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Probably a stupid refinancing mortgage question..

Just a data point for anyone interested - we locked in 2.875 last week, 30 year fixed refi with no points/fees. Crazy. And agree with most posters above that taking a 15 over a 30 even if you're planning on paying the loan off in 15 doesn't make much sense at current rates. In 10 years it might not even be a capacity to pay thing, just an overall cost of money consideration where you want to do something else because priorities change.
 
DCDeac said:
Just a data point for anyone interested - we locked in 2.875 last week, 30 year fixed refi with no points/fees. Crazy. And agree with most posters above that taking a 15 over a 30 even if you're planning on paying the loan off in 15 doesn't make much sense at current rates. In 10 years it might not even be a capacity to pay thing, just an overall cost of money consideration where you want to do something else because priorities change.
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We recently refinanced through Regions and got this exact same rate and deal. Our lender said it timed out to be the lowest rate they've offered.
 
DeacDiggler said:
i don't follow this last point. When you pay down extra principal this month, even if your payment next month doesn't change, isn't more of it forced to be allocated to principal since there isn't as much interest to be charged on the reduced principal?
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No, if they don't reamortize every time you make additional principal payment, the interest/principal ratios stay the same every month, and that extra principal just comes off the end of the loan (which at that point is like only 1% interest)
 
DeacDiggler said:
i don't follow this last point. When you pay down extra principal this month, even if your payment next month doesn't change, isn't more of it forced to be allocated to principal since there isn't as much interest to be charged on the reduced principal?
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I'm not sure what that post was trying to say, but you are correct. If you drop an extra $200 per month on your mortgage, it will go to principal (barring some bonkers loan from your local pawn shop). By dropping the principal total you drop the interest you owe each month on it. Just a $200 monthly pop on a 30 year $500k loan can save $40k+ in interest and close out 4 years early.

This is not the same thing as a reamortization/recast. You do that to lower your monthly payment based on paying down principal early, but you adjust your payments to meet the original time frame. Tacking on extra principal shortens your loan payout.
 
I don't know man, I've had mortgages where I paid extra and it didn't adjust the interest at all, just chopped off payments from the end, which saved me like a whopping 20 bucks in interest that would have been on that last payment.
 
dot com said:
I don't know man, I've had mortgages where I paid extra and it didn't adjust the interest at all, just chopped off payments from the end, which saved me like a whopping 20 bucks in interest that would have been on that last payment.
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See the post above for what is supposed to happen
Some mortgage serving companies don't do the recalc correctly (or maybe not at all).

Also, if you only make a few extra small principal payments it may not seem like much of a difference. If you regularly make an extra all principal payment that is say 50% of your regular payment, you will see a significant shortening of the payment time and decrease in total amount of interest paid. The example in post 24 above is for an added payment that is less than 10% of the regular payment.
 
We have a rental property with around 150k left on it and a primary residence with 370k left. Both are at 3.5% does it make sense to refinance the 370k and borrow 520k and pay off the rental so we just have one mortgage? Is there any advantage to that over refinancing both individually?
 
BostonDeac said:
We have a rental property with around 150k left on it and a primary residence with 370k left. Both are at 3.5% does it make sense to refinance the 370k and borrow 520k and pay off the rental so we just have one mortgage? Is there any advantage to that over refinancing both individually?
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Just closing costs.
 
BostonDeac said:
We have a rental property with around 150k left on it and a primary residence with 370k left. Both are at 3.5% does it make sense to refinance the 370k and borrow 520k and pay off the rental so we just have one mortgage? Is there any advantage to that over refinancing both individually?
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How much better could you do on the rate and do you plan to make extra payments?

I don't think refi is good for you with those numbers. Just kill the little one in a couple of years with extra payments.
 
Grabs Turds Bare said:
How much better could you do on the rate and do you plan to make extra payments?

I don't think refi is good for you with those numbers. Just kill the little one in a couple of years with extra payments.
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Not understanding the logic behind killing off the mortgage on rental property early. Thought it would ve better to keep that mortgage because interest would off set some rental income?
 
Deaconblue said:
Not understanding the logic behind killing off the mortgage on rental property early. Thought it would ve better to keep that mortgage because interest would off set some rental income?
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My take as well, unless you already show a loss on it without taking the mortgage into account.
 
Do you have to have income to refinance? What if you have collateral for the full amount but don't want to pay off?
 
WFU03 said:
My take as well, unless you already show a loss on it without taking the mortgage into account.
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Each dollar of the 150K mortgage should taking out a larger chunk of the principal than the 375K. A new 525K loan would like starting over.
 
Deaconblue said:
Not understanding the logic behind killing off the mortgage on rental property early. Thought it would ve better to keep that mortgage because interest would off set some rental income?
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It's debt snowball philosophy. Yeah, the interest deduction is nice, but it's not as nice as applying the rental income to the 375k mortgage.
 
Yeah, the answer here is to not touch the rental mortgage (rates aren't near as low on investment properties, anyways) and refi the primary down to 2.875 assuming you'll be in it for more than a couple more years.
 
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