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Kompenhans
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0.10 Dollars($)
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| I had taken a mortgage few years back and now want to refinance. I am not sure whether my credit will be checked again or not as I had already had a credit check when I applied for mortgage previously. Will that be sufficient to get approval for the refinance as I was okayed that time to get a mortgage? |
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miller_st
Joined: 17 Jan 2007
Posts: 917
168.92 Dollars($)
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Hi Kompenhans,
Its right that you were approved for the mortgage based on your credit profile when you had taken a mortgage. But that won't be sufficient when you go for a refinance now.
Refinance is like paying off the earlier loan and taking a new one. All the checks that were made that time will be made this time too. The lender is not aware whether your credit profile has improved or deteriorated from the time you had taken the mortgage and would check your credit now when you will apply for refinance.
Miller |
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schatz
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0.10 Dollars($)
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| Can someone provide name of few sites where refinance calculators are available so that I can compare if refinance will be right for me or not. I am not able to find any good calculators online. thanks |
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Niicss
Joined: 03 Oct 2005
Posts: 2579
Location: New Jersey
402.93 Dollars($)
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You can try out the refinance calculators provided by this community. I hope you will be able to find out if refinancing is a good choice by using the calculators.
_________________
Good is the Enemy of Great. |
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naylor
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0.10 Dollars($)
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| I have a 30 yr fxd mtg at 8.25% for $300,000 and I want to refinance it. But it has a prepayment penalty which will be $5000. I consulted one broker and he offered that I take a interim 30 yr with rate of 8.5% for an amount of $305,000 to include an extra $5000 towards coverage of prepayment penalty. It would cost me $2600 from my own funds and reduce the gain to $2400. Then I will again refinance after three months for a better rate. Payment on this interim loan would be $2345, which would have been $2100 if I had directly taken the final loan at 7.5% and 0 points. I would be losing $245/month for three months and it would reduce my gain to $1665. But still I would gain in this transaction. Should I follow what broker is suggesting? |
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colin
Moderator
Joined: 30 Jun 2006
Posts: 602
Location: Waltham, Massachusetts
112.65 Dollars($)
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Hi Naylor,
Broker is making you feel that you would be able to avoid paying for the prepayment penalty which is not so and you won't gain from taking an interim loan.
What you would be doing is merely borrow an amount which is equal to the PP. It will not be costing you anything out of pocket to borrow but you will be paying it back along with interest on it.
Suppose you refinance for the rate which will be offered on the final loan at 7.5% without taking the interim loan for an amount equal to the balance on the existing mortgage ($300,000). It would then cost you a prepayment penalty of $5000. So the total cost for the new mortgage would be $305,000.
In case where you take an interim loan, you pay $2600 from pocket, in addition a total of $735 in 3 months as extra monthly payments & get a loan for $305,000. So, total cost comes out to be $308,335.
By taking the interim loan you are not able to avoid paying for prepayment penalty. So whatever costs are associated with it, you are going to pay for them from your pocket.
These interim refinance mortgages which are explained to borrowers as a way of avoiding prepayment penalty are scams. These scams are used against borrowers who are more interested in how much they are paying out of pocket or receiving today & what their monthly payments are.
Colin |
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baldacci
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0.10 Dollars($)
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| If I refinance my mortgage after 5 years which is a 8% mortgage for a 30 yr term, without starting the 30 yr amortization period again and to pay off the loan in the period that was for the original loan (meaning after 5 years I want to pay off the new loan in the rest 25 years even if the loan term would be of 30 years). As per my understanding one way is to borrow an amount equaling what was the original balance and then immediately prepay a sum equal to difference between what was the original & current balance. Is this is correct method or a good method? Please help me out. |
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blue
Joined: 21 Oct 2005
Posts: 1138
Location: MARYLAND
137.81 Dollars($)
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Hi Baldacci,
Welcome to Mortgagefit discussion board.
There are other ways by which it can be accomplished.
