Refinancing my house questions

[UptaCamp]

So, like the title says, I am thinking of refinancing my house. My current interest rate is 4% and my credit score is right around 800. The mortgage broker gave me a quote of 3% on a 25 year loan and an origination fee of $1,560 on the approximate $105,000 left on my current mortgage.

The broker said that the first two months would not have a payment due, but that one of those months' payments would be moved to the end of the loan. She made it sound like the other payment essentially seems to disappear and that my net cost of the refinance would be around $800. But I know that money does not just disappear, nor is it free. Can anyone help me figure out what is really going on?

Also, for any of you that have refinanced recently, what type of rate were you able to receive?

Thanks.

 

[UptaCamp]

Note: I have never refinanced my a house before as this is my first home, purchased 5 years ago. So I really appreciate any and all insights, thank you.

 

[The Old Jaybird]

If possible refi for a shorter term....like a 30 to a 15 or 20 year term. I did this 25 years ago and saved about 90k net. This makes more of a "difference" than the percentage rate on the loan.

 

[fast306stang]

If you can refinance to a 15 year note, the interest rate is usually better.

 

[GeauxLSU]

I know that money does not just disappear, nor is it free.

Indeed it does not. No idea what she's talking about but your principle is your principle and your APR (NOT the rate they are quoting) is your APR. Consider the origination fee as prepaid interest. It's roughly a percent and a half. How long do you intend to keep this home? At some point, you are better off NOT refinancing.
I think we have a few members in the biz, maybe they can decipher what she was selling.

 

[Just1more]

Usually don’t come out ahead unless you are lowering by 2% or more. Your best bet is keep what you have and pay extra on principle to pay off early because the refi fees will eat your lunch at only 1% lower.

 

[godofdeinewelt]

Usually don’t come out ahead unless you are lowering by 2% or more. Your best bet is keep what you have and pay extra on principle to pay off early because the refi fees will eat your lunch at only 1% lower.

thats not true at all. Especially not with higher loan amounts. Yes you have to watch the fees/cost to see if refinancing is worth it, but that blanket statement is way off. Some people it’s worth lowering their rate by .375% if the loan amount is large enough/they are having lender credits eat up the fees.

 

[godofdeinewelt]

So, like the title says, I am thinking of refinancing my house. My current interest rate is 4% and my credit score is right around 800. The mortgage broker gave me a quote of 3% on a 25 year loan and an origination fee of $1,560 on the approximate $105,000 left on my current mortgage.

The broker said that the first two months would not have a payment due, but that one of those months' payments would be moved to the end of the loan. She made it sound like the other payment essentially seems to disappear and that my net cost of the refinance would be around $800. But I know that money does not just disappear, nor is it free. Can anyone help me figure out what is really going on?

Also, for any of you that have refinanced recently, what type of rate were you able to receive?

Thanks.

Pm sent if you would like to chat about it.

 

[Just1more]

thats not true at all. Especially not with higher loan amounts. Yes you have to watch the fees/cost to see if refinancing is worth it, but that blanket statement is way off. Some people it’s worth lowering their rate by .375% if the loan amount is large enough/they are having lender credits eat up the fees.

Note I said usually. I’m sure there are scenarios that may not apply but every time I’ve done it over the years (3 times) different houses, it’s been true for me.

 

[Bagman]

While moving to a 15 yr may sound good, consider this; the shorter term loan will result in a higher monthly payment obligation. If you have the income to support paying the higher 15 yr payment, why not stay with the 30 yr loan and make additional principle payments each month and pay it off in 15 yrs? The lower 30 yr loan payment MIGHT give you a little cushion in case money gets tight for whatever reason in the future. Just a thought, YMMV.