Comments on: Am I Crazy to Consider Refinancing Again?

By: One Frugal Girl

One Frugal Girl — Wed, 21 Sep 2011 02:38:08 +0000

@NCN - I'm close to making a decision. I hope to decide and post about it tomorrow.

@slugmama - I'm heavily weighing the prepayment option now. Great suggestion!

@Jerry - The interest rates are so hard to resist. I didn't think they could get lower than when we refinanced two years ago!

@Another Reader - A 15 year refinance will buy me a lower mortgage payment, but I'm not sure I want to go through the hassle of closing and costs to save the money that way. I think a prepayment might be a better option. Though your right, if I want to do something I need to do it before my job ends!

@Michelle P - I love the 15 year mortgage! If you can afford it go for it. We'll be all paid up by the time I'm 47!

@Rebecca - Good for you!

@Kosmo@ The Soap Boxers - Great point about interest payments versus closing costs! I'm going to dig up our old refinance statements and see just how much money went to fees versus interest.

By: Kosmo@ The Soap Boxers

Kosmo@ The Soap Boxers — Tue, 20 Sep 2011 16:08:36 +0000

"The pre-payment of interest is interest you would have had to pay on the old mortgage, "

Let me clarify that. What I meant to say what that instead of paying interest on the old mortgage, you're pre-paying the interest on the new mortgage. These should offset.

Sorry for the poor choice of words.

By: Kosmo@ The Soap Boxers

Kosmo@ The Soap Boxers — Tue, 20 Sep 2011 14:38:13 +0000

What was the breakdown of closing costs last time?

It's important to note that pre-paid interest and pre-funding of escrows aren't true costs. The pre-payment of interest is interest you would have had to pay on the old mortgage, and pre-funding a mortgage is offset when you are refunded the balance of your existing mortgage.

It's important to determine which of the costs are true costs (origination fees, points, inspections, appraisal, etc) and which costs are simply being time-shifted a bit.

Refis here in Iowa are apparently very simple compared to other parts of the country. The actual closing takes 5-10 minutes, and pretty much everything else can over email. Not a very painful process at all.

By: Rebecca

Rebecca — Sun, 18 Sep 2011 22:54:16 +0000

We refinanced in December 2008 to a 15 yr at 5%. I am working right now to refinance to a 10 yr at 3.25%. I figured out we will save about 2 years and $16k. That is totally worth spending a couple hours of signing papers!

By: Michelle P

Michelle P — Sun, 18 Sep 2011 21:08:34 +0000

I've been debating about what I want to do also. We are currently at a 30 year rate and want to go to a 15.

By: Another Reader

Another Reader — Sun, 18 Sep 2011 14:30:36 +0000

Refi in the mid 3's for 15 years. Add enough to the principal payments to pay it off in 10 if you can afford it. Otherwise, enjoy less stress because you have a lower payment at a time when you will have less income.

Be sure to do this now, before your layoff. You will have to qualify on one income if you wait.

By: Jerry

Jerry — Sun, 18 Sep 2011 13:40:53 +0000

I say go for it. It's a great deal and it will lead to major savings which is always a good thing. We may do it ourselves though our mortgage, taxes and insurance payment is manageable for us and I'm not interested in paying a longer term for my mortgage, but who can resist these interest rates??

By: slugmama

slugmama — Sun, 18 Sep 2011 04:38:04 +0000

Given all the things you laid out, I'd keep the current mortgage and commit to throwing more money each month at the principle.
The outlay to get the refi kind of outweighs any gain you'd receive in lower rate.
Keeping the current and throwing money into principle allows you to pay off the loan sooner but also gives you the flexibility of not HAVING TO pay more each month should an emergency or job layoff happen.
Just 2¢ from someone who paid their 30 yr. mortgage off in 6.5 years. ;-)

By: NCN

NCN — Sun, 18 Sep 2011 04:22:04 +0000

We're in the same boat. We have a 15 year at 4.625, and have been paying for 1 1/2 years. I want to go w/ either a 10 or 15, b/c both have rates below 4. I can't decide if I want to go through the hassle – and pay the ridiculous fees – or just keep paying off debt asap. I'll be reading to see what you decide.
Rock on,
NCN