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You can trim years off your mortgage by simply making bigger payments on the
loan you already have. And, it is FREE to do this.
Dropping the PMI is a valid issue to be looking at. If your Loan To Value
(LTV) exceeds 80% (divide the laon amount by the property value, if the
result equals or exceeds .8 ...) then you will still have PMI, or be faced
with a combo loan where you carry a 1st trust deed for 80% and a 2nd trust
deed for the remainder. In my opiniuon, you should have gotten a loan
structure such as this when you got your current loan. A combo loan almost
always gives a payment that is lower than the payment you got plus the PMI,
and there is the advantage that the 2nd give a tax benefit that PMI does not
have.
If your LTV is under 80%, you can petition to stop the PMI. You will need to
pay for an appraisal inspection and report to support the new property
value, but this only costs about $350.
Seven grand seems like a lot of money. Divide the closing cost by the
monthly savings to arrive at the time it will take for the new loan to pay
for itself. When I divide 7,000 by $50, I get a period of 140 months for the
new loan to pay for itself, that't nearly 12 years. Granted, you can divert
PMI dollars to the mortgage, but you can do the same thing if the value is
really there, and all you have to do is pay for an appraisal. Contact the
customer service of the lender and ask them what you can do to get rid of
the PMI.
Another consideration is, if you simply throw more money at your current
loan to retire it early, and you suffer some sort of financial difficulty
down the road, you can divert mortgage doolars back to that difficulty to
make it go away. If yo utake out a 20 year note, you will have to make the
payments come hell or high water, and this could prove to be problematic.
If you can determine what the principle portion of your current payments is,
and double it every month, then you will cut the loan term in half. You can
ALWAYS do this, and it costs nothing in closing costs.
"AJ M." <jerseycat10@nospam.yahoo.com> wrote in message
news:vK6dnStjr8I-HVnfRVn-gQ@comcast.com...
> Hello everyone. I'm interested in refinancing my home. I've a 30 year
> fixed-rate mortgage at 6.00%. My PITI payment is $1717.00. The initial
> loan value was $191,700. After 1.5 years, I owe ~ $188,000. I'm
> interested in refinancing down to 20 years, for the sole reason of
> chopping
> the 8.5 years of my mortgage. I lender friend of mine says that I can get
> a
> 20 year note at 5.125 from him. He says his company can only do that by
> charging me 1.5 points. All in all, he gives me a high estimate of 7000
> in
> closing costs, which would be rolled into my new note. So my new note
> would
> be for 195,000, at 5.125%, for 20 years. My principal and interest alone
> would go from 1150 a month to 1300 a month, however, I'd drop PMI by
> reapprasing, so my monthly payment would only grow by ~ $50.
>
> Does this all sounds reasonable to everyone? The only thing that sticks
> out
> to me is the $7000 closing costs. It seems high, even including the 1.5
> points.
>
> Thanks.
>
>
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Re: Refinancing Question
