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MrsM84
LIF Adult
Member since 2/13 2352 total posts
Name:
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WWYD - Refinancing
DH and I are in the process of refinancing to drop the PMI on our current FHA loan. Our mortgage guy gave us two appealing options and DH and I have been going back and forth on them, so I figured let me open it up to the chat boards! Many of you seem to be much more financially inclined than I am!
Option A: Just refinancing the current balance on our mortgage, rolling in closing costs and any fees. We will be able to get a 3.99% interest rate. This option would cause our monthly payment to decrease by about $380 and of course, no more PMI.
Option B: Refinancing the current balance on our mortgage and taking out an additional $23K to pay off all our credit card debt (debt is spread across 4 cards). This option comes with a higher interest rate (4.5%) and our monthly payment would be about $150 less than it currently is and no credit card bills whatsoever. As of now, if we just make the minimum payments on all our cards, its around $500 a month. When added to the $150 lower mortgage payment, its a total savings of around $650/month. But again, a larger loan amount and a slightly higher interest rate if we pursue this option.
Both options would mean we'd get a check from our current mortgage company for the funds we have in escrow and our mortgage guy is timing the closing so we'll be able to avoid making 2 mortgage payments (we won't pay our July payment on the old mortgage and we'd roll the first month - August - into the cost of the new loan, so first payment on the new one would be due 9/1). Thoughts?!?!? Thank you!
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Posted 6/4/19 10:05 PM  |
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ali120206
2 Boys
Member since 7/06 17789 total posts
Name:
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WWYD - Refinancing
Option B provides more of savings. And I am sure the interest rate you are paying on CC balances is a lot higher than 4.5%.
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| Posted 6/4/19 10:19 PM |
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MrsM84
LIF Adult
Member since 2/13 2352 total posts
Name:
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Re: WWYD - Refinancing
Posted by ali120206
Option B provides more of savings. And I am sure the interest rate you are paying on CC balances is a lot higher than 4.5%.
Yes! Good point. The APR on our credit cards varies from 16% to 20%.
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| Posted 6/4/19 10:21 PM |
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ave1024
I Took The Wrong Road
Member since 12/07 6153 total posts
Name:
That Led To The Wrong Tendencies
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Re: WWYD - Refinancing
Many financial experts say you shouldn’t refinance unsecured debt (CCs) into secured debt (mortgage).
Forget monthly payments how much more will you pay over the life of the loan for option B. Probably a lot more.
Go with option A and balance transfer the CC debt to 0% card.
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| Posted 6/4/19 10:50 PM |
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LSP2005
Bunny kisses are so cute!
Member since 5/05 19453 total posts
Name:
L
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Re: WWYD - Refinancing
Option A. You should never place unsecured debt into secured debt. You need a plan to pay off your cc debt and stop living above your means. If need be, cut up your cc. Take the savings and start to chip away at the cc debt.
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| Posted 6/5/19 7:10 AM |
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mommy2be716
LIF Adult
Member since 1/16 2921 total posts
Name:
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WWYD - Refinancing
option A. 4.5 is not a good rate.
We just refinanced too and I'm at 3.625%. TFCU is still offering this rate because it's 3.875 with a .25% off promotion. I would have your broker look into the credit unions to be sure your option A rate is the best he can do. Because 3.99 doesn't seem that great to me either.
Message edited 6/5/2019 7:47:22 AM.
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| Posted 6/5/19 7:47 AM |
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Jenn79
One more?
Member since 2/12 2410 total posts
Name:
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Re: WWYD - Refinancing
Option A. Put the savings towards the cc debt and as a pp stated transfer to a 0% cc. Good luck!
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| Posted 6/5/19 7:47 AM |
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MrsM84
LIF Adult
Member since 2/13 2352 total posts
Name:
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Re: WWYD - Refinancing
Posted by LSP2005
Option A. You should never place unsecured debt into secured debt. You need a plan to pay off your cc debt and stop living above your means. If need be, cut up your cc. Take the savings and start to chip away at the cc debt.
Thanks for your assumption that we are living beyond our means. My husband had been unemployed for close to a year and we put what we needed to on the credit cards during that time period to basically survive.
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| Posted 6/5/19 7:57 AM |
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Aries14
Can't plan life...
