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Old 04-22-09, 04:20 PM
koala_kaper's Avatar
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Question What makes it a good idea?

The other post got me thinking, what is it that makes it worth it to refinance?

Dh and I are kind of at a loss for what to do... Not QUITE as much now bc he's working more hours again, but I'm still curious...

Here's the deal with us... We don't WANT to live in this house for very long. We are even thinking of doing any minor fix-ups that we can and trying to sell next fall (I think that's what we talked about, if I remember correctly.) BUT I don't know if that will ACTUALLY happen or not.
Our interest rate is 7%.

ALSO dh has talked about wanting to buy his Grandpa's house (he passed away... I think I could get over it, but in my opinion it would be kinda creepy living there at first...) It will probably just get put up for sale anyway eventually after they finish going through everything. The other thing is, it's actually 2 lots bc the house next door burned down so Grandpa and one of his sons bought that lot. The son (dh's Uncle) bought Grandpa out, so now he owns that lot (which actually looks like one big lot instead of two separate ones... not sure how they'd go about dealing with that when they sell it anyway.) We were thinking about MAYBE talking to the family to see if we could make payments w/out getting the bank involved, again I'm not sure how it would all work or if they'd be willing to do any of that anyway.

SO with all that in mind... what is your opinion on the whole thing?

*Sorry, that got a lot longer and more complicated than I thought it would!
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Old 04-22-09, 08:58 PM
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Compared to current rates, your interest is pretty high. When I was a Realtor eons ago...the rule of thumb was that if you can drop your interest rate by 2 points it was worth refinancing. So it might be a really good idea in your case, especially if you could afford to refinance at a 20 or 15 year mortgage instead of a 30 year. If you have a lot of equity in your home, the new mortgage would be for a lesser amount and that could help drasticaly reduce your payments too.
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Thank you Janine!
koala_kaper (04-23-09)
Old 04-22-09, 11:11 PM
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You'd have to look into what the closing costs are for the refinance. If you're not going to save at least that much in mortgage payments during the remainder of the time you live in the house, then it's not worth it. You'll be putting out more than you're saving.

But if you can find a good closing costs deal (ours were only $299 + cost of appraisal, so close to $500), it would be worth it because 7% is high. We went from 6.75% to 4.5%.
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Thank you Dopey406!
koala_kaper (04-23-09)
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