Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
I have the option of refinancing my home at 5%. I currently have a $505k mortgage at 6.5%. However, the refinance costs seem to be on the large side at around $8k, which would be tacked onto the mortgage amount. The approx saving in interest per month is $300.
My other option, is to apply a (hopefully) large settlement to the current mortgage principal in the amount of $60k.
2 Questions:
What would be the better option - the refi or the overpayment?
If I applied the overpayment to the principle, when or would my monthly payment be lowered to reflect the lesser principal amount??
I know of no mortgage that would be re-amortized becuase of a single large payment.
Similarly I can think of no good reason to do this, especially as home values are down in just about every part of every market.
If you are in an area where conforming loans are available for $505K and the rate is a full point and half lower than your existing mortage AND you can afford the costs I can think of no good reason NOT to pursue this.
Further, if I played with with my calculators correctly I think the you could use that $60K thousand dollars to cushion off a heckuva lot of uncertainity by going with a 15 year mortgage and accelerating down to something under 13 years by front loading ...
Normal principal reduction payments don't change your scheduled payment, what they change is the portion of your payment going to principal and the portion to interest in your favor. Depending on how many you make and how big they are, you can shorten your loan term significantly.
You should ask your lender about a loan recast. That lowers your payment. There will be a charge for it but much less than a refinance.
Do you have an ARM..? If so, a lump sum payment would lower your monthly payments. You need to ask your lender when the ARM readjusts, and make the payment just before that time. When the loan readjusts, it will adjust at the lower amount, and hopefully lower interest rates... AMORTIZATION TABLE
Use this table to play with different scenarios...
If it's a fixed mortgage, nothing will change no matter how much you pay down, only the length of the mortgage...
Listen, I'm going to give you the facts. I've heard some confusing information on this thread and I know your head is spinning.
If you pay a lump sum payment you will shorten the life of the loan. However, your monthly payments will remain the same. You 100% want to do the re-fi The 8k in fees can be rolled right into your re-fi, so you don't have to come up with the cash. I know that 8k sounds like a lot of money.. and it is, but you will pay those fees off in a little over 2 years. I'm assuming you have a 30 year mortgage right?
1. In this economy a lower monthly payment is a BIG deal. HUGE. Especially $300 less.
2. You can continue paying the same amount you were paying before and have the additional $300 go straight to principle reducing the life of the loan. Only pay the $300 less if you get in a jam. If you are already in a jam, then by all means pay the $300 less.
3. This may be your only chance to re-fi while rates are sitting at 5%. I know you have probably heard this before, but as soon as the economy starts recovering, rates will go up fast and it could be to late.
4. You are going through a life change and need your note to be as low as possible. This is 100% the best way to do that, and you will save a fortune as well.
Basically, I'm trying to save my home whilst I can. Unfortunately, by the time I get the cash settlement, I will be delinquent 1 - 2 months on the FHA 30 yr fix.
Does anyone think that it would still be possible to streamline then (obviously I will bring my account up to date before streamlining)? But wont this affect my credit and payment history? Would any company consider me then?
If I streamlined before receiving the cash settlement, all I will get is the $300 off - compared with
?% (hopefully still 5% reduction plus lumpsum payment...
All I am trying to do is make the mortgage payment more affordable (through my own means).
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