Member since 8/08 2860 total posts
Name:
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WWYD - Refinancing
option A. You will end up paying a lot more by rolling cc debit into a mortgage payment.
When we got in over our heads with cc debit and interest rates we consolidated them with Greenpath and they worked with the cc companies to get all our interest rates down to 0 or like 4%.
Good luck!
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| Posted 6/5/19 8:58 AM |
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MrsM84
LIF Adult
Member since 2/13 2352 total posts
Name:
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WWYD - Refinancing
Thanks for all your responses -- seems like option A makes the most sense. I did the math and figured out that over the cost of the loan, we would be paying significantly more on option B. I was temporarily blinded by the appeal of no credit card payments! Currently looking into TFCU and balance transfers to help pay off the cards quicker.
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| Posted 6/5/19 9:04 AM |
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CookiePuss
Cake from Outer Space!
Member since 5/05 14007 total posts
Name:
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Re: WWYD - Refinancing
Posted by ave1024
Many financial experts say you shouldn’t refinance unsecured debt (CCs) into secured debt (mortgage).
Forget monthly payments how much more will you pay over the life of the loan for option B. Probably a lot more.
Go with option A and balance transfer the CC debt to 0% card.
Agree. Over the life of both loans, Option b would end up being much more expensive especially in comparing rates for your mortgage.
Additionally, for most, rolling in unsecured credit card debt only alleviates that debt for awhile. The spending habits are not being addressed and you will likely develop credit card debt again.
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| Posted 6/5/19 9:15 AM |
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MrsM84
LIF Adult
Member since 2/13 2352 total posts
Name:
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Re: WWYD - Refinancing
Posted by mommy2be716
option A. 4.5 is not a good rate.
We just refinanced too and I'm at 3.625%. TFCU is still offering this rate because it's 3.875 with a .25% off promotion. I would have your broker look into the credit unions to be sure your option A rate is the best he can do. Because 3.99 doesn't seem that great to me either.
I just reached out to our mortgage guy about TFCU -- he said that TFCU charges a lock in fee of 1.5. He attached their lock-in agreement to show me. He said that if we want to spend that amount in points, that he could get the same rate through his bank. Another factor is that TFCU and many other credit unions bring appraisals in much lower than independents would. They do this to protect their position.
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| Posted 6/5/19 9:29 AM |
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mommy2be716
LIF Adult
Member since 1/16 2921 total posts
Name:
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Re: WWYD - Refinancing
Posted by MrsM84
Posted by mommy2be716
option A. 4.5 is not a good rate.
We just refinanced too and I'm at 3.625%. TFCU is still offering this rate because it's 3.875 with a .25% off promotion. I would have your broker look into the credit unions to be sure your option A rate is the best he can do. Because 3.99 doesn't seem that great to me either.
I just reached out to our mortgage guy about TFCU -- he said that TFCU charges a lock in fee of 1.5. He attached their lock-in agreement to show me. He said that if we want to spend that amount in points, that he could get the same rate through his bank. Another factor is that TFCU and many other credit unions bring appraisals in much lower than independents would. They do this to protect their position.
Since when? I just closed 3 weeks ago and my rate was 3.625% lol... I paid 0 points, closing costs were under 8k and I got 45k cash out.
We don't have any CC debt or any other debt aside from a 5k car loan and our mortgage, though. Our credit scores are both over 800 as well, so maybe that played into it. Who knows.
Message edited 6/5/2019 9:45:58 AM.
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| Posted 6/5/19 9:44 AM |
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b2b777
LIF Adult
Member since 9/09 4474 total posts
Name:
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WWYD - Refinancing
Did he give you an option of taking loan A, and then a HELOC to cover the CC debt? Maybe the HELOC would be lower interest over a shorter time frame (say 36 months)? I agree with the PP that you shouldn't lump the CC debt into the overall mortgage -- or into a HELOC if you can avoid it. But if your DH is back to work and your lifestyle is back on track, it could be another option.
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| Posted 6/5/19 10:13 AM |
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LIRascal
drama. daily.
Member since 3/11 7287 total posts
Name:
Michelle
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Re: WWYD - Refinancing
Posted by MrsM84
Posted by LSP2005
Option A. You should never place unsecured debt into secured debt. You need a plan to pay off your cc debt and stop living above your means. If need be, cut up your cc. Take the savings and start to chip away at the cc debt.
