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refinancing help

Posted By Message

kerrycec03
Mom of 2 beautiful boys!!

Member since 6/06

13519 total posts

Name:
Kerry

refinancing help

So I called HSBC Corporation (who we have our mortgage with) to see about getting lower payments due to the lower rates. I was surprised...we have a little dilema and wanted your help:

1. we could re-do our mortgage back at 30 years (currently we have 26 years left) and it would save us $180 a month BUT we'd be back at 30 years)

or

2. do a 25 year mortgage and keep our payments relatively the same as they currently are but save a free year.

Now, I'm extremely on the fence. We do plan on moving in the next 3-5 years BUT we could use that extra $180 a month. I'm so torn as if its worth it or not.

What would you guys do? We do currently live paycheck to paycheck but if we did do a new 30 year, I would pay more than the payment due to chip away at it more. I'm so conflicted. If I knew we'd be staying in our current condo for another 10+ years I'd totally do a 30 year, but knowing we may move in the next 3-5 is confusing me. HELP!

Message edited 2/9/2011 9:07:32 AM.

Posted 2/9/11 9:05 AM
 
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ODonnell
.

Member since 9/05

5983 total posts

Name:

Re: refinancing help

Honestly, I wouldn't do it at all based on those two options. I would not increase my mortage by 4 years just for $180 a month, especially if it wasn't my forever home. I also don't see the benefit to refinancing for the same amount and only gaining a year. Are there related closing costs? When I have enquired about refinancing the closing costs were always what put me off. I'd prefer to take that money and put it against the principle.

Message edited 2/9/2011 9:18:57 AM.

Posted 2/9/11 9:18 AM
 

kerrycec03
Mom of 2 beautiful boys!!

Member since 6/06

13519 total posts

Name:
Kerry

Re: refinancing help

Posted by ODonnell

Honestly, I wouldn't do it at all based on those two options. I would not increase my mortage by 4 years just for $180 a month, especially if it wasn't my forever home. I also don't see the benefit to refinancing for the same amount and only gaining a year. Are there related closing costs? When I have enquired about refinancing the closing costs were always what put me off. I'd prefer to take that money and put it against the principle.




the closing costs would be rolled into the mortgage so thats not a concern. They are about $5700. Which if I'm saving a year off my mortgage is a savings as my yearly mortgage $22,380 roughly. So, to pay $5700 but to SAVE 16K sounds worth it, no?

Posted 2/9/11 9:20 AM
 

ODonnell
.

Member since 9/05

5983 total posts

Name:

Re: refinancing help

Posted by kerrycec03

Posted by ODonnell

Honestly, I wouldn't do it at all based on those two options. I would not increase my mortage by 4 years just for $180 a month, especially if it wasn't my forever home. I also don't see the benefit to refinancing for the same amount and only gaining a year. Are there related closing costs? When I have enquired about refinancing the closing costs were always what put me off. I'd prefer to take that money and put it against the principle.




the closing costs would be rolled into the mortgage so thats not a concern. They are about $5700. Which if I'm saving a year off my mortgage is a savings as my yearly mortgage $22,380 roughly. So, to pay $5700 but to SAVE 16K sounds worth it, no?



But you are then paying interest on the $5,700 you are borrowing and rolling in for closing costs. Personally, I wouldn't do it.

Posted 2/9/11 9:30 AM
 

neener1211
:-)

Member since 4/07

22952 total posts

Name:
J

Re: refinancing help

I looked into the same thing, and the options were so similar to yours. We decided not to do anything, but we will pay the mortgage off with extra money when we have it.

The savings of $180 a month didn't offset having to pay the mortgage every month for another 5 years.

Posted 2/9/11 9:49 AM
 

caps612
In love with my little guys!!

Member since 8/10

5108 total posts

Name:

Re: refinancing help

You have to consider what the closing costs are for the re-fi. You may not end up gaining anything after you roll that into your mortgage payment. Ususllay it can take about 2 years to re-coup the closing costs with the lower interest payment. If it will take you 2 years to do that and you don't plan on being in your home too much longer after that, I don't really see how it would be saving you anything by re-financing.

Posted 2/9/11 9:55 AM
 

MegZee
My bunny

Member since 5/06

8770 total posts

Name:
Meaghan

Re: refinancing help

Posted by ODonnell

Honestly, I wouldn't do it at all based on those two options. I would not increase my mortage by 4 years just for $180 a month, especially if it wasn't my forever home. I also don't see the benefit to refinancing for the same amount and only gaining a year. Are there related closing costs? When I have enquired about refinancing the closing costs were always what put me off. I'd prefer to take that money and put it against the principle.



