I haven’t refinanced in the last couple of weeks but have been through the process a couple of times. Looking at the aggregator sites I’d say that’s probably about right and I think it’ll be a stretch to find anything significantly better.
That said, the last few mortgage companies I worked with allowed you to adjust the dials somewhat (buying points? I forget the terminology). Essentially you could pay more in closing costs for a lower rate, or pay less in closing costs (even a negative amount) for a higher rate. I think which way to go depends on if you have plans to pay off the mortgage earlier, etc.
I just locked in 2.526% yesterday (with zero points) for 30 year fixed. Seemed to be moving around, was originally quoted at 2.55%, then 2.50% later in the day, 2.526% by the time I got the paperwork in to lock. Sufficiently better than my current 3.5% to be easily worth it…
You should save about $9K in interest by doing this refi if my calculations are correct. That’s enough to cover any hidden fees the “no closing costs” may not include like title origination fee, doc prep fee, appraisal, etc.
My first mortgage was at almost 6%, for a lot of reasons. One was that my credit score wasn’t spectacular-- mainly because I’d had only one card, and paid it every month-- another was the lack of a significant credit history. I’d bought a car on credit, but paid it off early without penalty when I got a small legacy from my father.
I started carrying a small balance occasionally on my credit card, and then paid the balance, maybe every three or four months. I also got a card that cost me $6/month, but it reported to the credit agencies EVERY MONTH. It also had a higher limit, and I maxxed it out, then paid it off over three months…
I refinanced after 18 months, and got half the interest I had previously had. My credit score was around 750 at that point.
Completely depends on closing costs and on your current rate. We just locked in 2.5% with no points on a 15-year fixed-rate refinance; my wife’s employer scored us a fat discount on closing costs, so we’ll recover our expenses after just a few months. Totally worth it.
Thanks for setting me straight, @needscoffee and @Machine_Elf. I was considering my options last month and was getting overwhelmed by the math and as soon as I saw references to that 2% thing I was glad to have a reason to stop trying to figure it out
Ugh. You guys are going to make me do the math or regret it, huh? I might be OK with regret…
Spreadsheets* are the good kind of hurt
My breakeven at far less than a 2% delta was less than a year.
Since you’re changing the schedule, I also find it useful to compare your monthly payment if you paid enough extra on the principal to pay it off in 15 vs refinancing.
*My phone initially swypo’d “Diarrhea” somehow. Which may be appropriate depending on how you feel about spreadsheets.
I would be interested in informed opinions on whether we should refi.
The current rate 4.0% on a 30 year fixed. We’re roughly 10 years into it, so we’re approaching the point in the amortization where our principal and interest paid each month are close to even - getting to where our monthly payment has a significant portion going to principal is the main reason I haven’t refinanced.
Credit rating is great. We may sell in 2-3 years due to retirement (forced or otherwise), or we may try to tough it out and stay here (a lot of upkeep).
Can we play this from another angle? I am currently 8 years in to a 30-year fixed at a rate of 4.625%. I am going to be here at least 8 more years (possibly longer, but that’s the minimum.) I have excellent credit (>800.)
Question 1: Is a 15-year a good option? My current monthly payment is quite manageable, but I wouldn’t want to shoot up too much.
Question 2: Is doing a refi for the remaining 22 years a viable option? If so, what type of rate should I aim for?
You need to pay close attention to fees as well as rates. Fees include but are not limited to points - also include title and related closing costs, recording fees and the like. (Things like prepaid interest and escrow don’t count.)
I would say 2.625% is not as good as it gets. I refinanced about a month ago to a 15 year fixed, and got 2.625%, but not only paid no origination fees or point but also got a 1% credit towards closing costs which exceeded the title fees, such that I made about $1,000 profit as soon as the deal closed. (I can disclose which lender this was with if it’s not against board policy.)
And rates have dropped since then. I’m actually planning to do another refi now, one month after the prior one. Not because rates have dropped enough to make it worthwhile, but because I had intended to refi an investment property once I got my primary residence done, and that’s been a much tougher sell. So now I’m thinking of doing a cash-out refi on my primary residence, using the cash-out portion to pay (almost) the balance on my investment property loan. I’ve gone with a different lender this time. 2.50% rate with no fees or points, but with title closing fees and no credit, so I expect to end up paying out about $2,500 or so. (Cash-out refis get worse terms, but it’s worth it because investment properties pay much higher rates. And I believe this has been exacerbated by covid, since banks are afraid of foreclosure restrictions and mortgage forbearance etc.)
7/1 ARM, Rocket Mortgage. Loan is $698400 with 28% equity after the new appraisal. $2800 closing costs, so 3/4 of a year or so to recoup. I get a rate discount because I’ve got a bunch of money in a brokerage (Schwab) associated with Rocket/Quicken.