Thanks for your assumption that we are living beyond our means. My husband had been unemployed for close to a year and we put what we needed to on the credit cards during that time period to basically survive.
I feel your pain.... I became disabled in Jan of 2016 and we have been living the same way- no salary, same expenses. We had no choice. I hate when people judge.  Awaiting SSD (three years now)
Option A. if you have your lender do the math, the higher interest rate with your unsecured debt = a lot more money over time.
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| Posted 6/5/19 10:22 AM |
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MrsM84
LIF Adult
Member since 2/13 2352 total posts
Name:
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Re: WWYD - Refinancing
Posted by mommy2be716
Posted by MrsM84
Posted by mommy2be716
option A. 4.5 is not a good rate.
We just refinanced too and I'm at 3.625%. TFCU is still offering this rate because it's 3.875 with a .25% off promotion. I would have your broker look into the credit unions to be sure your option A rate is the best he can do. Because 3.99 doesn't seem that great to me either.
I just reached out to our mortgage guy about TFCU -- he said that TFCU charges a lock in fee of 1.5. He attached their lock-in agreement to show me. He said that if we want to spend that amount in points, that he could get the same rate through his bank. Another factor is that TFCU and many other credit unions bring appraisals in much lower than independents would. They do this to protect their position.
Since when? I just closed 3 weeks ago and my rate was 3.625% lol... I paid 0 points, closing costs were under 8k and I got 45k cash out.
We don't have any CC debt or any other debt aside from a 5k car loan and our mortgage, though. Our credit scores are both over 800 as well, so maybe that played into it. Who knows.
The amount your home was appraised at could have been a factor. The LTV (loan to value ratio) impacts the interest rate offered and any points the lender deems necessary as the LTV is what the lender uses to assess the "risk" of the loan. Perhaps your home value is very high in comparison to the amount you refinanced. As my mortgage guy said, credit unions often low ball the appraisal which protects them more in the transaction.
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| Posted 6/5/19 11:29 AM |
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lightblue
LIF Adult
Member since 1/17 2249 total posts
Name:
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Re: WWYD - Refinancing
Posted by ave1024
Many financial experts say you shouldn’t refinance unsecured debt (CCs) into secured debt (mortgage).
Forget monthly payments how much more will you pay over the life of the loan for option B. Probably a lot more.
Go with option A and balance transfer the CC debt to 0% card.
This.
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| Posted 6/5/19 12:25 PM |
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Re: WWYD - Refinancing
Posted by MrsM84
Posted by mommy2be716
option A. 4.5 is not a good rate.
We just refinanced too and I'm at 3.625%. TFCU is still offering this rate because it's 3.875 with a .25% off promotion. I would have your broker look into the credit unions to be sure your option A rate is the best he can do. Because 3.99 doesn't seem that great to me either.
I just reached out to our mortgage guy about TFCU -- he said that TFCU charges a lock in fee of 1.5. He attached their lock-in agreement to show me. He said that if we want to spend that amount in points, that he could get the same rate through his bank. Another factor is that TFCU and many other credit unions bring appraisals in much lower than independents would. They do this to protect their position.
We refinanced 4 years ago through TFCU and they gave us an outstanding appraisal which allowed us to remove pmi. We bought with 3.5% down, and were able to refi after only 3 years to remove pmi based on their appraisal, which put us as having over 20% equity. Plus their rates/fees were fantastic compared to everywhere else we looked at.
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| Posted 6/5/19 1:43 PM |
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Re: WWYD - Refinancing
Posted by MrsM84
Thanks for all your responses -- seems like option A makes the most sense. I did the math and figured out that over the cost of the loan, we would be paying significantly more on option B. I was temporarily blinded by the appeal of no credit card payments! Currently looking into TFCU and balance transfers to help pay off the cards quicker.
I would go with option A because like you said there is less money over the life of the loan. If you want a zero balance interest transfer, look into American Express, I have their charge and I recently logged into my account and saw they have a few cards with 0% interest for like 15 or 18 months. Good luck!
