Refi?

[luca19608]

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]

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]

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]

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]

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]

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]

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]

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