What will it cost to refi our construction loan?

Asked by Sal, 23188 Thu Jan 22, 2009

We have a construction loan that we are ready to recast as we now have sold our other home and have a substantial amount to put down on it. The problem is that the interest rate is locked at almost 7%. We were wondering if it would benefit us to switch banks or even use the same lender but refinance the loan instead of recasting it. We are in the Hampton Roads Virginia area.

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Jim Mellen, Agent, Williamsburg, VA
Thu Jan 22, 2009

Since you have already closed on your construction loan, your cheapest option will be to "recast" with your current lender. If that is really available-make sure you ask that they are recasting which should give you a better rate and should not carry too much in closing costs.

If you have to actually refinance your typical payback is about 3-5 years depending on the rate and costs. Shopping around is your best option as mentioned earlier, but your closing costs are going to be very similar to a new mortgage. Your current lender might be your best option. Good luck, Jim Mellen
Web Reference:  http://www.JimMellen.com
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Luke Allison, , Asheville, NC
Thu Jan 22, 2009
If you are locked in on your rate then you will have to switch lenders. However, you should be looking at a rate closer to 5% than one at 7%.

You will need to incur a new set of closing costs but for a 2% annual rate savings, you will recapture that in no time.

If you have any questions, please feel free to contact me.
Luke Allison
Flagstar Bank

Apply Online: flagstarloans.com/lallison
0 votes
, ,
Thu Jan 22, 2009

Shop around when you refinance to make sure you get the best deal.

You will likely lower your payments considerably. Make sure you don't have any pre-payment penalty on your current loan. If not, then go ahead and shop around to get the best deal on your refinance. If you need a lender recommendation, call me! (I don't think we are supposed to throw the names out here).

Susan Krancer
Liz Moore and Associates
0 votes
Marty S, , Irvine, CA
Thu Jan 22, 2009
It would REALLY be to your benefit to refinance it.

I would speak with a mortgage broker and see what your options are, as the bank may not want to refinance it since they already have you for 7%

I am a mortgage broker. If I can be of service, please let me know!

Martin Smith

Precision Funding
877-238-6324 Ext 704
877-238-6324 FAX
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