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| Posted 6/5/19 1:43 PM |
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b2b777
LIF Adult
Member since 9/09 4474 total posts
Name:
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Re: WWYD - Refinancing
Posted by TwinMommyToBoys
Posted by MrsM84
Thanks for all your responses -- seems like option A makes the most sense. I did the math and figured out that over the cost of the loan, we would be paying significantly more on option B. I was temporarily blinded by the appeal of no credit card payments! Currently looking into TFCU and balance transfers to help pay off the cards quicker.
I would go with option A because like you said there is less money over the life of the loan. If you want a zero balance interest transfer, look into American Express, I have their charge and I recently logged into my account and saw they have a few cards with 0% interest for like 15 or 18 months. Good luck!
This works if she can pay back the amount she owes in that time period -- 18 months isn't long if she owes a lot of debt. The other factor with transferring is you incur a transfer fee.
Just make sure you weigh all of this when you make your decision.
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| Posted 6/5/19 1:46 PM |
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JandJ1224
Member since 6/06 5911 total posts
Name:
Jannette
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Re: WWYD - Refinancing
Posted by MrsM84
Posted by mommy2be716
Posted by MrsM84
Posted by mommy2be716
option A. 4.5 is not a good rate.
We just refinanced too and I'm at 3.625%. TFCU is still offering this rate because it's 3.875 with a .25% off promotion. I would have your broker look into the credit unions to be sure your option A rate is the best he can do. Because 3.99 doesn't seem that great to me either.
I just reached out to our mortgage guy about TFCU -- he said that TFCU charges a lock in fee of 1.5. He attached their lock-in agreement to show me. He said that if we want to spend that amount in points, that he could get the same rate through his bank. Another factor is that TFCU and many other credit unions bring appraisals in much lower than independents would. They do this to protect their position.
Since when? I just closed 3 weeks ago and my rate was 3.625% lol... I paid 0 points, closing costs were under 8k and I got 45k cash out.
We don't have any CC debt or any other debt aside from a 5k car loan and our mortgage, though. Our credit scores are both over 800 as well, so maybe that played into it. Who knows.
The amount your home was appraised at could have been a factor. The LTV (loan to value ratio) impacts the interest rate offered and any points the lender deems necessary as the LTV is what the lender uses to assess the "risk" of the loan. Perhaps your home value is very high in comparison to the amount you refinanced. As my mortgage guy said, credit unions often low ball the appraisal which protects them more in the transaction.
You can't lowball an appraisal....An appraiser would provide the same value conclusion and it wouldn't matter who the client was.
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| Posted 6/5/19 1:52 PM |
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mommy2be716
LIF Adult
Member since 1/16 2921 total posts
Name:
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Re: WWYD - Refinancing
Posted by mommywantsababy
Posted by MrsM84
Posted by mommy2be716
option A. 4.5 is not a good rate.
We just refinanced too and I'm at 3.625%. TFCU is still offering this rate because it's 3.875 with a .25% off promotion. I would have your broker look into the credit unions to be sure your option A rate is the best he can do. Because 3.99 doesn't seem that great to me either.
I just reached out to our mortgage guy about TFCU -- he said that TFCU charges a lock in fee of 1.5. He attached their lock-in agreement to show me. He said that if we want to spend that amount in points, that he could get the same rate through his bank. Another factor is that TFCU and many other credit unions bring appraisals in much lower than independents would. They do this to protect their position.
We refinanced 4 years ago through TFCU and they gave us an outstanding appraisal which allowed us to remove pmi. We bought with 3.5% down, and were able to refi after only 3 years to remove pmi based on their appraisal, which put us as having over 20% equity. Plus their rates/fees were fantastic compared to everywhere else we looked at.
yep, same. Original appraisal wasn't the best, but they didn't pick homes in our neighborhood by accident. I came back with 3 recent sales and my appraisal was great.
I think your broker isn't interested in working with them for some other reason. That reason he gave you is incorrect, though. I do know that your LTV ratio needs to be over 60% for a cash out refi, and if it's less then they add .125%.
For example, we bought at 340k with a loan amount of 272k (20% down). We owed 249 at the time we refinanced, and our house appraised at about 550k. This allowed us to change our loan amount to 300k and take a decent amount of cash, while only increasing our payment by about $20 because of the rate difference.
