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The Scoop on the Refinance

November 12th, 2013 at 11:33 am

So today I went and had a talk with our lender.

When we got the loan we had such non-existent credit (always paid cash) that we couldn't get into the low interest rates. So we got the loan at a 6% rate, and we were told we had to refinance in 2 years.

Well after today I learned some new information.

We don't have to refinance within 2 years. He said he can extend it as long as we like, nothing happens. So we don't have a strict timeline anymore, except for worrying about if rates are going to increase.

Current 30 year fixed are at 4.5% at my bank. Which is already higher than I was hoping, when we first got our mortgage they were like 3.75%.

The big things holding us back from refinancing now is the loan fees. They charge more the lower your credit score is.



Credit Score | Refinance Fee

700 | 1.25%
720 | .75%
740 | .50%



Any less than that your talking 2% or 3% fees

Well since it's been over a year since our mortgage I told him to go ahead and pull our credit score to see how we were doing.

Mine is about 680 and husbands is about 670.

Frown

Not much progress in a year. He said there is nothing bad on there, the low score is just from "length of history."

So now it's a waiting game for our scores to go up to get in the lower bracket.

In all honesty with the amount we are going to refinance at the lowest our fee will be $300 and at the high end $750. So it's not all that much of a difference.

But we will just keep making payments and let our score grow.

Now the main question is, do we do as planned and refinance in the summer, or do we wait another year or two until we are actually ready for our remodel with the chance that interest rates will rise more?





1 Responses to “The Scoop on the Refinance”

  1. snafu Says:

    Is it your plan to continue making the same payment on your mortgage with the escrow reduced by $ 50. each month? If that's the case, make certain that the $ 50. is directly applied to the Principal. If you look at the amotorization tables you'll see that most of your payment is interest.

    I suggest that you look at mortgage rates offered by on-line financial institutions. If you can get a better deal you can ask your lender to match if you prefer the brick and mortar bank. Lenders can adjust fees as they wish and there are no rules. They'll charge more if they think you'll pay more. They can charge less if they think you'll refinance somewhere else. A mortgage is usually a terrific money maker for lending institutions as you can pay 3 times the value of the mortgage over the length of years.

    The 'talking heads' on business news seem to believe that interest rates will edge back towards normal after March 2014 if employment rates stay up.

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