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Should I refinance?

Our current loan amount is $290,000. I can buy down to at least 4.624% at a total loan cost of $8000. for a 30yr  fixed. Our current payment with tax/insurance is $2105. It should save us a least $265 a month. We gross about $120,000 a year. Thanks Cory in Reno
  • December 29 2008 - Southwest
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Answers (5)

Look at it this way -- the total loan cost to refinance is $8000. You will save $265/mo in payments if you refinance at that rate/fee combination. In smple terms, your payback period is 30 months - just 2.5 years.

You should get quotes at varying rates to see what the fees are, and go with the one the gives you the shortest payback period whole at the same time not be too cost prohibitive.
  • January 04 2009
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Cory,
How much are they quoting you just to buy your rate down?  Martin is correct in that the $8,000 should include your escrow account, otherwise shop around and gather more quotes.  Find a rate which makes you comfortable with the payment and your closing costs should be under $4,000.

Please let me know if this helps, you can always contact me if you have more questions/comments. 

  • December 29 2008
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If you can avoid buying down the rate, do so. That's expensive money. Good luck. It appears time is on your side!


Paul

  • December 29 2008
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ccb1,

I will guess the $8,000 total loan cost includes escorws.. (hope it does)... If so, back those out (they are not costs in your loan as they are your own taxes and insurance).. This may bring the break even period under 2 years (that is the mark I like to see for anyone)...

Tchau,  Be patient and I think you will be rewarded.  However, be prepared (get the loan process out of the way... this is for anyone interested and simply FLOAT the rate)  then you can LOCK (an possibly close) on the same day.  It makes it much less hectic and you will not miss the boat.  Happy Holidays.
  • December 29 2008
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ccb1,

if you plan to stay more than 3 yrs (breakeven point), you are okay to refi.

if you plan to sell within 3yrs, forget it. it is not worth it.

the project interest rate will come down to 4.5% for 30yrs. it is the rate i am waiting for. my rate is 5.75%, 1yr ARM due to expire april 2009.  i have great patients and now it is closed to what i predicted. i am going to hang on.
  • December 29 2008
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