Please excuse my complete ignorance on this subject (it's quite sad considering I have a B.S. in Economics (and in my case, the B.S. most definitely stands for bullshit)).
Last year my main squeeze and I bought a house (we closed in August). I have a poor credit rating and hers is very good/excellent, so the loan (and the house) is in her name and the mortgage rate was 4%. With the average down to 3.07% (it was apparently 3.75% around the time we were approved last year), is it worth it to refinance?
p.s.--I'm not sure if this is relevant (because, as I said, I'm an ignorant slob), but the original loan was a "first time buyer" loan and our downpayment was well below the 20% threshold (so it includes one of those loans on top of loans thingies, I forget what they call it). In addition, she had only been two years on the job when approved for original loand and so now it's three years at her current job and she received a small pay raise since. Also, her job is unaffected by the virus. Just the opposite, it improved business for her employer.
Mortgage rates hit another record low (from CNN-Business) - (
New Window )
We refinanced earlier in the year because we were on a higher interest construction loan so it made sense.
down from a 3.875 fixed
only gonna be in house 10 more yrs, probably 20k total savings after reduced tax benefit (less mortgage int deduction)
but lowered our payment $650
thought it was a good idea in a covid world, not a bad idea to have more free cash flow
down from a 3.875 fixed
only gonna be in house 10 more yrs, probably 20k total savings after reduced tax benefit (less mortgage int deduction)
but lowered our payment $650
thought it was a good idea in a covid world, not a bad idea to have more free cash flow
I didn't think there was a tax benefit for mortgage interest anymore. I took out my mortgage in 2015 at 4.25% with lender paid PMI to take advantage of the mortgage interest deduction rather than 4% and paying PMI which was available at the time. I wouldn't have been able to deduct PMI so I opted for the higher rate.
Last month I refinanced the 30 year to a 20 at 2.85%. Thankfully it was timed perfectly, but it appears to be going lower again. It will be interesting to see where everything ends up.
But I am real close to standard deduction at this point
Will really have to pad the charitable contributions to like 3-4 % of agi
Was already factored in my refinancing calculation
Would’ve been at same point in 5 yrs if I didn’t refi
One thing I hated is I voted republican and they raised my taxes with salt tax limitation
Never had that happen before ( not politics. Just an observation)
There will be processing charges for the new loan that may amount to several thousand dollars. If the bank agrees to include those charges as part of your new loan you will have an accurate idea of how much your new payment will save per year.
You are probably not going to live in the house for another 30 years, so those extra charges aren't that significant anyway.
NY State imposes a 0.5% recording tax on all new mortgages inclduing refis. If you are in NYC, it's 1.8%.
Good luck in any case. 4.0% is still a pretty good rate.
NY State imposes a 0.5% recording tax on all new mortgages inclduing refis. If you are in NYC, it's 1.8%.
Good luck in any case. 4.0% is still a pretty good rate.
If you do it as a CEMA you are exempt from the mortgage recording tax on the amount of the principal of your current mortgage.
Quote:
the mortgage recording tax. It could easily kill any benefit you may get from refinancing. It's why MBS pools backed by NY State loans trade at a premium. The tax causes NY loans to prepay at a much lower rate than average.
NY State imposes a 0.5% recording tax on all new mortgages inclduing refis. If you are in NYC, it's 1.8%.
Good luck in any case. 4.0% is still a pretty good rate.
If you do it as a CEMA you are exempt from the mortgage recording tax on the amount of the principal of your current mortgage.
good point, but there are stips and possibility of other, though lesser fees. CEMA is most effective if the refi is done with the same lender.
It is really simple math...
Determine the cost of the refinance. Divide that by the monthly payment savings. See how many months it takes to break even. Then, ask yourself if you plan on living there that long
Remember to ask the lender about buying the rate down. This is something that may make sense if you plan on living in the home for a long time.
Keep in mind depending on your income level that mortgage interest can be a valuable source of itemized deductions so in a lot of ways a 30
Year gives you more flexibility than a 15 year which amortizes more quickly
than lots of people might want.
We’d need a ton more personal details on this than you should be willing to share on this thread to make the right call. Talk to a mortgage banker. As others have said a
4% loan isn’t terrible as is - if you were at 5%+ I wouldn’t need details but you’re in a grey area.
The wife and I are looking at properties in FL. I am in a unique situation with various business arrangements with lenders to potentially get a rate well below 2%....maybe even below 1%
First, if your score is over 720... then you are going to get the same rate (all other things being equal) that you would with a score of over 800. Most lenders rate sheets stop adding value beyond a score of 720.
Regarding the drop in your score, it is possible that when it was pulled the second time that your credit utilization was higher. Meaning, your credit card balances potentially higher and closer to your credit limit vs when your score was over 800. Credit utilization is a significant factor when it comes to credit scores.
MORTGAGE REFINANCE CALCULATOR - ( New Window )
Nothing is impossible and not saying that lender did a bait and switch on you.... but in the past 20 years I have never seen a lender rate sheet that had rate adjustments for credit scores that high.
Still working on the details. Deciding if I want to take a big chin I out of the principal as well.