ITA. If you are moving in 3-5 yrs I would leave it alone.

Remember, if you re-amortize your mortgage, your payments are mostly interest in the beginning. compare where you are at your current amort schedule vs. new one

Posted 2/9/11 10:22 AM
 

HeatherRose
Life is Good :)

Member since 11/07

6605 total posts

Name:

Re: refinancing help

because your looking to move in a few years i would bring it back to 30 years

Posted 2/9/11 10:23 AM
 

MsSissy
xoxoxo

Member since 3/07

38865 total posts

Name:

Re: refinancing help

Posted by neener1211

I looked into the same thing, and the options were so similar to yours. We decided not to do anything, but we will pay the mortgage off with extra money when we have it.

The savings of $180 a month didn't offset having to pay the mortgage every month for another 5 years.



Same here.

Posted 2/9/11 10:41 AM
 

td123
LIF Infant

Member since 3/10

294 total posts

Name:

Re: refinancing help

I'm confused as to why the extra five years of payments matters when you are moving before it comes due. I'm under the assumption that when u move you will be taking a mtg on the new house at 30 years. Is that the wrong assumption? If not, then your home you end up in wont be paid for 35 years from now anyway (thats assuming you movied in 5 years)

Posted 2/9/11 10:58 AM
 

dfw343
LIF Infant

Member since 7/10

246 total posts

Name:

Re: refinancing help

If you plan to move in 3-5 years it's not worth it. You are better off taking that money you would use to refi and make improvements to up the value of your house!

At least that is what I would do lol

Posted 2/9/11 11:38 AM
 

caps612
In love with my little guys!!

Member since 8/10

5108 total posts

Name:

Re: refinancing help

Posted by td123

I'm confused as to why the extra five years of payments matters when you are moving before it comes due. I'm under the assumption that when u move you will be taking a mtg on the new house at 30 years. Is that the wrong assumption? If not, then your home you end up in wont be paid for 35 years from now anyway (thats assuming you movied in 5 years)



ITA
i think some people just don't like idea of having a 30year mortgage if they feel they have already paid down a few years. But to me I think that is silly cause even if you re-start at 30 years, in the long run your payments are lower and you pay less interest.

Posted 2/9/11 11:42 AM
 

TreAnt427
-

Member since 8/06

8634 total posts

Name:
Tracy

Re: refinancing help

Kerry we just refinanced and started 30 years all over again. But to me the monthly savings is worth it.

If you are planning on moving I would def take the lower payment. Since you will probably take a 30 year out on your new place anyway.

ETA - I have heard it's mostly worth it if you are going down 2 points in interest.

We went from 6.625 to 4.5

Message edited 2/9/2011 1:21:14 PM.

Posted 2/9/11 1:19 PM
 

LAMGAJ28
.

Member since 10/05

6039 total posts

Name:

Re: refinancing help

If you are thinking of moving in the next 3-5 years, I'd not do it with neither of the choices you gave.

Posted 2/9/11 1:51 PM
 

DRMom
Two in Blue

Member since 5/05

20223 total posts

Name:
Melissa

Re: refinancing help

I would shop aound., Look at a credit union or a broker as well. It may not be your best deal.

Posted 2/9/11 1:55 PM
 

bikramaddict
mommy-to-be

Member since 8/06

4376 total posts

Name:

Re: refinancing help

is there a fee if you pay your mortgage off early? we would pay a penalty if we paid off within the first three years. if you think you'll move in 3-5 years i would double check if you havent already.

Posted 2/9/11 2:15 PM
 

sunnyplus3
:)

Member since 11/05

8749 total posts

Name:

Re: refinancing help

have you had an appraisal done yet?
If you restart at 30, assuming there is no pre-payment penalty, you decide to sell in three years, you will barely scratch the surface of paying down principle in the first three years so if the market continues to decline you could easily end up owing more than what you can sell for.
Also I would never roll closing costs into a 30 year loan, its like you are borrowing 5,700 and paying 5% or whatever over 30 years if you stayed in the home and again that will affect the principle of the loan if you sell in the near future-that's another $5,700 you'll need to get out of the sale of property to pay the loan off.

Neither sound like a worthwhile deal to me. Try other lenders.

Posted 2/9/11 3:02 PM
 
 

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