randomguy

Any of you mortgage gurus-

Have a house purchased 1.5 years ago for 246k. Probably worth around the same now. Interest rate of 6.65% on 30-yr fixed. With Fed cuts, think it's worth it to refinance?

Stephan Dupourque

Here's a good article on the subject:
Three Rules Of Thumb For Mortgage Refinancing

There are lots of reasons to refinance, depends on your goals, whether they are short term (selling in less than 5 years) and long term (keeping it for 10 years or more). First, start with the big picture. If you have 28.5 years left on your current mortgage, figure out the total interest you will pay in those 28.5 years. Then, figure out the total interest you will pay on a new 30 year loan. The payments will be less on your new loan, but overall, you might be paying more, especially after you factor in the closing costs of refinancing and you put them back into the new loan.
If you're a little bit of a gambling man and are thinking short term with a 3 or 5 year ARM (adjustable), and can get a lesser interest rate, then it might make more sense to refinance. But if you're thinking long term and the interest rate isn't low enough to offset a new 30 year loan with closing costs, probably doesn't make much sense.
Just remember to compare apples with apples on the overall cost of the loan by remembering that you are going from a 28.5 year loan to a 30 year loan.

beto

This will all depend on what your home appraises for and if it is well above your purchase price. The other factor to consider is you closing cost needed when you refinance. I ask they same question to one of my mortgage friend and she said it was not worth it. She mentioned that if the interest rates went down to about 5% then we could look at the option. Hope that helps.

crazy A

TO refinance it's best to go with a 15yr fix term with a interest rate of 6.50 % below depend on your credit score....need anymore info hit me back....but to answer your question yes it worth it....

captainChet

The safe rule for a refinance, to make it worth it, is if you can get about 2% better interest rate. Do the math, you'll see it's about that. Remember closing costs have to be considered.

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IAH EMB-145 CA

crazy A

Closing cost can be added to your loan amt. So you don't have to come up with the money....

captainChet

Of course you can and that the reason you need a good interest spread! Now you will be financing the closing costs at x% for 15/30 years. Do an amortization schedule on just the closing costs and see how much interest you are paying to just finance these costs. It's very high (the total interest, that is).

That's why you need the new interest rate to be lower (2% is about break even) to offset this new interest expense. In almost all cases, the closing costs are included in the new mortgage. Not many have the cash to pay closing costs outside the loan.

Before I came here in 2000 I did work as a mortgage broker (for a bank) for about a year and half so I'm speaking from experience.

YMMV

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IAH EMB-145 CA