We assume that you have a $250,000 frm of 30 yrs @8%. The mortgage payments are $1834.42. If you do not make any extra payments, five yrs later balance on your mortgage will be $237,674. At that time suppose you have the opportunity to refinance for 7% with a new 30 yr mtg, but you are looking to pay this new loan off in 25 yrs instead of 30 yrs., then some options you have apart from what you have learned are:
Shorten the term:
You may make the term short for the new loan to be of 25 yrs instead of 30. Your payments will be $1679.84 instead of $1581.25, as increased payment schedule because of the shortening of the loan term. But even then the payments would be less than your current payments. Some lenders offering 30 yr term loans would allow 25 yr term at the same rate applicable for a 30 yr mortgage.
But negative to this type of approach is that most often the lender will not customize the loan as per requirement of the borrower. Like someone with a 30 yr mortgage which is 3.5 yrs old, the new loan can't be for a 26.5 term.
To borrow what was the original balance & prepay:
This option is what you have read about. In this method, you will borrow original loan amount, $250,000 for a term of 30 yrs and then prepay $12,326, which will result in shortening of your loan to a term of 25 yrs & 8 months.
This method has also some drawbacks. As you will be borrowing than what is the current balance on the loan, it will be considered as an cash out refinance and some lenders would price is higher. Additionally refinance costs would be higher because of the higher loan amount.
The last option - add to the payment:
A better alternate method is to increase the payments by the exact amount which will be required to amortize the loan over the period you want (25 yrs.). For the example that I mentioned, it would be $1679.84 payments instead of the normal payment of $1581.25. Using this method you can pay off the loan exactly in the time duration as you require.
Do let me know if you have any other questions.
Thanks
Blue
_________________
Lets help each other. Try my blog |
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momkim91
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0.10 Dollars($)
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Post subject: Refinance |
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| Will refinancing go against my credit report or credit? |
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larry
Joined: 27 Jun 2007
Posts: 3328
474.44 Dollars($)
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Hi Momkim,
Welcome to the forum.
If you go for refinancing, it will not affect your score negatively. Refinance is not listed as a negative item on your credit report. Only if you default on a loan, file bankruptcy or foreclosure, then it will be reflected on your credit report. |
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Jacquielynn
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| Suppose we refinanced six months ago into a frm of 30 yr term of say 6.125. Now if loan officer is tells that it is possible to get even lower rate of say 5.75, what should be correct for me? I would have already made payments for five months, would it be right to give that up now & refinance my mortgage with this new rate? |
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miller_st
Joined: 17 Jan 2007
Posts: 917
168.92 Dollars($)
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| As you would be getting lower rate by refinancing, it would be beneficial to accept this offer. But you need calculate & compare how much would be the refinance costs with the savings you would be able to make from the reduction in rate. Also check if there is a prepayment penalty clause in your mortgage and how much it would come to. Refinance costs plus prepayment penalty amount compared to savings gained from reduction in payments because of the rate reduction, this is what you have to look at before making the decision. |
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Timberly
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| I am staying in my current home for 5 years and I'm paying for a 30 year fixed rate loan. I will be moving out and thereby selling in the next 3 years. So do you think it is feasible to refinance with a 3/1 year ARM now? |
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adonis
Joined: 22 Oct 2005
Posts: 3777
Location: ALASKA
109.26 Dollars($)
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Welcome Timberly,
If you can manage variable payments and a higher rate of interest (because rates on ARMs have gone up), then only you should go for the 3/1ARM. But hey, just a moment, you said you're moving out within the next 3 years right? Then I don't think it is the right decision to switch to an ARM now.
_________________
Procrastination is the enemy of your financial sucess |
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coloradoloans2007
Joined: 14 Aug 2007
Posts: 2
2.65 Dollars($)
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Post subject: Which Mortgage Should I Choose? |
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Francoise
Mortgage Specialist
Colorado Home Loans
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