Realtor bees/ Loan officers- can you please explain refinancing/pmi

posted 2 years ago in Home
Post # 2
5160 posts
Bee Keeper
  • Wedding: April 2013

missfrillycoat:  Your intuition may be correct. 

I may be incorrect, but is sounds like your DH is more interested in improving cashflow (the amount of money you have to pay out each month) rather than reducing the actual total amount of money it takes you to finally finish paying your morgage.  This is not necessarily bad or wrong, but it sounds like the way you are prioritizing is opposite.  Sounds like it may be a mismatch in the end goal that needs to be negotiated.

When you refinance, do you plan to extend the terms of your morgage?  For example, do you  have 20 years left now, and after refinancing you’ll have 25 years left to pay?

Post # 4
135 posts
Blushing bee
  • Wedding: May 2015

The loan officer should be able to show you the calculations and amortization schedules to see which is going to be saving you more money in the long run and how much equity you will have in the house in x number of years.  Like the poster above said, refinancing options really depend on your end goal, i.e. Extending the term to lower your payments vs. paying down your principal faster.

That said, do you know what your loan to value is currently?  If you are not under 80% now, you will still likely have PMI on most mortgage products.  I’m not sure what area you are in, but you could also look around to see if anyone is doing refinance specials.  A bank in my area is doing a refinance special with no closing costs (including appraisal and all additional fees) and no prepayment penalty.  They also have several different mortgage options, including conventional, ARMs, and some other types that are specific to that bank.  Some other banks in the area have similar specials, but with strings, such as prepayment penalties, or you have to have a checking account, etc, so be careful to read the fine print.

We are looking in to refinancing our house from a 30 to a 15.  Our interest rate would be only slightly lower and our payment would be a little more, but with no costs to recoup, we would gain equity in the house so much faster (We would also be getting rid of PMI).  Since we plan on moving in a couple years, this will make a difference in the down payment for our next home.  We would save even more with an ARM, but since we aren’t 100% on when we will move, we feel better with a fixed rate in case we stay in this house longer that we currently plan.

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