Refinancing: How Sweet It Is
We’ve had a 6 percent 30-Year fixed mortgage since we bought our house in 2005. With rates at historic lows, we, like many people, started looking into refinancing earlier in the year, but had to put it on hold until we got tax extensions, and then returns, filed. When we spoke with the mortgage specialist…
We’ve had a 6 percent 30-Year fixed mortgage since we bought our house in 2005. With rates at historic lows, we, like many people, started looking into refinancing earlier in the year, but had to put it on hold until we got tax extensions, and then returns, filed. When we spoke with the mortgage specialist at Chase in February the conforming loan limit for a two-family house in Brooklyn was just south of $800,000. When we got on the phone yesterday morning we were pleased to learn that the conforming limit had recently been raised to $934,200; the single-family limit is $729,750. We were able to do a 90-day lock for a 1/4 point at 5 percent. Here’s where you have to start to question how low prices can really go: With rates where they are right now, you could, say, buy a $1.2 million house and lock in mortgage payments of $5,000 a month; assume you make $1,500 on your rental and you’re down to $3,500; throw in the tax breaks and you’re down to $2,500; add back in $1,000 a month for taxes and insurance and you’re back up to $3,500. $3,500 a month to own your own house in New York City and have, say, 2,400 square feet of living space for yourself (three out of four floors). The trickier part comes when you need to finance more than that $934,200. Have any readers gotten financing for significantly more than that recently? How did you structure it? We heard from Chase that HELOCs are quite hard to get right now?
I have absolutely nothing to add to this discussion. However, I do want to mention one thing that really irks me is when brokers pronounce “refi” as “refry” (like refried beans).
“and then 2 years (or 20 yrs) later refinance THE principle balance at 5% how is that not a good thing?”
Did you know in a 30 year mortgage at year 15 you will only paid 20% if the principle. So for 15 years most of the mortgage is interest and you are not “Amortizing” the mortgage.
Noticed Adam Dahill is missing in action and you know why? He will have to explain my scenario to you and you will understand he makes money by making mortgages and collecting fees. Go into a Bank or a Mortgage Broker and like them show a rate schedule, add on the interest you have PAID and the remaining moths on the new mortgage and get back to me.
Last thing: If you don’t or can’t believe me then go out and make other people rich. Hey it’s your money do whatever the fuck you want.
The What
Someday this war is gonna end…
BTW, we didn’t mean to claim that the market WAS bottoming out, just that, assuming you could come up with the downpayment, that carrying the costs of a two-family house in a medium-priced area was getting pretty manageable at these rates…Just said it makes you wonder how low prices can go given those numbers. Not calling the bottom of the market by any means; there’s too much crap that still has to work its way through the system first. If you already bought, though, the one way it seems you can take some of the sting out of the falling market is to reduce your own costs of carrying the place.
Loan is paid down to $946K and we’ve also paid off a bunch of that HELOC over time. Keeping the HELOC in place and making up the diff between 946 and 932 with that, so no new out-of-pocket at closing…still happy to be convinced that we shouldn’t refi but no one has clearly made that case yet…
Actually, he is agreeing with you. He is saying Mr. B is WRONG to think the market is bottoming out, just as I did about 3,000 posts above.
However, you are WRONG to think that past mortgage payments have any bearing whatsoever on whether to refinance now. You are absolutely completely wrong, yet you continue to call everyone else idiots and retards who don’t agree with you. Yes, lower rates do not always mean you should refi, you have to consider how much longer you expect to be in your house and how much the closing costs are to refi, but past payments are irrelevant.
The conforming limit is $934,200. If you’ve owned your place about 3.5 yrs, you should still owe approx $953,600. Are you going to have to bring $20K to the table in order to close? What about your 2nd?
It looks like you have about $1.015 million in total debt outstanding secured against your property. $953K @ 6% and $62K @ a variable rate.
Since you total debt is about $80K over the conforming loan limit, you can pretty much forget about consolidated all of that debt at once.
But, $930K @ $5000/month is a great deal. Trying to save another hundred bucks by timing the market probably isn’t worth the stress.
I dont know what the F The What is talking about – I guess I;m retarted.
If I borrow 1M (for example) at 7%
and then 2 years (or 20 yrs) later refinance THE principle balance at 5% how is that not a good thing?
If his argument is that you are now borrowing the $ for 32years as opposed to 30 (and hence more interest expense over the full term) then just pay off the refi at an accelerated pace. (i.e. 28 yrs from the date of refi in this example), you’ll still be saving because borrowing money at 5% is LESS expensive than borrowing at 7% – but I can not believe this is his point because it is so dumb that it is even beneath him
What am I missing – there is no debate here (is there)
“I don’t know why The What has to undermine his own perfectly good argument by going ballistic.”
If I made the the points without profanity people still would ignore everything. Look at you, on one hand you say ” He’s right; if you’ve already had a mortgage for a while, a lower rate is not in and of itself automatically good.” and then ” But others are also right, that if you use your lower rate to pay off more principal, you can save yourself a lot of money, even if you don’t live in the house for 30 years.” Then to top it all off ” And so people who actually COULD benefit from What’s original point, just because he’s the one making it.” and then you realized your point and now ” … sorry, I mean people who actually COULD benefit from What’s original point *will end up ignoring it*, just because he’s the one making it”
You can’t make this stuff up and this shows how confused Americans are. Look at this little diddy “Mr. B is right to refi, but wrong to think it means the market is hitting bottom.”. I guess you have not been around Williamsburg, Greenpoint, L.I.C. and Downtown Brooklyn was there are tons of new Condo projects going up and will have devestaing effect on prices.
The What (I’m off my Meds???? OK..)
Someday this war is gonna end…
This post will prove that someone is off his meds.