quote:

Originally posted by Rey HRH:

Okay, I got the $48,400 from using the incorrect years (30 instead of 20). The additional $200 a month translates to $36,600 being rolled into the loan.

Looking at Credit Card interest rates versus Mortgage rate, it makes mathematical sense. But understand that 1) you still need a plan or commitment to not continue piling on credit card loans or you'll be looking at refinancing again 5 years down the road and 2) have a goal to add to your principal payments to knock off as soon as possible however much credit card you're rolling in otherwise you'd be paying off whatever stuff you bought for 20 years which I'm willing to bet will be more years than how long most of the stuff you bought will last.

Just friendly financial advice.

Where are you getting he's rolling $36,600 of credit card debt into the loan? None of his posts indicate any of the numbers he posted include credit card debt. From his second post: "Naturally, both companies are happy to lend us a few grand more to consolidate cc debt, which is a good move.". The difference in payments works out if he owes around $300,000.

Whether or not to refinace depends on the costs and how long you plan on owning the house. If you don't plan on keeping the house long enough for the savings in interest to offset the refinance costs, don't refinance.

Getting the best deal involves shopping around, but you don't haggle like car shopping. Call a number of banks and credit unions and pick the best offer.

quote:

Originally posted by trapper189:
Getting the best deal involves shopping around, but you don't haggle like car shopping. Call a number of banks and credit unions and pick the best offer.

I guess what it boils down to is this. Which is what I’m trying to determine. Although the Fed sets the interest rates, are there companies that are known to work under less of a profit margin? Do they have wiggle room?

The government does not set mortgage interest rates, the market does.

Generally speaking, credit unions have the lowest fees and best rates. They are non-profit and operate to benefit their members. But there's a lot competition in home mortgages, so it really isn't possible to generalize and narrow the field for you.

quote:

Originally posted by trapper189:

Where are you getting he's rolling $36,600 of credit card debt into the loan? None of his posts indicate any of the numbers he posted include credit card debt. From his second post: "Naturally, both companies are happy to lend us a few grand more to consolidate cc debt, which is a good move.". The difference in payments works out if he owes around $300,000.

Whether or not to refinace depends on the costs and how long you plan on owning the house. If you don't plan on keeping the house long enough for the savings in interest to offset the refinance costs, don't refinance.

Getting the best deal involves shopping around, but you don't haggle like car shopping. Call a number of banks and credit unions and pick the best offer.

I got that he's rolling credit card debt from the same quote you pulled: "both companies are happy to lend us a few grand more to consolidate cc debt."

The $36,600 was a quick calculation of the $200 more a month he'll be paying for 20 years at 2.85%. It's just a net present value formula in Excel. Granted the $36 k overstates the amount as part of the $200 includes the higher payment going from 30 years to 20 years. But the purpose is to ballpark the magnitude. It's also a check to see if there are any hidden costs being rolled in if the numbers I came up with were vastly different than what the OP was expecting to roll in.

Refinance costs are very minimal now a days. What used to bite people are origination costs and points. My last refinance was completely zero cost. My last two were only appraisal costs and I think it was even credited back to me.

quote:

Originally posted by apf383:


I guess what it boils down to is this. Which is what I’m trying to determine. Although the Fed sets the interest rates, are there companies that are known to work under less of a profit margin? Do they have wiggle room?

I just got an email from Fremont Bank offering 2.99% APR, 30 Year Fixed Rate, No Closing Costs refinance.

The big picture you need to see is that with low interest rates means there's a lot of money floating around. There's not much meat on the bones now for lenders. The loan officers who are working on commission are just working on the volumes they are able to process through. The institutions themselves are scrambling to replace the loans they are losing due to refinancing.

Find a reputable lender that isn't a giant like Wells Fargo as others have said. Make sure the mortgage rate they're offering is close to what you can google. Understand the reason if there is a wide difference between what they're offering you and what you can google. And ensure your loan costs are minimal.

If the rates continue to fall and if it makes financial sense, rinse and repeat the process.

quote:

Originally posted by Rey HRH:

I got that he's rolling credit card debt from the same quote you pulled: "both companies are happy to lend us a few grand more to consolidate cc debt."

The $36,600 was a quick calculation of the $200 more a month he'll be paying for 20 years at 2.85%. It's just a net present value formula in Excel. Granted the $36 k overstates the amount as part of the $200 includes the higher payment going from 30 years to 20 years. But the purpose is to ballpark the magnitude. It's also a check to see if there are any hidden costs being rolled in if the numbers I came up with were vastly different than what the OP was expecting to roll in.

I read that to mean the companies offered, but the CC debt was not yet included in the payment amounts. I read "a few grand more" to be $2k - $3k, maybe up to $5k. You are right though, the payment difference between the current 30 year schedule and a 20 year schedule assuming 6 years of the original 30 has been paid is only $1.82 per month per $100,000 of original mortgage. There's no way there can be a $200 increase in monthly payment unless the amount being financed is about $36k more than the current amount owed.

I'm guessing that his quotes were calculated based on the original $325,000 mortgage and not the $288,000 he currently owes.

Personal experience.
1991 we built a lot home. Great experience. Borrowed $90,000, 30 year mortgage, 9% interest.
My bride instantly started paying $100 more per month on the principal. Doing this the bank estimated our last payment would be made in 19 or 20 years.
Several years go by and the rate drops 2%. Banks were encouraging everyone to refinance. Of course it makes sense to consolidate C.C. Debt and car loans! we fell for it and dropped to a 20 year mortgage.
Several years later, repeat of the above. 15 year loan.
Now my bride is paying $500 per month extra.
We paid the mortgage off at year 28.

Lessons learned the hard way.
Credit cards need to be used for emergencies, or safer purchases that can be paid back at the end of the month.
If the banks or other institutions are encouraging you to do something, check it out because there is a good chance it’s better for them than it is for you.

Life isn’t always fair, and sometimes we have very few choices. Looking back, we would have been better off struggling for a couple of years to climb out of short term debt and we could have ended up debt free several years earlier.

It never makes sense to finance a meal or a new outfit for 30 years (or 15 or anything more than 30 days).
Do your refi as soon as possible, but pay off the cc debt out of today money.
I wouldn't want to be retiring with any mortgage, especially one inflated with rolled-in cc debt.
Just my .02