refi mortgage

joe_mnApril 4, 2011

had 30yr mortgage. was 5 yrs into it. asked bank about refi options and they said i could refi for free and drop interest 1 full percent. or i could pay about 3% fee to drop interest 2 full points. if i was smart, i would apply saved money from lower payment to principal and pay off loan early. i certainly will not be in house in 30yrs. heck, won't even make it 5yrs.

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Billl

Is there a question in there somewhere?

    Bookmark   April 4, 2011 at 3:03PM
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joe_mn

was expecting to be scolded for not dropping rate 2 points. that route would have paid for itself in 3yrs based on my loan balance. the refi i did was minimal paper. went down to bank and had a few docs notarized. took about 15 min. i stayed with original bank so perhaps thats why the paperwork was so easy. a full on refi would have required going to a traditional closing session.

    Bookmark   April 20, 2011 at 2:25PM
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colorcrazy

Joe, the bank must have charged you something. I can't imagine they would let you get a lower interest rate with no fees.

You are correct, paying off early is the real way to save on the interest.

    Bookmark   April 23, 2011 at 2:08PM
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weedyacres

Some banks are doing streamline refi's now. The interest rate is a little higher than market rate, and that higher rate pays the points and fees so it comes out as a no-cash refi.

    Bookmark   April 25, 2011 at 4:20PM
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joe_mn

i did it on 05/2010. no fee 30yr rate was 5.3%. i was above that. i checked in august and it was 4.5% for no fee. grr. bank says it is program to keep current customers from fleeing. can do it once a year. so i am eligible now again but rates are higher.

    Bookmark   April 26, 2011 at 10:27AM
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Billl

Someone at most of the major banks realized that it was cheaper to offer good customers lower rates than to have them take their business elsewhere. Not exactly rocket science, but pretty revolutionary given the level of incompetence we've grown to expect from our giant, moster, mega-banks.

As for the strategy, if you are only going to be in the house a couple of year - take the money and run. No use paying points for an even lower rate. While you are at it, I wouldn't pay extra on the house if you are disciplined enough to save other ways. Just take the money you are saving and put it in a special "I'm Moving Soon" account. It is usually better to have cash on hand when you sell as opposed to an equal amount of equity. Paying off the house early is obviously a great goal, but only if you plan on living there long term.

    Bookmark   April 26, 2011 at 11:23AM
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joe_mn

bank mailed paperwork to me. had 3 or 4 pages that needed to be notarized so we went to bank. notary signed date and made mistake so she crossed it out. a week later we got call saying packet was rejected for notaries correction. had to resubmit paperwork.

    Bookmark   April 27, 2011 at 1:55PM
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