Should I Refinance My Mortgage?

Updated on January 20, 2009
A.D. asks from Coppell, TX
6 answers

I had a 5 yr ARM loan whish I got refinanced last year, March 2008, with 5.5%, 30yrs fixed. I pay monthly escrow with it.

As rates are going down , should I refinance it again? I would like to go for a 15yrs fixed, without escrow. I would rather put that towards principle.

Can I get some recomendations for mortage brokers/firms please?

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answers from Dallas on

The easiest way to determine your savings is to go to a website like and use their mortgage calculators to see how much you will save changing your mortgage to a 15 year note at a lower interest rate. Your payment will go up so you'll need to determine if it's an amount you can handle. If the overall savings is significant, you still need to factor in your closing costs before you make your decision. And regardless if you have an escrow account with your mortgage or you pay your taxes and insurance yourself, you still need to factor in the costs for taxes and insurance as those bills will not just just go away if you do away with your escrow account. You still have to pay taxes and insurance. You just pay it yourself rather than the mortgage company paying it. I prefer not having an escrow so I can keep that money in my savings or money market account and get the interest off that money rather than having the mortgage company get the interest. But at the end of the year, and when the insurance payments come due, I make sure I have the money on hand to pay those bills, so I factor that into my mortgage payment for monthly budgeting as well.

The mortgage broker I would recommend is Joanne Tucker, owner of Clarion Mortgage. We've used her several times for financing and refinancing and have referred several others to her as well. If you don't want to figure out the savings on your own by using the mortgage calculators, you could call her, give her your information and she could tell you your savings, the pros and cons of refinancing at the current rates, and whether or not she would recommend it. She is honest and provides exceptional service in my opinion. Her phone number is ###-###-#### and here's the link to her website: We have ALWAYS gotten a lower interest rate using her than ANY rate published at the time of our purchase or refinance. She also passed on any "bonus" from the lender directly to us during closing (keep in mind there is not always a bonus available, but when there is, she passes it on to her clients). It's my understanding that most mortgage brokers keep that money for themselves and the borrower never even knows it's part of the deal.

We've been considering refinancing as well, but we got such an excellent rate the last time we used her (5 years ago), we need to wait for the rates to go down a little more before it would be feasible to expend the closing costs to refinance.

Good luck with your decision!



answers from Dallas on

Another tip: make your monthly payment in 2 seperate payments each month. For example, if your mortgage per month is $1000, pay $500 every two weeks (like one payment of $500 on the 15th & 30th if your payment is due each month on the 30th).

By doing this, we shaved off 8 yrs of payments. Our 30 yr fixed became a 22 yr fixed. It doesn't cost us anything to do this!!! And it will save you interest and money in the long run. My parents shared this tip with me when we bought our home, and it will make a big difference and not cost a thing. Set it up thru your bank to pay it this way.



answers from Dallas on

I agree with the previous post - it's too soon and rates haven't changed that much for you to really see any benefit. Plus, refinancing too frequently could have a negative effect on your credit rating. I recommend you pay extra principle every month with your monthly 30yr mortgage payments. That way you can make the higher payments you were looking for with a 15 yr note, but in the event that your financial situation changes, you can go back to paying the regular amount every month until things improve. Depending on how much extra in principle you pay every month, you could have that mortgage paid off in 15 years any way (there are lots of mortgage calculators out there on the internet to help you know how fast you'll pay off the mortgage with extra principle payments). NOTE: Be sure that your current mortgage allows for early pay-off without penalty. Some mortgages actually charge you extra if you try to pay it off early.


answers from Dallas on

It is a decision you have to weigh carefully. Sounds like you have a good interest rate.

A lot of people tell you that you won't be able to recoup the closing costs involved for years but that depends on what you are doing..... Very true IF you are rolling in all closing costs, home equity loan, cars, pools etc.....into the new loan.

My hubby is a numbers man and our lender thought he was crazy because since we built this house in 2000, we have done a re-fi 4 times. He is thinking about it again now. Our rate is around 5 1/2 for 30 yrs right now. My lender (Guardian) just calls me when rates hit a certain point because they know us and know that we will not hesitate to move on it if the timing is right.

We are not in the norm because we REFUSE to roll any costs involved into the new loan or add anything else. We pay all closing costs out of pocket and at the same time, we pay down the mortgage so we are actually lowering the loan amount. This amount depends on how much we feel comfortable parting with from savings at the moment which is usually sizable enough to make a good difference. We never do escrow. Why let the mortgage company make interest on your money? We know we have 2 large bills and what time of year they are due. We plan for it. If you are not disiplined then that might not be the route you need to take.

EDIT: as far as credit rating.....I've never heard of that. Our credit rating is one of the highest (best) out there.

Good luck to you!



answers from Dallas on

No, you probably should not refinance again so usually takes a couple of years for you to "recoup" the closing costs & expenses from refinancing. What you can do at this point is pay your mortgage as if it were a 15 yr note & not a 30 (making sure to designate the extra being paid as going to your principle).

If you didn't have an escrow with your mortgage, you would still need to be putting that money away each month to pay your home insurance and property taxes at the end of the year. So, it wouldn't really matter if you put that in escrow or in a savings account, see what I mean?

BTW, I'm not in the mortgage business...just a plain old homeowner who reads alot! :-)



answers from Dallas on

The general rule is if you can drop 1 point in your rate. The 15 year fixed rate is at about 4.5%. Work with the mortgage calculators on my company's website and if you are interested you can locate a branch near you. Their is additional cost for a loan without escrow. It would be worth a review.

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