17 replies to this topic

[traderpaul]

OK, If the house that you have an eye on was selling at $380K.....Now the owner wants just $320K.....There are lots of houses that priced the same way.....Would you buy it now or wait for a lower price?

Well, I guess that logic could have, and was used in financing houses, as well. Interest rates were in the 8% range or so, and dropped to 5% fixed, where I refinanced my house-instead of waiting till they dropped lower-glad I did. I guess some of the folks waiting till it got cheaper to finace are still waiting-and good luck with that. Lots of people used the two or three year rates, or variable rates, "sure" that the bottom wasn't in.

You really think refinance saved you money? Do the math.....You paid closing cost....(hidden in most cses, added to the bill).....You extended the term....Your first payment, $1 went to the principle and the rest went to the interest....So you saved 3% on paper.....I bet you are paying the same if you do the math......Yes, you payment may be lower, but it takes you longer to pay them off....

I paid no closing costs or points. if it was "hidden" in the 5%-I'm good with it. Actually, I'm saving a ton, because the cost of my mortgage 3 percent lower enabled me to cut my mortgage from 30 years to 15 with a very negligible rise in the cost of my payment. So, no, the payment isn't lower, it's a little higher-but will take me much LESS time to pay off.

Did you do the math? How much money for the total loan your old vs the new?

[thespookyone]

70 K less on the new loan, Paul, yes, before entering a transaction that large-I always do the math.

Edited by thespookyone, 05 August 2007 - 11:20 AM.

[arbman]

Totally, I started also around 7.25% and refinanced at 5.25% several years ago and it made something like $550 per month difference, $200K less. It was like 20% or so on the entire financing costs for the lifespan of the loan...

[traderpaul]

Totally, I started also around 7.25% and refinanced at 5.25% several years ago and it made something like $550 per month difference, $200K less. It was like 20% or so on the entire financing costs for the lifespan of the loan...

Basicly you turned your 30yr into a 40yr loan.....From 7.25% to 5.25%. Did you count the money you paid for your first mortgage toward the money you saved?

[traderpaul]

Totally, I started also around 7.25% and refinanced at 5.25% several years ago and it made something like $550 per month difference, $200K less. It was like 20% or so on the entire financing costs for the lifespan of the loan...

Basicly you turned your 30yr into a 40yr loan.....From 7.25% to 5.25%. Did you count the money you paid for your first mortgage toward the money you saved?

so the true saving is ( present rate times months + first motgage paid )- (old rate times months) = savings

If you have any saving at all.....remember you are paying more taxes due to lower mortage payments

[arbman]

I refinanced in the 2nd and 4th year of the mortgage, it was worth for me and paid about $4k since I refinanced twice, once around 6.25% and then 5.25%. Paul, 1% difference on a large home loan is a substantial difference. You can not ignore $200K savings. So, I extended the mortgage for only 4 yrs and I can easily pay it off 10 yrs earlier with the savings, but I won't because the rate is so low, I would rather invest the difference than paying it off...

[emdee]

Those who were able to refi at lower rates and not pull any equity out saved a ton of money. I was able to refi in 2003 at a 2% lower rate (nailed the local bottom) and with all costs rolled in was able to knock twelve years off of a 30 yr fixed mortgage by reducing it to a 15 yr at an almost identical monthly payment. Yes, there was an impact to my yearly taxes as I had less mortgage interest to claim, but the savings far outweighs the downside.

[klono]

This is a math problem. $200,000 X 2% = $4,000 approximate interest savings in the first year. Even if you paid a point and appraisal fees you are ahead in one year.