Re-financing your house.

• thavoice

  Just curious as to what swing in % points does it become worth redoing one's mortgage and how long do you have to do have it before you DO refinance?
  
  GOt mine at 4.25% and I think now it is at 3.9%.....but have only had it for just over a year. I presume one cannot just refi whenever.
• j_crazy

  

  Depends on fees. The math is simple once you know the variables.
• thavoice

  I will talk with the bank, before someone suggests it, was just asking on here becuase many can bring up good and valid points to bring up when I do talk with them.
• sherm03

  

  Usually .75% or 1% is when you can start looking at it. Otherwise, it is not worthwhile.
  
  My wife and I were looking into it recently to save a point. It would save us about $45 on our monthly payment. But, we would have to pay a little over $650 in closing costs. So it's going to take over a year just to recoup the closing costs.
• thavoice

  Good info sherm. thanks.
  
  Is there a timeframe that one can do this? Does the mortgage need to be out so long before one can do it? I
• bases_loaded

  

  if you're going to spend more in closing costs and appraisal than you're saving by refinancing....don't do it. Also if you can shave 5..10...15 years off your old loan.
• sherm03

  

  thavoice;1078337 wrote:Good info sherm. thanks.
  
  Is there a timeframe that one can do this? Does the mortgage need to be out so long before one can do it? I

  There's no timeframe that I'm aware of. From my understanding, you can refinance at any time. It's just not always wise to do so.
• Sonofanump

  I pay 3.625% fixed so it would need to be at or under 3.25% fixed for me to change.
• fan_from_texas

  It depends on a number of factors, and there's no hard-and-fast rule.
  
  Look at how much the closing costs are, and then look at how much you'd save each month. Adjust the savings for any tax effects (i.e. if you save $200/mo. in interest, you can't deduct that from your taxes, so you'll save only $200 * (1 minus your marginal tax rate)). Calculate the opportunity cost of your money (if you are putting in $2,000 to close, what interest rate would you otherwise earn on it? Or is it no out-of-pocket money, just rolled into the new loan?). Will refinancing get you to a breakpoint (removing PMI, for example)? How will it improve your cash flow situation? (E.g., is your lifetime income front-loaded or back-loaded? How are your long-term expenses? Is it better to save money now even if it extends out the loan by another 2-3 years? Or is it better to reamortize over the existing loan period?). Are you planning to move anytime soon?
  
  All of these factors affect whether it makes sense and how long the pay-off will be, and they're going to be different for everyone.
• queencitybuckeye

  In addition to the above, how confident are you that you will be staying in the house long enough to make it worthwhile.
  
  I also think curb appeal comes into play here.
• fan_from_texas

  queencitybuckeye;1078368 wrote:I also think curb appeal comes into play here.

  I want to say something witty to drive this point home, but all I've got is, "We've got dolphins."
• stroups

  

  sherm03;1078347 wrote:There's no timeframe that I'm aware of. From my understanding, you can refinance at any time. It's just not always wise to do so.

  
  The only timeframe I would think would come into play is if you had your house on the market. I have heard some banks don't like it if your house is fresh out of a real estate contract.
• dlazz

  I rent.
  
  Hope this helps.
• Sonofanump

  dlazz;1078486 wrote:I rent.
  
  Hope this helps.

  It helps the person that you rent from since he gets the income and equity.
• bases_loaded

  

  stroups;1078448 wrote:The only timeframe I would think would come into play is if you had your house on the market. I have heard some banks don't like it if your house is fresh out of a real estate contract.

  
  You also have to wait 6 months from transfer of deed, as I found out recently
• sleeper

  

  You should probably divorce your wife.
• QuakerOats

  You can save even more if you just don't pay your mortgage and then have the bammer or Chris Dodd bail you out some day down the road.
  
• hoops23

  

  I pay 1%
• thavoice

  sleeper;1078747 wrote:You should probably divorce your wife.

  Well that is obvious, but I am asking about mortgage refinancing, not marital advice.
• McFly1955

  

  Just got our appraisal back today for our refi -- going from 5.875 to 4.00 -- 25 year fixed. We will recoup closing costs in about 15 months, and plan to stay 7-10 more years, so it should pay off nicely for us.
  
  Just depends on how much you're saving versus how long you will be there and the closing costs involved.