Profile picture for tkamas

Refinancing Options from a 5.1% loan

The statistics:
Purchased Price: $345K - 10K seller closing help
Original Loan Value: $300K
Current Loan Value: $280K
Current loan rate: 5.125% APR

Current Home Value: Zestimate is 310K but comparable recent sales are closer to 360K

Goal loan rate: 4.125% APR
Goal closing costs: $0

So I might be dreaming here, but I wouldn't mind saving a couple hundred dollars a month if the current refinancing market will allow it.  I would want to maintain or improve the terms of the loan I have now (25 year, fixed rate, no prepayment penalty, online payments) but I may be flexible to options.  My goal is to free up more cash for paying down principal without the commitment of a 20 year loan. Any advice, or a solid reality check, would be appreciated.
  • October 01 2011 - White Oak
  • 0
    0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Be a Good Neighbor. Be respectful and on-topic. No spam or self-promotion! See our Good Neighbor Policy.

 
 

Answers (4)

I don't think you are dreaming.  But throw the Zestimate out though!  That number seems to confuse almost everyone I talk to.  I'm a huge fan of this site but not the Zestimate. 

If you want to get a true reality check, identify the lending institution with whom you are going to work with and ask them to refer you to an appraiser who could conduct an appraisal that would be valid on the loan, if you decide to refinance.  Yes, you would have to pay for the appraisal, but this would be a great starting point and money well spent.  From what I read in your post, you could at least capitalize on the lower rates currently available to either decrease the term or payment...possibly both.  If you are disciplined and seriously looking to pay down the loan, explore the option of paying extra payments on a 30  year fixed loan.  It's amazing how many years can be cut off of your loan by simply making 2 extra payments per year.  Too many people refi to a 15 year mortgage and then have cicumstances change in their life that makes the payments unbearable.  Good luck and let us know how it goes.
  • October 01 2011
  • 1Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

If you get the $360k value you are at 80% LTV. Your goal rate is close to what you may receive. Lenders have different fees, so APR may vary.

Happy funding, Rudi
  • October 01 2011
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

@Mike Gordon.

For an agent answering a mortgage question you did very well. TU

Happy funding, Rudi
  • October 01 2011
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Hi Tkamas,  Values are important, but so is your credit score.  It will be important to contact  a loan officer to allow them to review both your specific situation and goals beyond the mortgage to give you the best options.  Most good lenders can get a pretty good idea of value without paying for a full appraisal.  Appraisals are subjective though, and the value may come in much higher or much lower than you expect.

In most situations, I agree with Mike, regarding the 30 year versus 15 year mortgage.  Please keep in mind, depending on the appraised value, if FHA is your best option, a 15 year could be the best option though due to the high cost of 30 year mortgage insurance.

All the best.
Bridget "Maryland Mortgage Mama" McGee
  • October 04 2011
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.