The very good reasons to refinance

I've been in my loan for a year. 30 Year, 6.75% (w/PMI it's 7%). I pay in a little extra to principle every month, so that my amort scheulde is about 25 years. I plan on refinancing and paying enough extra that my amortization is still under thirty years
So anyone can refinance, pay enough extra to stay on their original loan amortization schedule (if the loan allows prepayemnt) & still save on cash flwo

Unfortunately, living in Massachusetts where JUMBO mortgages (over $417k) are not being given the same low interest rates and it is ridiculous! How can $417k be considered "luxury" loan in MASSACHUSETTS?? Not Fair!

There is yet another option: refinance to get a lower interest rate but pay the amount due plus a monthly prepayment so that you are not extending the length of the mortgage. This way, you get the benefit of the lower interest rate and ultimately pay less interest.

There is a significant caveat to refinancing. Closing costs. Yes, closing costs, the way certain lawyers and assorted other mercenary swindlers pick your pocket in a very big way. One of my favorites: Freight Fee. You have to make sure the 18 wheeler it requires to carry all those tons of paper required to buy your your house all over again is paid for. Real estate transactions are a racket, where people you never heard of show up with their hands out. How about this: Overnight Mail Payoff. Yes, I'm quite serious - it is right in the settlement charges. And this: Obtain/Process Discharge. Say what? Someone gets paid, you don't know who, or for what, but you pay them. But I would not feel so alone...

Antonio- unless you put a lot of money down, good luck with that right now. I'm assuming you haven't had your house appraised yet right...

It's not worth what it was last year.

You can refinance with no closing costs if your mortgage is with Wells Fargo. The rate you get will be .5% higher than the posted internet rate (or so I've heard).

This is why American's are fed up !

We are 2 1/2 years into a 30 year mortgage at 6.25 percent. We pay extra every month and on tract to finish in 27 years. We are going to a 5.25 percent loan. We are going to make the same payment and be done in 22 1/2 years. It's a no brainer- we will save > 100,000 in interest over the life of the loan.

We were just locked in at 4.875 2 days ago and that will be down from 6.125. Why wouldn't you refinance when the payback period to recoup closing costs is less than 8 months? Sure our loan period goes from 29 years back to 30 but it doesn't really matter that much as we'll either pay more towards principal with our monthly savings or we will end up selling in 5-7 years.

Oh and we are hoping to use our 1 opportunity to unlock and then lock in again at a lower rate when the rates dip down again. From everything I've heard and my gut feeling, the rates will be dipping down again within the next 30 days (hopefully!).

Re: "How can $417k be considered "luxury" loan in MASSACHUSETTS?? Not Fair! "

You are kidding, right? It must be nice to be you to bemoan being able to buy a house over $400K and not think of it as a luxury. Believe it or not there are whole communities (and believe me the earth isn't blackened in all of them) where there isn't one house that is over $417K. In the listings today in Boston.com of the 33 listings for my metro-west town there are only 2 are over $417K. Even in upscale towns there are any number of houses for less than that. Next-door Concord shows 4 houses that are either under $417K or after a 10% downpayment would have a loan less than $417K. Even my summer house town (Harwich) shows page after page of listings for under $400K. So you may possibly begin to understand why some of those "other-half" people (like me) might think of $417 as luxury and your attitude annoying - to say the least.

You can buy a house and afford a loan over $417K? How wonderful for you! Is it fair? I have no idea.

I'm still looking for a good refi deal, but with 0 upfront costs. You can always pay extra towards the principal (in good times.) You can't always lower your payment (during harder times)!

you know what, at this point I don't care about the future, I need to have extra money in my pocket NOW. My comppany isn't giving out raises but everything is going up..I need that extra cash. I am paying a 200k lona for 40 yeasr at 5.45% If I could get a lower rate and extend the terms I would - I can't worry about the later, I nee dto worry about now! I am a wido with 1 income...

I have 21 years left on a 6.625% mortgage that I pay extra every month. Why not go to a 15 year at 4.625% and save years with the same payment, even with points?

you know what, at this point I don't care about the future, I need to have extra money in my pocket NOW. My comppany isn't giving out raises but everything is going up..I need that extra cash. I am paying a 200k lona for 40 yeasr at 5.45% If I could get a lower rate and extend the terms I would - I can't worry about the later

This sounds like a direct quote from any number of subprime borrowers who endlessly refinanced their houses to get lower payments before finally losing them to foreclosure.

You have a 40 year loan and need to extend the terms? You can't afford a 5.45% rate? I'm going to be direct. Sounds like you can't afford to stay in your house. It would be smarter to sell ASAP in the early spring market and take what you can get. Then rent for less.

