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Consolidating Mortgages

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mattmoneyman
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Consolidating Mortgages  Reply with quote  

Hi all,

I'm not very savvy about finances, so I'm not sure who to believe on what is the best mortgage refinancing options. My goal is to lower my payment and interest but I would prefer not to extend the number of years. I owe less than what my house is worth (finally). My income and credit score are good. Here are the stats:

1st Mortgage:
30 year fixed
Interest: 5.875%

2nd Mortgage
15 year fixed
Interest: 7.890%

I can provide dollar amounts and payments if needed, but I'm looking for some general advice. I believe the first mortgage qualifies for HARP which appears to be a great deal, but I'd love to roll these into one payment if possible. I'm really not sure where to start or who to go to. I bank with Bank of America and a credit union from a previous employer (they typically have great deals).

What questions should I be asking and what are my general options. Is there a website out there with unbiased information where I could read up on this? I think I need to move on this before the Fed hikes rates.

Thank you!
Post Sun Sep 20, 2015 6:42 pm
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oldguy
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I would probably skip the HARP plan, it is a gov't plan that is mostly for underwater loans and it applies only to near-new loans (written after May 2009). The govt accepts extra risk by lending more than the house is worth - but in return they ask for a higher interest rate.

Since your house is worth more than the loans, you should get a 30 yr, fixed rate, loan with about a 3.875% to 4.25% rate. And I would NOT get a shorter term, instead lock in that ~4% rate for 30 yrs. That gives you the option of prepaying if you want to, ie you could pay extra principal and pay it off in 15 yrs, 20 yrs, whatever you want (altho I wouldn't think that you would want to prepay 4% capital, I would keep it for the whole 30 yrs).
Post Sun Sep 20, 2015 9:43 pm
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mattmoneyman
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How would the cost of the refinance factor in? What is the average cost of a refinance? Is it a flat fee they work back into the mortgage or ...?

Thanks!
Post Thu Sep 24, 2015 12:46 pm
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oldguy
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As I recall, my last refi's costs were in the $1500 range. I always roll all of the costs into the loan, rather than pay cash for them. But it's your choice.

My goal is to retain my own capital, and to borrow as much as I can for the full 30 yrs - for me, 4% or 5% fixed rate for 30 years is cheap use of someone else's capital - so I add the costs.
Post Thu Sep 24, 2015 5:14 pm
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littleroc02us
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when I purchase my first home in 2006 during the top of the market, I was stupid and got an 80/20 loan where the rate on the 80 was 6.75% and the 20 was 9%. Luckily we paid down the principle and the market improved allowing us to take out one loan @ an interest rate of 4.25% for 30 years. It was the best thing we could have done. The fees for the refinance were in the neighborhood of 1% per 100k.
The real question is what is the break even time period, meaning how many years will it take to make back the costs of refinancing before you are making head way.

Risk comes from not knowing what you're doing. (Warren Buffet)
Post Thu Sep 24, 2015 5:49 pm
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mattmoneyman
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Any thoughts on pros/cons of rolling school loans into a mortgage? Is it really just a matter of comparing interest rates?
Post Wed Oct 07, 2015 5:39 pm
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