#1  
Old 10-09-2019, 05:16 PM
Roderick Femm's Avatar
Roderick Femm is offline
Member
 
Join Date: Jul 2005
Location: On the cusp, also in SF
Posts: 7,274

Should I re-finance?


My lender is offering a re-finance. The cost to me is $9,900, and due to a reduction in interest rate I will save $183 per month. The re-fi cost is, of course, rolled into the mortgage amount owed, and the clock will be re-set to 30 years; the current mortgage has about 27 years to go. (I am not interested in shortening my mortgage length by paying more per month, that would just be reducing the amount of money I have available to spend now for someone else's benefit after I'm dead.)

I don't need to save this $183 per month, in fact I doubt I will notice it. I am POd at my lender for pestering me on the phone about this (which I have told them) and for insisting that it was done for my own best interests; and I am somewhat reluctant to reward the pesterer by whatever amount his commission on the $9,900 is. But if it's a good deal and something I ought to do to be financially responsible, I will waive that consideration. I'm just not sure how to make the financial calculations to see if this is worth it.

I have an excellent credit score, by the way, and any damage to it by the lender's inquiry has already been done.
  #2  
Old 10-09-2019, 05:36 PM
kanicbird is offline
Guest
 
Join Date: May 1999
Posts: 19,643
Just from looking at the numbers you gave (3 years into it, and the interest rates then compared to today) it appears like they may be just throwing you enough of a bone so you don't refinance with another. However if I understand you it may be a bone with some meat on it. Just because they are making this offer it does hint that a better deal may be possible and also that better deal may be the fair value offer if you care to look.

In other words you may be able to do better if you cared to do so. You would also be giving up some equity to them in this deal ($9900).
  #3  
Old 10-09-2019, 05:46 PM
Roderick Femm's Avatar
Roderick Femm is offline
Member
 
Join Date: Jul 2005
Location: On the cusp, also in SF
Posts: 7,274
Thanks, I hadn't considered that aspect of things. One thing I forgot to mention is that there is no need for a re-appraisal with this re-fi offer from my current lender. I would expect a new lender to want to have an appraisal, as well as making another query on my credit score.

eta: I am pretty much content with status quo, but who doesn't want to save money, if it's a real savings? Is there a calculator I could use to tell me how long it will take at the $183/month savings to make up that $9,900, with interest?

Last edited by Roderick Femm; 10-09-2019 at 05:47 PM.
  #4  
Old 10-09-2019, 05:51 PM
crazyjoe is offline
Guest
 
Join Date: Dec 2004
Location: Farmington, MI
Posts: 3,123
Such a small savings could easily be due to them extending the term of your loan back out to 30 years. I just refinanced to 3 percent on a 15 year mortgage with only about 2k in closing costs, if that helps any. I'd say shop around, cuz it sounds like they are not offering you a good deal.
__________________
If I had a bulldozer.....
  #5  
Old 10-09-2019, 05:57 PM
Omar Little's Avatar
Omar Little is offline
Guest
 
Join Date: Apr 2000
Location: Within
Posts: 13,216
Quote:
Originally Posted by Roderick Femm View Post
Is there a calculator I could use to tell me how long it will take at the $183/month savings to make up that $9,900, with interest?
https://www.nerdwallet.com/mortgages...inance-savings
  #6  
Old 10-09-2019, 06:09 PM
enalzi is offline
Guest
 
Join Date: Apr 2008
Location: Chicago, IL
Posts: 8,189
Quote:
Originally Posted by Roderick Femm View Post
One thing I forgot to mention is that there is no need for a re-appraisal with this re-fi offer from my current lender. I would expect a new lender to want to have an appraisal, as well as making another query on my credit score.
You probably wouldn't need an appraisal with another lender. They aren't reusing your old appraisal (3 years is way too old). Most likely you are in Freddie Mac or Fannie Mae's database and they'll accept your value as given. Any other lender that wants to sell to Freddie/Fannie can do the same.

You're going to get a new hard pull on your credit report whether you go with your old lender or a new one.
  #7  
Old 10-09-2019, 06:16 PM
Ravenman is offline
Charter Member
 
Join Date: Jan 2003
Location: Washington, DC
Posts: 26,736
This is not a scientific, I crunched the numbers sort of answer. Itís just my first thought based on what you describe.

I would tell the lender to stop bothering me with a deal that has very little upside to me. The costs involved are nothing to sneeze at, and the savings are probably mostly based on converting your original 30 year loan to a 33 year loan (in essence).

Just IMHO.
  #8  
Old 10-09-2019, 06:35 PM
Icarus's Avatar
Icarus is offline
Member
 
Join Date: Feb 2001
Location: In front of my PC, y tu?
Posts: 5,318
So, you would be mortgaging their commission and fees to pay over 30 years. Why would you do such a thing? (I know, I know, it's standard practice. But it's like I tell my kids about running up a credit card balance, how does it feel to be paying for that meal or pair of shoes for the next 10 years?)
  #9  
Old 10-10-2019, 08:55 AM
Isosleepy's Avatar
Isosleepy is offline
Charter Member
 
Join Date: Jul 1999
Location: Pittsburgh
Posts: 1,828
That is a massive number to quote on refi.
There will be cheaper options out there to do the exact same thing, or even better. From your op, though, a more interesting question may be: how long do you expect to live, and do you care what you leave behind? Money now in exchange for debt later is a perfectly fine rationale if you aren’t around when the debt is due, and don’t care much about those that are.
  #10  
Old 10-10-2019, 10:47 AM
control-z is offline
Guest
 
Join Date: Mar 2003
Location: Virginia
Posts: 12,971
Another vote for the fees seem way too high. I would shop around, or if that's too much trouble just tell them no thanks.

Last edited by control-z; 10-10-2019 at 10:49 AM.
Reply

Bookmarks

Thread Tools
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is Off
HTML code is Off

Forum Jump


All times are GMT -5. The time now is 04:01 AM.

Powered by vBulletin® Version 3.8.7
Copyright ©2000 - 2019, vBulletin Solutions, Inc.

Send questions for Cecil Adams to: cecil@straightdope.com

Send comments about this website to: webmaster@straightdope.com

Terms of Use / Privacy Policy

Advertise on the Straight Dope!
(Your direct line to thousands of the smartest, hippest people on the planet, plus a few total dipsticks.)

Copyright © 2019 STM Reader, LLC.

 
Copyright © 2017