Question

Refinancing your home.  We have the option to refinance from a 30 yr.Refinancing your home. We have the option to refinance from a 30 yr. at 4. 125% to 15 yr at 3. 175% that would raise our payment around $168/mo. It would take it from 15% to 18% of our take home. Closing costs are around $3, 000. Problem. We aren’t sure we will be staying in our house 3-10 years. We are already outgrowing it but not ready or in a position to move yet. We’d have over half our payment going to principal and interest plus lose PMI if we refinanced BUT it would take away that extra money to throw at our car (only debt). Anyone been in this situation or have advice? We’re still not sure which way we’ll go but leaning towards not refinancing.  

Answer 1

Ask your mortgage officer to run break even scenarios after paying closing costs. I am also thinking of moving within the next 18 months and our break even is 1 year. But every year beyond that- we save 6k/year.  

Comments

Ultimately, I decided not to refi. But it may be worth it for you if you plan to stay 3 years.  

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Christina, I listened to Dave Ramsey talk about this and the way he did it it was about 2. 6 years for us. The loan officer said he’d recommend staying in our home for 4 years if we decided to do it.  

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Then I wouldn’t refinance.  

Answer 2

Have you looked into 3/1 ARMS or 5/1 ARMS. Ask your mortgage officer about it considering you don’t know if you’ll stay.  

Comments

Michelle, I’ve always heard to stay away from ARMs because it can drastically change. not your experience?  

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They are locked in for the first number time frame and can only adjust once a year and by a certain percentage. They tend to be really good options for people who plan to move. I’m not a mortgage officer but i manage a bank and have lots of experience with them. So for a 3/1 ARM, it’s a fixed rate for 3 years.  

Answer 3

We just started the refinancing process this past week. Because we don't plan on being here more than 3 years, the 15 year didn't make sense financially. We went into the refi to go conventional and get rid of PMI so we could use that money else where that is more beneficial to our goals. We of course also made sure we'd recoup our refi costs within that time (ends up we'll recoup in 14 months). I think it really depends on how long you'll be in the house and what your immediate financial goals are.