Financing in 97132>Question Details

Tori_atiya, Home Owner in 97132

Is it worth it to refinance a fha to conventional loan for only a half a point? I'm potentially saving 200 dollars a month from paying no MI.

Asked by Tori_atiya, 97132 Fri Oct 7, 2011

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Half of a point is just one of the fees you need to factor in all of the hard costs to realize the savings. Leave out the taxes and pre-paids as you will pay those without the refinance. I am with Jeff.... Mortgage Coach EDGE is a great tool here is an example I keep handy.
Web Reference: http://mcedge.tv/16a9i4
0 votes Thank Flag Link Tue Oct 11, 2011
The answers are good below, but one more thing to think about. With the rates being so low, it might be worth considering cutting the term of loan and having the benefit of an even lower rate. The short the term, the lower the rate.

Best of Luck!
Web Reference: http://www.AFN-Loans.com
0 votes Thank Flag Link Sat Oct 8, 2011
Tori,

The answer is, it depends. If you plan on being in the home for three years or longer chances are this is the right this for you to do. You need to calculate your break even on the refinance but even more importantly find a loan officer that can calculate your total cost and can compare what you're doing now with what a new loan will look like for you.

A total cost analysis takes into account the amortization shcedule of your current loan and compares it on equal terms with other loan options you may be considering (or should consider). You never know, what appears to be the best decision on the surface may actually look different when a thorough analysis is completed. Fortunately, with the right computer software it doesn't take much time to do the work. Look for a loan offiicer who works with the Mortgage Coach EDGE product.

Good luck!

Jeff
Web Reference: http://www.jeffnunley.com
0 votes Thank Flag Link Fri Oct 7, 2011
Tori - most likely the answer is yes. However to determine if refinancing is worth it you need to compare the closing costs vs. the amount you'd be saving by doing the refinance. Assume closing costs are about $3k - if you are saving $200/mo that would be a 15 month breakeven point ($3k divided by $200) and if you are going to be owning the home for longer than that, then in my opinion would be well worth it. So what are the closing costs for the proposed refinance? Are you extending your loan term out longer than you are currently at? If you have 29 years left, to get an apples-to-apples comparison it'd be good to compare the payment on a new 29-year mortgage (not 30-years), etc. as stretching our your loan term is a way to artificially save you money (so make sure your savings isn't all because your loan term is being extended).
0 votes Thank Flag Link Fri Oct 7, 2011
Tori - This depends on how long you plan on staying in the home. If it's long enough to recoup the costs of re-financing, go for it. We ALWAYS like to see people get loans without PMI or re-finance ASAP top get rid out if. It's a monthly cost that you never get back.
The Marie Souza Team - Top Selling on Cape Cod
Cape Cod Real Estate Services
Phone: 508-790-2000
info@mariesouzateam.com
0 votes Thank Flag Link Fri Oct 7, 2011
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