Mortgage refinance

Hello friends!

I am wondering if folks have advice about refinancing mortgages! My home loan is from 2015 and at 4%. With the recent drop in interest rates, I have been looking at possibly refinancing, but I’m not sure what all I should be looking for. Any advice/rules of thumb appreciated!

Mostly I’ve been using the zillow refinance calculator to run numbers, and it’s not exactly a slam dunk with the numbers I’ve got, which surprises me. https://www.zillow.com/mortgage-calculator/refinance-calculator/

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If you can find a low cost or no cost refi the numbers usually work better. One other thing to consider is how long you are going to be in the house. Do you plan on living in this house for 2 years or 20?

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Lower closing costs would probably help, yes. We just refinanced our year-old mortgage from 3.625 to 2.625% with the same company we used to buy our house, with ~$3k closing costs. It saves us $200/mo on our mortgage payment.

That Zillow calculator says our break even point is ~16 months, so any longer than that and we’re just profiting. If you can reduce your closing costs AT ALL, or find a slightly better APR, that would make a huge difference in your break even point.

Do you have a bank you trust to look at real rates you could get? Our lender gave us different (and better) numbers than online calculators.

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I don’t have any plans to leave/move, plus, pandemic. I’m assuming my time horizon is at least 5 years.

Good point about the closing costs! A lot of the online things quote something, but then have a giant asterisk about all the things that quote doesn’t cover.

I don’t really have a trusted bank, but that’s a good point to ask around!

I think one thing that is tripping me up is that I recoup closing costs relatively quickly, but the total cost of the loan ends up higher because I’m resetting the 30year clock, or the payment isn’t lower if I choose a 20 year loan. Maybe I’m looking too far out!

Definitely consider a 20 or 15 year loan! Your payments may stay the same but the interest rate will likely go down!

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The numbers keep not penciling out for a lower payment with a shorter loan! I’m only 5 years into my original 30 year loan? It’s really annoying!

Also consider your goals for the refinance, do you want to cash flow based on a shorter payment? Or do you want lower total costs over the life of the loan?

We wanted the second, and some of the loans offered to us were better for cash flow, but would actually raise our costs that we pay for the house. The mortgage officer looked at us like we had 3 heads when we were doing the math on how that would work out.

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Ugh - Texas has higher closing costs. We refinanced earlier this year and got a slightly better rate. My main goal was to drop our forever PMI (FHA loan) and move from a 30 year to a 20. Shorter loan was higher monthly payment but paying less over time was more enticing to me, even if we’re squeezed a little. I wanted to do a 15 year but couldn’t swing those payments.

I worked with an amazing mortgage broker from a regional bank who sent me multiple breakdowns of several options and explained everything. I bought my house with her and worked with her again for the refi.

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Thats a good point to consider! I was definitely hoping for both! I’m not sure it’s worth it for me to increase monthly costs to reduce overall costs.

I’ve had several friends have good luck refinancing with Better.com. Not sure who you are working with.

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This is purely exploratory! Getting all the paperwork organized is a giant pain, I don’t want to do it unless it’s something I’m pretty sure I want to go through with.

For folks interested in various mortgage calculators, this site has a few that do a good job of comparing overall costs:

I also like that they have a calculator that gives you the effective interest rate of increasing payment on your current mortgage.


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I refinanced in August with rocket mortgage. It was delightful. Went from 3.875% to 2.75% and took w years off my mortgage term (had 27 years left, now have 25 year term) saved about 50k overall. No out of pocket closing costs beyond a $500 deposit. Happy to share the contact info from the lady who helped me, she spent an absurd amount of time figuring out how to get the best possible deal.
When we closed on the loan, the agent said interest rates have gotten even lower and he even saw a 1% rate on a 30 year loan.

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I would be very interested in that contact info!!

PMed you!

Thanks for sharing those. Based on the calculators, the effort of refinancing should definitely be worth it. @Marcela Can I have that contact info, too? And is it totally absurd of me to be nervous about the possibility of a mortgage with other than my credit union? :grimacing:

I personally have no loyalty to any particular financial institution when it comes to my mortgage. Once all the paper work is done, there isn’t any interaction with them. My $$ gets auto transferred every month to whomever is currently servicing my mortgage.

I mention “servicing” because, especially with non-credit union originators, mortgages get sold to other financial institutions all the time. And the institution you send your payment to (the servicing institution) may not be the one that owns it. My previous mortgage was sold several times and eventually was bought by Fannie Mae, but they employed the previous bank to deal with the monthly payments.

When I got my current mortgage, I used a bank that promised not to sell my mortgage. I didn’t see why that was an issue, but I guess it is for some people? I went with them because they had the best rate, no other reason.

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I’m happy to talk about my experience more in-depth if you have questions. I will warn though, my first mortgage was through Wells Fargo so I wasn’t especially expecting much in the way of service :slight_smile:
I did almost the whole application process online through the Rocket Mortgage site and when I got my personalized offer, I reached out via chat and the agent worked with me to figure out a way to make the offer even more in line with my goals (lower monthly payment/lower interest rate/ save money overall). She then walked me through each step of the process and I remember it being was less fraught than when we first got our mortgage. A lot of stuff was automatically populated and they didn’t seem to need as much documentation.
PMing you the contact info. ( I’d post it here, but I’m not sure if that’s a problem? I don’t think I get anything for referring people. My agent was just nice.)

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Yeah, I think this is what worries me. I’ve heard horror stories about treatment by a new servicing institution or owner (though I can’t remember specifics now). And I think many banks are unethical, so I’m not sure I’m comfortable with my mortgage money going to a new bank at any random time.

@Marcela That is good to hear that you didn’t have to fill out a lot of paperwork! I was hearing that refinancing paperwork is onerous (specifically there was a YNAB blog post about it).