Mortgage Company to Refinance with and Should I Pay More to Get a Lower Rate?

Countrywide was calling us EVERY single day trying to get us to refinance our home. We told them NO and they were still calling us. Their telemarketers are very aggressive.

We have had our mortgage with Countrywide for 20 years. Our payment is low and we only have 10 years left to pay on it. My husband said we would be crazy to refinance with points and closing costs. Countrywide was trying to make money off of us.

Talk to someone who knows about finance and get their advice based on your old interest rate, the new rate they are offering, how long you have already paid on the loan, what your current payment is, and what the payment will be when you refinance.

You can do the math yourself. Find out exactly what you will have to pay to refinance. Look at how much you would pay until the end of the loan with your current interest rate. Look at how much it will cost you to refinance and how much you will pay until the end of the loan with the new interest rate. Do the math and compare. Will you save money?

My husband said it would cost us more money in the long run to refinance and he did not want to pay all those costs that you have to pay to refinance. But our situation may be different than yours. We have a low payment, we don't plan to move in the next 10 years, and we only have 10 years left to pay on the loan. Do the math on your loan and figure it out for yourself. Countrywide makes money when you refinance. So, Countrywide's advise will always be to refinance even if that is not in your best interest.

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Check out what financial counselor Dave Ramsey has to say about it (www.daveramsey.com) -- he says never pay points, because you're likely to move before you can make back the money you save with a lower interest rate.

I looked into refinancing our home, but with the closing costs added into the loan, our monthly payment would be about the same.

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How long have you been in your current mortgage? If you've been in your current mortgage for less than three years, it probably wouldn't make financial sense to refinance.

When refinancing your home, you need to consider the closing costs and how long it would take to pay off the closing costs. What I mean by that is if your new interest rate takes only $100.00 off your monthly payment and your total closing costs (including by-down points for a lower rate) are $3,000.00, then it would take you almost three years to pay off just the closing costs. I can help you figure out how much your new monthly payment would be if you are interested in giving me the numbers. I used to sell mortgages a while back, so I have some experience in this field.

You want to make sure that there are no points and no origination fees. No par would be great. You also want to make sure that you are going to stay in this home long enough to reap the benefits of the new loan. For example:
If your mortgage is $100k and you are going to be saving 1% interest going from 6% to 5%, that is a savings of $1k per year. So if you are going to pay $3k in closing costs, you need to stay in your home at least 3 yrs to make it worth it. If it is not worth the closing costs, you can pay an extra amount per month and get it paid off sooner w/ out refinancing. I would try a few different companies and get quotes from them. Church Hill Mortgage is a good company.
Hope this helps.
W.

I realize you got your loan through Country Wide, but I'd switch if I were you! They've made the news for doing shady things with loans. Google them and do your homework. The best choice is an informed choice.

I am not a Realtor or a mortgage officer, however I was an assistant to a M.O. and I learned never pay for points to lower your rate unless the rates are sky high. You can get a 30 year fixed for around 5% or even lower without paying points. It will take you years to recoup what you paid in points..and what if in 3 or 4 years you want to move? Monet down the drain.

Hi K.,

You should study up on Countrywide. Those people don't seem to have their act together - lots of problems, laid off thousands of people in past months, caused lots of homeowners grief, and I'll bet Bank of America wishes they hadn't bought them in the current economic mess we're in. They have a big lawsuit facing them for requiring people to use their handpicked appraisers who charge big fees; that is evidently either illegal or unethical, according to what I just read about them.

You might have a lot of trouble if you go through those people. Shop around and see if you can find another outfit. With their overstretched staffing issues, they may cause you problems you might not foresee.

Good luck,
D.

We refinanced last year. We originally had a mortagage and a home equity loan from when we first bought the house and wanted to get rid of the home equity loan and put it all in the mortgage since we had made improvements to the house and it could appraise for more than when we bought it. We refinanced with the same company that had our original loans, Wells Fargo. They waved part of the closing costs, since it was a refinance and we were staying with them, so it was only about half of what it normally is. Our interest rate was about the same as we had prior, like 6.5 or something. (This was obviously before the rates dropped). We didn't pay down anything. We weren't doing the refinance for interest rates reasons, but I still wouldn't recommend doing it. We're paying about $150 less a month than we were because of the equity loan terms and rate though.

My brother is a former mortgage broker and he has several friend in the business. Find one you trust to find out what is best for you. He would be more then happy to recommend someone. With a broker they can look at several companies and find the one with the best rates.

I work at a Mortgage company in Knoxville, TN. Get a Good Faith estimate. They will tell you what you want to hear but then add a lot of fees that you don't realize. You will end up paying more than what you thought. Call around to several places and get Good Faiths from all and compare them. You can buy down your rate and if you are going to be in that house a long time then sometimes that is a good idea.

we refied and it was the worst thing we ever did.... not only are we paying more in the long run but we were locked in with this house for 5 years or we would get a huge penalty if we tried to leave.... and after all that our payments didnt even drop!!

Have them give you the total - it is the amount you will pay by the end of the loan for everything - principal, interest, fees, etc. Your loan officer should be able to easily print out both scenarios for you to compare.

Hi K., I work in financial services and can help you. Please give me a call to setup a time to meet. ###-###-####.

Hi,
I just refinanced with a rate of 4.5% for 30 year fixed (did not have to buy the rate down) with RBC in New Bern. The loan originator there is efficient and very professional. Since I'm already locked in, I haven't been watching the rates but I'm sure if you contact RBC, they will give you the best opptions. I agree that you will see some lower rates after the election too. Good luck.

You need to figure out if the closing costs will out weight the benefits of the new rate. What is your current rate? What are they offering? I would not refi if the closing costs are more then the interest you will save. I don't know what your mortgage rate is right now but mine is like 5.25% which I signed for about six years ago. Even if I were to get a slightly different rate (I am not sure how low they are going right now I figured all of the costs would not make up the difference in the rate). Now I am not just spouting off I work for a bank and have a finance degree. I swear Susie Orman was on TV talking about who should refi and who shouldn't last week some time. Look her up she is very bright.

Most of the time it cost about $2000 to refinance your mortgage. With that said, intrest rates are so low it's unreal. I think they are between 4.9% and 5.6% and that is considerably lower. If you can pay out $2000 now to refinance you will win in the end. I'd rather pay $500/month house payment than $625/month which is what I currrently do. If you figure that is $125/month savings which means in 16 months you've saved $2000 which is what you paid out to get the lower rate. But as others have mentioned you need to talk with them and get all the information on what you will pay versus what you pay now. Also, if they won't pay closing costs it's not a good deal. Of course I financed through a bank and not a mortgage company so I'm not sure how that's going to work out for you. Good luck!