.... Maybe. This question is totally situational. You need to look at all the costs of refinancing (loan fees + closing costs can easily equal a few thousand dollars). If you are getting a much better interest rate and you plan to stay in your home for at least three more years than it might be worth it. If you currently have an ARM type loan I would suggest looking into refinancing at this point. I had considered refinancing at the end of last year because I could have gotten an interest rate in the mid 5% range. But, after I considered all my fees associated with refinancing, considered the time I planned on being in this house, and how much I would save monthly I barely broke even. So, it wasn't worth it for me.

 

4. Is it better to try and refinance with your current lender or another one?

I always recommend using local lenders (when something goes wrong you get to look them in the eye ). And, I just overall believe in keeping as much business local as possible. I recommend asking some of your friends, family, or call your Realtor for a lender recommendation. Make sure you get a good faith estimate from them. That will include all their fees and they will estimate all of your closing fees (by law they should provide you with this, but if you don't understand it make them explain it to you). And, it's always good to shop around. If you feel more comfortable working with one lender, but another one has a better rate... chances are the one you want to work with will do whatever they can to match the lower rate.

 

Any and all info you have would be great. TIA

 

I think the most important thing is finding a lender you are comfortable with. A good lender will not push you into refinancing if it is not in your best interest. My business philosophy is that if I save a client money (even if that means I don't make any) they will remember that and refer their friends and family to me.

[kerryjbrown]

I am in the wholesale mortgage industry for the past 6 years and yes, right now is a difficult time. The key to refinancing, only do so if you have a reason (need cash to pay for the wedding, you were in a NegAm loan that is coming due, you are in an adjustable loan and want to get into a fixed, etc...). Do not refinance if you don't have a specific reason. You should refinance to lower your payment and depending on when you obtained your mtg., right now is not a good time as rates have gone insane over the last month. Most of the big banks are in trouble and pulling out so there are fewer and fewer places to go.

 

PM me if you want me to help you see if your situation would benefit you. I am an Area Sales Manager and have done this for several years. Biggest thing I would say is go to someone you trust and ask about the front and back points as the retail loan officers are doing less loans than they used to and some are charging more per loan to make up for it (there are still lots of GREAT LO's out there though, so look around).

[NewOrleansbride]

Quote:

Originally Posted by kerryjbrown right now is not a good time as rates have gone insane over the last month.

You can still get a loan in the mid to low 6% range if you have good credit (680+ credit score). That is a great rate!! They aren't as good as they may have been in the past few years, but even just within the last 30 days I've had clients getting rates below 6% without paying any points. They are climbing up, and they probably will continue to go up (which is unusual in an election year), but they are not bad right now. I'll consider them bad when we reach highs that they had in the 80s (if you think 6.5% is bad, try paying 18%).

[twinkletoes]

Thanks guys! You have defitenly helped me answer the main ?s I had. We dont need to refinance for anything in particular right now. I will defitenly share these answers with my FI!

 

Your help has been greatly appreciated. Thanks again :~)

[kerryjbrown]

Quote:

Originally Posted by NewOrleansbride You can still get a loan in the mid to low 6% range if you have good credit (680+ credit score). That is a great rate!! They aren't as good as they may have been in the past few years, but even just within the last 30 days I've had clients getting rates below 6% without paying any points. They are climbing up, and they probably will continue to go up (which is unusual in an election year), but they are not bad right now. I'll consider them bad when we reach highs that they had in the 80s (if you think 6.5% is bad, try paying 18%).

I completely agree, however many people bought or refi'd within the last 2 or 3 years when rates were much better so it is more difficult for them to refi in today's market as rates are higher and their payments go up when they are trying to save money. This is why it is so important to look at your situation and see what the reason's are for refi'ing and if it has net tangible benefit.