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Money matters...is it really such a good time to refinance?

376 Views 8 Replies 5 Participants Last post by  Jefferson'n'Ted, 
E
Well maybe if you have a better credit rating than last time when you had no choice but to take a "higher" rate, but I don't have a very high rate. For me it's mind boggling....I can get a really low interest refinance (4.25%...in NY that's as LOW as it gets), down 1.50% from my existing mortgage, sounds great right?? Get this...closing costs would run almost $13,000!! :ugly: That's because I live in NY...another state would be half the amount. So...if I include the closing costs in the mortgage my montly savings would be about $300. It's nice to save $300/month....but this means another 30 years of mortgage...I'll be dead before I pay this house off so the guy recommends doing a reverse mortgage when I get "old" since there's plenty of equity in this place. What the heck is a reverse mortgage??? I mean I know what it is but is it really something to think about??

Anyone know about this stuff??
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Jefferson'n'Ted
I'm not a mortgage lender, but I do work in banking and have a general knowledge of mortgages.
I have to say, Holey Moley!!! $13,000 in closing costs?? You have got to be kidding me. That is usury! Around here closing costs are $995 to $1300. Are you sure you didn't put an extra zero on there?
How many years do you currently have left on your mortgage? What would the payment difference be if you refinanced for the same term that you have left now?

As far as reverse mortgages go, they can be great if you aren't concerned with leaving your house to your heirs. You are basically selling your house back to the bank. They pay you and build their equity in your house--up to a predetermined point. They used to be bad news, but are now a pretty good deal--if they are right for your circumstances. You have to go through counseling before you can get a reverse mortgage. Here is a link that talks about reverse mortgages.
http://www.aarp.org/money/revmort/

Edited to add the HUD link.
http://www.hud.gov/offices/hsg/sfh/hecm/rmtopten.cfm
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yes and no...unless reverse get better; put it outta your head. and shop around. $13,000 is a heck of a lot...are you refinancing only what you owe or adding to it? do you plan on staying there more 5 years? if so, might be worth it. i'm about to check into it, as well.
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Allie
Do you need the extra money? If not, why not refi into a 15 or 20 year loan? You don't have to go back to a 30.
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Closing costs on a refi should not be that high. They shouldn't even be half that amount.

I was on a 22-year loan and I refinanced back into a 30-year to get a lower interest rate. I add an extra payment each month to principal so that I'm paying the same monthly payment I paid on the 22-year mortgage. This way, with the lower rate, I'll be paid off even quicker than the original 22 years.

I'd definitely check into and look closer into closing costs.
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Allie said:
Do you need the extra money? If not, why not refi into a 15 or 20 year loan? You don't have to go back to a 30.
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That's what SU and I are doing, we're paying them every week our mortgage instead of once a month, we'll have it paid off in 20 years instead of 30 years and will have saved over $180,000 if we keep it up this way. I don't know how it's all worked out, but SU and I took a 30 year mortgage out and they send us a paper that we have the option to pay it off earlier and save on it if we wanted to, that's what we did. It still adds up to the same amount at the end of the month, but they're getting their principal earlier and that's why we're saving supposedly $180,000. Do you have the option to do this?
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zoezoe said:
yes and no...unless reverse get better; put it outta your head. and shop around. $13,000 is a heck of a lot...are you refinancing only what you owe or adding to it? do you plan on staying there more 5 years? if so, might be worth it. i'm about to check into it, as well.
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I love my house and my neighborhood so I hope to stay here for a long time. We were only going to refi what we owe. The closing costs do sound outrageous, I need to get more info. It is not unusual for it to cost around $6000 - $8000....but 13,000 is outrageous.

JeffersonsMom, thanks for the great links!
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Jefferson'n'Ted
Oh you're welcome. Reverse mortgages aren't for everyone. And do have their drawbacks--for example if you have to go in a nursing home for an extended period, you might be in jeopardy of losing your house. They are great for people on fixed incomes and in good health, that need money for improvements or such. There is no monthly payment. As opposed to say a home equity loan.

But I have to say that those closing costs would really put me off. There is all kinds of legal work to do on a mortgage--title search, mortgage release (on the old mortgage), mortgage filing, flood search, mortgage preparation, document preparation, and so on. But geeze, that is 10 times what it costs around here. I think I would shop around for another mortgage company. Banks are hungry for people with good credit right now.
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Jefferson'n'Ted
I was just watching HGTV. They said that closing costs average 3% of your loan amount. So unless you have a helluva mortgage, you need to look for another lender.
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