If you don't want to worry about the future, who will? Me, and other taxpayers, when you can't pay off your new loan and start demanding a bailout?

Lucky MA residents...I moved to FL and I can't re-fi because my house does not appraise to allow it.

There are some great rates out there. I just locked in a 30 year refi with 0 points at 4.625%. Go with a mortgage broker who will let you 'float down' if the rates drop. I've heard that they might drop again in the next 30 days. So get the paperwork in your broker's hands now, and lock in at a rate you're comfortable with. You can't wait until the rate is low and expect to get all the paperwork in their hands in 24 hours. And sometimes the rate is available for only 1 hour at a time.

Jeesh. Marie no offense but you could not be more wrong. For those of us that bought our houses at the top of the bubble - $417 got you a tiny house on a busy street. Yes today the prices are WAY down, but many of us have loans from the top of the market. So Angelaone is quite accurate.

You will pay a higher proportion of interest to principal in your refinanced loan, but you will have money now for your life. Is that worth it to you? Why?

Keep in mind that even though you are kissing some equity goodbye, and are back to paying more in interest, you can write that higher interest off on your Federal taxes and get back a bit more come April. I have a 30 year fixed mortgage at 5.875% with a 22k home equity loan at 6.75% AND a 4,500 student loan at 6.88%. I'm refinancing to consolidate that debt with cash out at a LOCAL bank for a new 30 yr fixed 5.00%. Easy decision for me...

yes Daisey please dump that albatross asap, I don't want any more of my tax dollars going to bail out people like you....

Refinancing is like anything else in life, a good idea if you do the math and conduct your business in a prudent manner, and potentially hazardous if you're a dope.

I'm refinancing from a 6% 30 year FRM with 28 years to go into a 4.625% 30 year FRM. The breakeven on closing costs adjusted for taxes is about 14 months. Pretty close to a no-brainer. I can pay extra principal every month to shorten the term of the mortgage but I don't have to, and if I need the extra $400 per month cash flow, it's there. I'm 54, and I certainly do not intend to be paying a mortgage in my 80s, so at some point I'm going to move and downsize or I'm going to just pay the balance off.

Outside of a company advertising rates in the 4s as a thankyou for mass only, rates are about the same they were a few years ago. You should have refinanced then. My 30 year is 5.25%. I'll have to wait until at least 4.5% before I think about refinancing again.

I'm still shaking my head at all the people who jumped at loan amounts they couldn't reasonably afford with terms that don't make sense. Interest only loans. ARMs. Balloon mortgages. They all sounded fishy to me. The more ink in the contract the more you should be concerned.

I agree with angelaone that the Jumbo rates are unfavorable. While I would consider my self quite fortunate to be able to afford such a house, in Massachusetts it is not as luxury as one might think. Step anywhere within the 128 belt 3 years ago, and your at 400k within a blink of an eye for anything half decent, with half decent schools. Add annual inflation, and cost of living, while 417k stays static, it gets tighter each year. It's all relative. Not to mention if we're borrowing more money, that's more business for the bank and we should demand concessions. I am larger customer, why pay more? Do I pay more when I buy all my cars from one dealer? This is a business, and we ought to expect the best value we can get. It's no different for anything else you buy.

Gee, Marie, what do you mean by the expression "the earth isn't blackened in" all the communities where home loans as high as $417K are rare? I agree that the poster's lament over that price being deemed "jumbo" needs a reality check to consider how comparatively welathy he is, but the ambiguity of your phrasing made me really upset. If all you meant was that a great big fire hadn't destroyed all the housing in those neighborhoods, it would help if you expressed that more clearly. If you meant something else, though, I've got a name for you that can't be printed here..

I wanted to respond to Regretful House Buyer's comment (#4), but did so in a lengthy response on my real estate blog: www.massrealestateblog.com. I think it's not an accurate depiction of the refinancing process.

Rather than go through a refi, TD BankNorth allowed us to do a loan modification from 6.125 to 4.5 fixed for a one time fee of $1400. We will be saving $300/month so this fee will be paid in 5 months. This allowed us to avoid having to start back a year one which we were against being almost 5 years into our loan.

anyone looking to refi, do it now...regardless. anyone looking to buy, chill out!
rates are going to do a major spike in the next six months. as money piles into a rallying stock market from treasuries the rates will shoot up, this will cause more discounts in housing. Save you money , and pay less for a house rather than stretch a loan. don't give banks the power. you will be getting 7, 8 % in CD's from banks if you want to play it safe. if you want to invest by oil , gold now...sell in late summer.

