- Find a Real Estate Professional
- Realtors®
- Mortgage Lenders
- Home Improvement Pros
- Other Real Estate Services
- Review an Agent, Lender or Pro
- Marketing on Zillow
- Real Estate Agent Advertising
- Join the Professional Directory
- Popular
- Real Estate Market Reports
- More
Answers (8)
- Joe Cafiero, "Joe Cafiero"
- Contributions:3221
Right now with those credit scores, I would settle for nothing less than 5.0% with 0 points on a FHA loan.
- Robert Lowery, "Bob Lowery"
- Contributions:2097
Yes, he mentioned FHA in his original question.
The Fannie and Freddie adjustments would be pretty significant for a 80% LTV cash out refi with 688 scores.
It's always best to sit down with a LO and compare the payments before making a decision. Also, when paying points, you should look at the savings and see how long it will take to make that investment back.
If your payment is $47 cheaper and it costs $1500 in points, it would take you 32 months to make it back. That is not bad, so if you plan to have it for more than 32 months, I would do it.
Also, you can roll the points into the loans up to 85% on an FHA loan, so I would probably recommend it unless you plan to sell in the near future. And, there would not have to be money out of pocket.
Still, those rates seem a bit high for FHA, so I would shop around.
Or, as AZ suggested, maybe check with some non-Agency lenders, like a credit union or small local bank.
The Fannie and Freddie adjustments would be pretty significant for a 80% LTV cash out refi with 688 scores.
It's always best to sit down with a LO and compare the payments before making a decision. Also, when paying points, you should look at the savings and see how long it will take to make that investment back.
If your payment is $47 cheaper and it costs $1500 in points, it would take you 32 months to make it back. That is not bad, so if you plan to have it for more than 32 months, I would do it.
Also, you can roll the points into the loans up to 85% on an FHA loan, so I would probably recommend it unless you plan to sell in the near future. And, there would not have to be money out of pocket.
Still, those rates seem a bit high for FHA, so I would shop around.
Or, as AZ suggested, maybe check with some non-Agency lenders, like a credit union or small local bank.
fha? the OP is going to be at 77%ltv worst case...check your local credit union, and avoid mi/pmi...
- Paul McFadden, "pmcfadden"
- Contributions:143
Both those quotes sound expensive to me. Paying points is not a good idea if you can avoit it. It's expensive money. You should be able to get an FHA loan with no points that should be affordable. Make sure you decide soon. As of April 1, the cash out limit on FHA loans is decreasing to 85% loan-to-value, down from 95%. Good luck!
- HomeSand.net, "White Picture"
- Contributions:4395
The calculation is for 5% VS 5.5%
1st option :
Your actually mortgage is $100,000, Cash out $25,000, 1 point is $1,250, Escrow fee $2,500 ( guess )
$100,000+$25,000+$1,250+$2,500 = $128,750. at 5.5% with 30 years term, Monthly mortgage payment is $731.03
2nd option :
1.75 point is $2,187, Escrow fee $2,500
$100,000+$25,000+$2,187+$2,500 = $129687. at 5% with 30 years term, Monthly mortgage payment is $696.19
If you use 2nd option, then you need 64 months to breakeven with 1st option.
With 2nd option, you don't pay out of pocket money( however, the principal will increment $937 from 1st option)
and you still payless than 1st option.
1st option :
Your actually mortgage is $100,000, Cash out $25,000, 1 point is $1,250, Escrow fee $2,500 ( guess )
$100,000+$25,000+$1,250+$2,500 = $128,750. at 5.5% with 30 years term, Monthly mortgage payment is $731.03
2nd option :
1.75 point is $2,187, Escrow fee $2,500
$100,000+$25,000+$2,187+$2,500 = $129687. at 5% with 30 years term, Monthly mortgage payment is $696.19
If you use 2nd option, then you need 64 months to breakeven with 1st option.
With 2nd option, you don't pay out of pocket money( however, the principal will increment $937 from 1st option)
and you still payless than 1st option.
- Robert Lowery, "Bob Lowery"
- Contributions:2097
I would shop around for a better rates and points.
all other factors equal, the 5% loan with 1.75% points is likely a better choice. Think of it this way: you pay an extra .75 percent upfront, and save .5% forever on the loan. By simple interest, 1.5 years later you are even. (I know interest is compound, and time value of money enters in, but the difference in this case is small, so I'm being lazy and not pulling up a financial calculator)
The carloan/credit card debt has two components to think about:
1. interest rates. What are your rates on each? if they are higher than 5%, then on a pure expense of money idea, you would be doing well to pay them to zero with your refinance. Simply put, less rate is always better.
2. Are you disciplined enough to not waste the extra money getting rid of car/credit card payments will give you? You need to either invest it, or pay it towards the principle of your mortgage. Otherwise, you have simply stretched your car payment/other debt out for 30 years, which is not wise. So, if you choose to refinnce them away, make a plan to either fund your 401k/roth IRA whatever with the money you will save each month, and NEVER run up another credit card balance again in life; pay them all in full each month.
The carloan/credit card debt has two components to think about:
1. interest rates. What are your rates on each? if they are higher than 5%, then on a pure expense of money idea, you would be doing well to pay them to zero with your refinance. Simply put, less rate is always better.
2. Are you disciplined enough to not waste the extra money getting rid of car/credit card payments will give you? You need to either invest it, or pay it towards the principle of your mortgage. Otherwise, you have simply stretched your car payment/other debt out for 30 years, which is not wise. So, if you choose to refinnce them away, make a plan to either fund your 401k/roth IRA whatever with the money you will save each month, and NEVER run up another credit card balance again in life; pay them all in full each month.
Is a loan of 5.0% with 1.75 points or a loan of 5.5% and 1 point better ?
Stating a discriminatory preference in an advertisement for housing is illegal. If you think this content is discriminatory or otherwise inappropriate and feel it should be removed from Zillow, please let us know by completing the information above.
We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.