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Refinance

We bought our house in 2006 for 280K with hardly any money down. FHA loan. Our payment was 1900.00 a month we had a 6.5%. In 2008 my mortgage went up 1000K - nearly 3K a month. Our house was new constuction. I had just had my baby and wanted to stay home. We refinanced and my new payment was 2600.00 with a 6.5% - we were pretty much adding 2 years to the loan. I wasn't super happy but it worked for now. In 2009 the interest went fairly low to 4.75 - 5.25. We decided to take advantage of the interest and refinance to 5.25% and got down to 2,350.00. We are OK with this payment.

However the company contacted us about refinance and I've been giving it a thought, not that I need to but they are offering 4.25% with no closing cost. Which is not bad however I don't want the hassle. The new payment would be 2200.00. What do you all think? We plan to stay in the house for maybe another 5 yrs.
Thank YOU all for your advise

Answer Question
 
Anonymous

Asked by Anonymous at 6:49 PM on Aug. 16, 2010 in Money & Work

Answers (5)
  • Refi - absolutely - you have nothing to lose. Even go for a shorter term, if you can swing it.
    tasches

    Answer by tasches at 6:58 PM on Aug. 16, 2010

  • If there are no closing costs are other hidden fees, then you don't have to worry about recouping those costs so look at it another way ... the difference in monthly mortgage would be $150 ($2,350 - $2,200). $150/month for 5 years brings you a savings of $9,000, plus whatever you're saving in interest by taking advantage of the lower interest rate. If that appeals to you and you're willing to go through the hassle, then go for it!
    FootballMom85

    Answer by FootballMom85 at 6:58 PM on Aug. 16, 2010

  • Go for it
    itsmesteph11

    Answer by itsmesteph11 at 7:14 PM on Aug. 16, 2010

  • Also, make sure you are not paying any points. Read the fine print carefully.
    elizabr

    Answer by elizabr at 7:22 PM on Aug. 16, 2010

  • If it's a fixed rate interest and you've read the fine print I would go for it.

    It sounds like when you first purchased the home you did it on an ARM (adjustable rate mortgage) meaning as the market changed your payments also changed. With interest rates at rock bottom the only way there going to go is up! So it's best to lock in at a low interest rate than an adjustable rate.

    A lot of banks are doing low fee closing costs in states that have been hard hit by the housing crisis. It is better for them to have you keep paying them payments- even at a lower interest rate- then to have to foreclose on you. Especially if you are underwater and flat broke.

    On the other hand, if they are putting you into an ARM instead of a fixed rate- or if there are mountains of hidden fees- then obviously you should not take them up on the offer.

    GOOD LUCK!
    Erica_Smerica

    Answer by Erica_Smerica at 8:51 PM on Aug. 16, 2010

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