In 2003 I bought a condo at 5.875% (fixed 30 year). I paid double the mortgage each month until I refied at 4.125% this past March. However this time I did a 10 year fixed. My mortgage went up less than a hundred a month. I still double my mortgage so will have it paid off in March of 2013 (latest) . My daughter graduates HS in 2014. Original loan was 155K. New loan is 100K I saved well over 100K in interest alone just with the Refi. By doubling my mortgage every month I will save at least another 10K.
Refi's are great if you are doing it for the right reason.. not so you can buy a boat or go to Tahiti for a vacation. Do it to pay down your principal and out of debt!

Re: Comment #4--An overnight fee to mail in a payoff is customary. Why should the attorney eat the cost of mailing your payoff check to your bank/mortgage company? Payoff quotes are given as of a certain date and so the payoff check must be received by that date so as to avoid further interest charges (interest does accrue everyday). Usually, the date of a payoff is a day or two after the closing requiring that the check be overnighted. And wouldn't you want a sizable check mailed overnight rather than regular first-class? If you do not understand a fee on the settlement statement, you should ask the attorney and/or bank for an explanation.

CHayden wrote:
"Outside of a company advertising rates in the 4s as a thankyou for mass only, rates are about the same they were a few years ago. You should have refinanced then. My 30 year is 5.25%. I'll have to wait until at least 4.5% before I think about refinancing again."
Lucky for you that you are already in a low fixed mortgage. Rates went up to about 6.5 percent and then came back down. Borrowers who are mortgaged over 6 percent and those in adjustables have good reason to look into it. If they didn’t refinance at the low point before, then they can do it now. Those borrowers who are three or more years into their mortgage should watch also attempt to shorten their term.

Re: "Marie, what do you mean by the expression "the earth isn't blackened in". Simply class warfare. Rich looking down on the normal people is all, and how they seem to see us: living on poisoned ground. Blackened earth is a pretty common term (I note it is currently used by a rock band and video game via Google) that referes to war-ravaged or other desimated ground. My reference was to those that would seem to consider all but the wealthiest towns ruined for even basic human habitation when in fact people live there, quite affordably and happily too. My house (not small, is 2 stories with 4 bedrooms) , or on a postage stamp (roomy 2/3 acre with field), or long way from Boston (30 minutes if you drive - I use the T) was never over $400K even at the top of the market. So yes, sorry I still think $400K is a lot of money and it equates to being more wealthly than most people unless you limit your view to select towns and areas.

I do understand how those with big loans feel they aren't afforded the same rates as those with smaller loans. I would be annoyned too if I were in your shoes. On the other hand I can't help but thinking that either these people are either well off enough to afford the loans, or, er, ah, (referring to the crises) they couldn't afford the loan but got it anyway. Which is what got us into this trouble in the first place.

Believe me I am not trying to be holier than though. They only reason I am not with you is that my house wasn't worth enough to sell and be able to afford the mortage on one of those nice homes with the jumbo loan that you got. I couldn't have made the decision, I was priced out of the market. So I have an affordable mortage just because I couldn't do anything else, not because I am smarter.

Hi. I was planning on selling my town home this year. However, when the realtor gave me the comps of sellers in my area, the same exact square footage, the selling price is $40,000 less than my purchase price. I never expected to get what I paid for it, just didn't realized it is that bad. So, there goes my equity, and since my fiance and I only have $30,000 saved up, I know it won't be enough to cover down payment/costs. My agent suggested I should wait for a year or two before selling, "hoping" that housing market gets any better. My fiance and I are planning on getting married next year, so we will probably end up selling in a year's time because we would need a bigger home than the two bedroom that we have now. So my question is, would it be worth the trouble of refinancing, when we are selling in a year anyway? I am paying an interest rate of 5.375% in a 5yr ARM, which incidentally will end in April. Any ideas/suggestions would be graetly appreciated

My brother is complaining in DC that the Jumbo's Loans now were added Feb 2 to the Credit Unions list but only if you pay .250 More in the Discount points.. running 1.250 now and a 1.00 Origination fee. They sure make the folks who bought those Mc Mansions pay through the nose ! Glad I stayed away & only built additions onto my ranch home. I still have cathedral ceilings but only 12 ft high not 20 ft high.. But my loan is under the 417K limit. Our Credit union offered 4.875 for only 1 wwk in January. The catch was you hade to pay 1.500 in points and a 2.00 Origination fee. With the closing costs I am not sure that it is even worth it to come down from a 6.75 Fixed 20 year loan..cost 7K in fees
osts alone would be