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Profile picture for Ms LCB

I bought my house 4 yrs ago with a rate of 7.2%. Should I now refinance with 788 credit score?

  • May 12 2010 - JeffVanderLou
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Answers (22)

Profile picture for Blue Nile
Here it is already 60 days later, and people are answering the same question again....

I certainly would hope that if it made sense to Ms LCB, that the refi would already be a done-deal.

Yes, rates are lower now than they were in May; but people don't refi every time the rates change 3/8%.
  • July 12 2010
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I would echo the other answers. Short answer is a qualified YES! Rates are at all time lows. If you plan to stay in the house more than a year I'd look into it. That said, equity position is important as is possibility of consolidating other debt.Depending on these factors it may actually make sense to do an FHA loan. Best to consult a mortgage professional for more detail on options. Feel free to contact me if you are not already working with someone.

  • July 12 2010
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Absolutly, Rates are far below what you are paying now and depending on your outstanding balance you could be saving a few 100 dollars on a monthly basis....Regards John [contact info removed by moderator]
  • July 12 2010
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Yes, it is worth looking into.  Increase your wealth by saving money in your monthly mortgage payments.  Do this, and you will be happy you did!
  • July 12 2010
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The simple answer is yes. You will save significant dollars both in the short and long term.  Don't overthink this.  You can drop your rate by more than 2%. 

Let me know if I can be of any help.
  • July 12 2010
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It all depends on the equity you have in the home.  If your loan to value would be over 80% then the savings in payment will be eaten up by the cost of the mortgage insurance you would have to pay.  Now this all depends on what your loan to value happens to be and the loan size.  This is a very simple question for a professional mortgage broker to answer for you.  If you know a broker, call them, if not, I'd be more then happy to figure it our for you.  I'm only licensed in California, so depending on where you are from, I may not be able to help you beyond just telling you my opinion on refinancing.

But my first reaction to your question is YES, rates are so low right now, you could probably save a ton of money monthly.
  • July 11 2010
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Profile picture for poole7
P.S. Mortgage Marketplace does not include (yet?), an estimate of the tax deduction on your mortgage interest and property tax (depending on your income, the state you live in, etc).  As Clay mentions, your mortgage savings may outweigh this factor (see tax adviser).

Using Mortgage Marketplace and other online tools, to explore these various issues before contacting professionals, can help one be more informed and ask better questions.

  • July 11 2010
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Profile picture for poole7
From a homes-owner:

Yes, you should definitely explore this now, with rates at historic lows -- may not get any lower.

Also, you may have several attractive options that may not have been affordable when rates were higher, such as a 15-Year mortgage (currently around 4%), paying points to get an even lower rate, or getting a so-called "zero closing-cost" loan by paying a slightly higher interest rate.

If you are the kind of person who likes to explore things on your own a bit before you contact professionals, I would recommend the Zillow Mortgage Marketplace, which is a great tool. Here are some informative features that I have found very helpful:

(1) On the left, you can select that it is a Refinance and then enter info about your current mortgage (which is anonymous until you decide to contact a lender or broker).

(2) Once you receive quotes, you can explore your competing priorities, by clicking on the different column headings, to arrange quotes in order of interest rate, monthly payment, total cost over a given time frame (True Cost), etc.

(3) You can explore different scenarios for how long you expect to keep the house / carry the loan, by selecting 1 to 30 years under True Cost.

(4) Clicking on Quote Details on the right will show you the breakdown of estimated costs, the amount of principal and interest to be paid each month, and your expected break-even point on the new loan.

You can also read reviews of each lender or broker, to help you decide whether to contact any of them. Of course, caution about reviews is always a good idea, as you don't know who submitted them (could be a family member, or someone with an axe to grind). Having more reviews is probably better, to see whether people have had good experiences with him/her.

Was this info helpful to you?
  • July 11 2010
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Profile picture for greymac
Here are some estimates to help you make a decision:
$100,000 at 7.2% for 30 years = $679 per month P&I
assuming you finance the new closing costs of $2000
$102000 at 4.5% for 30 years = $517 per month P&I

So, refinancing can save you on your monthly payment, but you'll see the effect of the closing costs when you sell, since your loan balance will increase. 

Good luck with finding a new lender!
  • July 10 2010
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Absolutely worth looking into - seeing as though you may be able to qualify for a 4.500% 30 year fixed rate with 0 points...
  • May 31 2010
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It will not make financial sense to keep a rate of 7.2% for a tax deduction, ever, if they have the income to qualify for an A paper loan.   

  • May 17 2010
  • 2Yes

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The decision to REFI would be based on your unique situation.  After reading all of the previous answers I'd add the following considerations.

How long do you plan on owning the property?

Is your objective paying off the mortgage early and own free and clear?

Does lowering your interest costs outweigh the mortgage interest deduction?
 
After considering the reasons to REFI do the benefits outweigh the costs to REFI (out of pocket or rolled into the loan & financed long term).  Sometimes a property owner only enjoys "bragging rights" of the lower rate?

While owning the property only 4 years you've been paying mostly interest and paid very little principal (unless you're currently prepaying your mortgage) and purchasing 4 years ago -at the peak of the market-your property may not have appreciated enough in only 4 years to offset any decline in value.

Lastly, as a real estate professional my best advise is to "consult a qualified financial or tax advisor".
 
Good luck.
  • May 17 2010
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At first glance I would say Yes!  But with all things a further explanation cannot hurt.  If you answer yes to the following you should refinance and maybe even into a 15 year if possible.
-Do you have at least 5 years left on the current loan
-Will you drop your interest rate more than 1%
-Are you willing to pay new closing costs
-Will your new LTV be at or under 80%

  • May 12 2010
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  • May 12 2010
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Everything that Jim Fett mentioned is true.  I would only mention that if your current loan has a small balance - it may not be advantageous to refinance.


  • May 12 2010
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Based on the information listed you should at least get some quotes.  You have excellent credit and a very high rate compared to what is incredibly low rates.  That said, there are other factors that will come in to play on your refinance that include but may not be limited to the type of property, job history, and income.  On the surface it looks as though you have a great opportunity to better your terms.
  • May 12 2010
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Profile picture for Blue Nile
You didn't mention the loan to value ratio.  If the loan to value ratio is going to be under 80%, a refi will do quite well for you.  If the loan to value ratio would be 125% or more, you may not be able to get a new loan.
  • May 12 2010
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The payment on a 15 Yr will be close to what you have now, if it is a 30 Yr, look at that option too.

  • May 12 2010
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why wouldnt you think you should ?  the rates are still great and the same rates as we have seen 15years ago... so they are really holding steady and are great !  find yourself a local broker that can quote rates from multiple investors and see what your best rate and what your best APR will be... then hurry and refinance...save yourself some money......

good luck
  • May 12 2010
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Certainly worth looking into with rates much lower than your post.
  • May 12 2010
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Profile picture for daveskow
yes !
  • May 12 2010
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Yes.
  • May 12 2010
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