Refi?

luca19608 · 01-24-2009, 11:00 AM

We currently have a 10 year lock interest only ARM that will adjust in 2017. We planned on refinancing between now and then. We currently have an offer to refinance to a fixed 30 at 4.875, We are currently at 6.875. The problem is the closing costs are close to $15,000, including over $3000 for mortgage insurance up front, along with $90 a month. My gut tells me no right now. We are paying a little principal every month. Our credit scores are over 700. I hate paying mortgage insurance, this is an FHA loan also. Looking for some advice on this. Thanks

Moe Bedard · 01-24-2009, 12:21 PM

Is the new loan saving you a large amount each month? Or when you calculate the 15k that you are putting out of pocket along with the $90 extra per month is it a wash.........are you really saving a significant amount in the long run or not?

luca19608 · 01-24-2009, 12:24 PM

WE will not be saving any money, but we do currently have a no-interest loan for the next 8 years. I don't know how to figure out what our current payment would be with a fixed 30 year loan.

Moe Bedard · 01-24-2009, 01:12 PM

If you can post the
loan amount
interest rate

I can let you know approximately what it would be.........an then you can add your taxes and insurance in.

luca19608 · 01-24-2009, 01:18 PM

196,000, 6.875% I think I figured it out around 1668 a month. The refi quote was around 1528 a month. So I would be saving 140 a month, breaking even in 9 years or so, right before our current ARM would expire. I don't know what to say.

Moe Bedard · 01-24-2009, 01:27 PM

The Principal and Interest payment alone is
$1285.67

then you can add the rest..................you would need to decide is that is what is going to be better for you in the long run............I know it is a hard decision, but you also have to keep in mind that you are spending 15k up front to save $140 per month..............is that worth it? It doesn't really make financial sense to put out 15k that could be used to bring your principal down instead of just closing costs.

luca19608 · 01-24-2009, 01:50 PM

I didn't think so either. I guess the fact that I have an ARM scares me. Our escrow per month is 380. I just have to hope that we can pay more toward our mortgage, hoping that our home appraisal will go up.

Moe Bedard · 01-24-2009, 02:55 PM

Yes.......but your interest rate isn't going to adjust for 8yrs..........alot can happen in 8yrs.