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Refinance after only 6 months of home ownership?

Deleted member 8741

user requested account closure
Banned
Oct 26, 2017
4,917
Hey all, I'm normally pretty savvy at this but I need some others to tell me if I'm missing something.

My loan officer for my mortgage for the house we bought just sent me an email saying with the market downturn we could refinance and save a chunk of money on our house. Apparently the rates dropped and our appraisal and other documentation still holds and with some paperwork we would be able to easily do it.

Does this set off any alarm bells for anyone? Just seems strange to get this proposal, especially this week but I can't put my finger on it.
 
MrHedin

MrHedin

Member
Dec 7, 2018
6,829
Nope not really alarm bell worthy at all. Just make sure you look at all the costs and fees to make sure the math works out in your favor. My loan officer (we're in the middle of a refinance ourselves but had started the process before the market crash started) told me he generally recommends doing it if you can drop your rate by 1% but again do the math on your end to see if how much you would benefit.
 
bevishead

bevishead

Member
Jan 9, 2018
885
My loan company calls me every 6 months with this stuff. The market doesn't change all that much that fast. They are hungry for getting another loan. I refinanced about 2 years ago from a 30 year loan with 25 years left to a 15 year loan with a better interest rate. That hasn't stopped them from calling every 6 months for another refinance.
 
OP
OP

Deleted member 8741

user requested account closure
Banned
Oct 26, 2017
4,917
He just emailed me and said they dropped again after he emailed me. Looking like a pretty big rate drop. I don't see why I wouldn't do this?
 
OP
OP

Deleted member 8741

user requested account closure
Banned
Oct 26, 2017
4,917
bevishead said:
My loan company calls me every 6 months with this stuff. The market doesn't change all that much that fast. They are hungry for getting another loan. I refinanced about 2 years ago from a 30 year loan with 25 years left to a 15 year loan with a better interest rate. That hasn't stopped them from calling every 6 months for another refinance.
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This is slightly different because nothing about the terms is changing, just." a lower rate.
 
Inugami

Inugami

Member
Oct 25, 2017
14,995
Just remember that there are always fees and such associated with refinancing. It may work out in your favor, but it'll also cost you a pretty penny to redo the loan... so make sure it makes sense both in the long erm and short term.

(edit) As above, even if there are no closing costs, they are definitely taking a cut SOMEWHERE. They aren't refinancing with zero gain to themselves.
 

Valus

Member
Nov 21, 2017
1,089
Seriously dude, just find out what the end all be all costs are going to be (there WILL be some) versus how much you're going to save each month. For example they charge $2k and the end of the day and you save $200/mo. In ten months you will have made that money back so it's worth it. Let's say it's only $50/mo, now we are talking several years to get that money back and may not be worth it.

Go through the process with these things in mind and you'll know for sure if it's worth it. They will also most likely add the costs to your new mortgage too meaning nothing out of pocket.
 
DinosaurusRex

DinosaurusRex

Member
Oct 26, 2017
5,953
Octodad said:
No fee/No cost.
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We will probably do this on our house we just closed on. Same terms, same bank, no fees, we save $100+ a month.
That's 12,000 dollars over the first 10 years.

Edit: just keep in mind you need to find out if it actually costs you anything and adjust your math accordingly. If it takes years to pay for itself it's not worth.
 
Fatoy

Fatoy

Member
Mar 13, 2019
7,244
Pockets said:
No closing cost refinancing usually comes with an added financial percentage fee added to the loan.
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The customer might still end up better off, though. Just because a middle-man is taking a cut doesn't mean the end result can't be an improvement.

Mortgages are pretty different in the UK than in the US, but rates have dropped significantly here in the last few years as well. We stand to save about £100 a month in interest when we remortgage this summer, after our fixed period expires. If you have decent loan-to-value (we own 50%+ of our house at the current market value) then you can be looking at 1% interest fixed for two or three years.
 
MechaMarmaset

MechaMarmaset

Member
Nov 20, 2017
3,584
You have to weigh the amount saved on interest against the closing & financing fees. I refinanced 6 months after buying. It was enough to save me $40K on the full term. The general rule is 1% drop in rates = refinance, but you can still save a good chunk of money with sub 1% if you have low closing costs.

Nothing weird about this. 6 months is the standard minimum time to refinance with the same bank, so them calling you up is pretty normal.
 
OP
OP

Deleted member 8741

user requested account closure
Banned
Oct 26, 2017
4,917
This was the answer I got

The "par" interest rate is at 3.25%. By taking the 3.5%, the investor will pay out a premium pricing, which is applied directly to offset your closing costs.

So, the investor must be borrowing their money cheap enough to be able to pass along those "future profits" immediately to you. I usually will recommend doing the No Cost if you can improve by 0.25%. In our case here, we are getting 0.50%..

With no hard costs, there are no break evens to worry about, and really no risk. I've done my personal loan 3 times in the last 18 months on this same scenario…
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GiJose

Member
Oct 25, 2017
403
I did a loan adjustment instead of a refinance a few months ago. It came through at the same interest rate as a refinance, dropped us .75, with zero costs up front or folded in to the loan.
 
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