Should I refinance my mortgage? Details included. ?

Question

Hello. I currently have an interest rate of 6.375%. I owe $82,000 on the balance of my 30 year loan, which has 25 years remaining. My monthly payment is $550 without taxes and insurance. 

I have a qoute from my bank (which my mortgage is through) to refinance and get a rate of 5% for 30 years at a cost of around $2000.00.

This means I have a new loan starting over for 30 years refinancing roughly $84,000 at 5%.

I can also buy another .5% for an additional $700.00.

The 5% makes my payment around $450.00. Saving me $100.00 a month. 

The 4.5% makes my payment roughly $425.00. 

I plan on staying in this house less than 5 years from now. 

My friend at work used to work in the mortgage industry and he says I should take my credit report (which I have) to some other banks or lenders and get competitive offers. He feels the cost to refinance may be a little too high from my bank. 

- My question the experts here is do you guys think I should refi to get the lower rate? 
- Do you think the closing costs are too high? 
- Do you think my friends advice is correct?

(A) · Accepted Answer

When you refinance the insurance co. re evaluates, and the cost of insurance goes up.Wait because interest rates are going down possibly to 3.25% before long.

lorine · Answer

Quote 1: After about 2 years, both mortgages were to be refinanced into one with a lower rate. Quote 2: Recently, my mortgage company only refinanced my largest mortgage that was at around 6% and changed the rate to about 9%. The 2nd one was not included in the refinancing. If the Quote 1 was true than there would not have been two mortgages at the time of the second refinancing. I find it difficult to believe that any company would promise in writing to refinance anything at a lower rate. That said, if you can find a better offer, its never too soon to refinance.Just make sure you recover any costs of refinancing in a reasonable amount of time.

Anonymous · Answer

Your goal when considering a refinance is simple....

Will you stay in the house long enough to make up the cost of the new mortgage in the savings in your payments?

If you do make up the closing costs, and then save money on a monthly basis, then it is worth it.  

Since you know you are staying 5 years or less, it may or may not be worthwhile to check out someother lenders.  It doesn't hurt to get a second opinion.  Also, it no longer adversely affects your credit to have it pulled by multiple lenders when pulled for the same purpose.

golferwhoworks · Answer

Liz is correct if you know for certain that you are not staying at least 5 years or longer then this is not for you as you will never recoup the cost even buying the rate down. No way unless you are diligent enough to send in what you are paying now as extra to the principal but most are not. I would not do it 
I am a mortgage banker in TN & KY

Cugador · Answer

If you're going to live in this house longer than 3 years, then do the refinance.  Otherwise, it's not worth it.

Should I refinance my mortgage? Details included. ?

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