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| Posted 6/5/19 1:55 PM |
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MrsM84
LIF Adult
Member since 2/13 2352 total posts
Name:
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Re: WWYD - Refinancing
Posted by mommy2be716
Posted by mommywantsababy
Posted by MrsM84
Posted by mommy2be716
option A. 4.5 is not a good rate.
We just refinanced too and I'm at 3.625%. TFCU is still offering this rate because it's 3.875 with a .25% off promotion. I would have your broker look into the credit unions to be sure your option A rate is the best he can do. Because 3.99 doesn't seem that great to me either.
I just reached out to our mortgage guy about TFCU -- he said that TFCU charges a lock in fee of 1.5. He attached their lock-in agreement to show me. He said that if we want to spend that amount in points, that he could get the same rate through his bank. Another factor is that TFCU and many other credit unions bring appraisals in much lower than independents would. They do this to protect their position.
We refinanced 4 years ago through TFCU and they gave us an outstanding appraisal which allowed us to remove pmi. We bought with 3.5% down, and were able to refi after only 3 years to remove pmi based on their appraisal, which put us as having over 20% equity. Plus their rates/fees were fantastic compared to everywhere else we looked at.
yep, same. Original appraisal wasn't the best, but they didn't pick homes in our neighborhood by accident. I came back with 3 recent sales and my appraisal was great.
I think your broker isn't interested in working with them for some other reason. That reason he gave you is incorrect, though. I do know that your LTV ratio needs to be over 60% for a cash out refi, and if it's less then they add .125%.
For example, we bought at 340k with a loan amount of 272k (20% down). We owed 249 at the time we refinanced, and our house appraised at about 550k. This allowed us to change our loan amount to 300k and take a decent amount of cash, while only increasing our payment by about $20 because of the rate difference.
Thanks for the information. I'm going to look into TFCU before we move any further with our guy. Does anyone have someone specific they worked with and had a good experience with? We are in Farmingdale, if that matters. I guess I should start by filling out an application online with them, right?
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| Posted 6/5/19 2:49 PM |
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nraboni
Uggh...
Member since 10/09 6905 total posts
Name:
Nicole
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WWYD - Refinancing
Also check out Bethpage Federal Credit Union. They have really good rates and are great to work with.
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| Posted 6/6/19 9:24 AM |
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mommy2be716
LIF Adult
Member since 1/16 2921 total posts
Name:
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Re: WWYD - Refinancing
Posted by MrsM84
Posted by mommy2be716
Posted by mommywantsababy
Posted by MrsM84
Posted by mommy2be716
option A. 4.5 is not a good rate.
We just refinanced too and I'm at 3.625%. TFCU is still offering this rate because it's 3.875 with a .25% off promotion. I would have your broker look into the credit unions to be sure your option A rate is the best he can do. Because 3.99 doesn't seem that great to me either.
I just reached out to our mortgage guy about TFCU -- he said that TFCU charges a lock in fee of 1.5. He attached their lock-in agreement to show me. He said that if we want to spend that amount in points, that he could get the same rate through his bank. Another factor is that TFCU and many other credit unions bring appraisals in much lower than independents would. They do this to protect their position.
We refinanced 4 years ago through TFCU and they gave us an outstanding appraisal which allowed us to remove pmi. We bought with 3.5% down, and were able to refi after only 3 years to remove pmi based on their appraisal, which put us as having over 20% equity. Plus their rates/fees were fantastic compared to everywhere else we looked at.
yep, same. Original appraisal wasn't the best, but they didn't pick homes in our neighborhood by accident. I came back with 3 recent sales and my appraisal was great.
I think your broker isn't interested in working with them for some other reason. That reason he gave you is incorrect, though. I do know that your LTV ratio needs to be over 60% for a cash out refi, and if it's less then they add .125%.
For example, we bought at 340k with a loan amount of 272k (20% down). We owed 249 at the time we refinanced, and our house appraised at about 550k. This allowed us to change our loan amount to 300k and take a decent amount of cash, while only increasing our payment by about $20 because of the rate difference.
Thanks for the information. I'm going to look into TFCU before we move any further with our guy. Does anyone have someone specific they worked with and had a good experience with? We are in Farmingdale, if that matters. I guess I should start by filling out an application online with them, right?
Melissa Armenia I worked with at TFCU- she's at the east meadow branch
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| Posted 6/6/19 10:49 AM |
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