Am I refinancing too many times? Any reason why I shouldn’t refinance?

[Coronita]

[quote=ninaprincess]Original Balance: $352,000, 3.875%, 1655.23 payment.
Current Principal Balance $346,062
Loan Set up in March but I have made some small principal reductions.[/quote]

Your total loan would have $595884.43
Your monthly was 1655.23

So you’ve had this loan for 8 months.
It’s not going to be entirely accurate because you made small pricipal payments along the way.

Total interest in 8 months.
was $9046 you paid.

(1136.67+1134.99+1133.31+1129.94+1128.24+1126.54+1124.83+1123.12)

So….
Roughly by refinancing,

You’re saving (over the life of the new 30 loan)
595884.43-553,858.13-$9046=

$32980.30 by refinancing, and also lowering your monthly by 116.23/month..

Assumption… The BIG assumption is you stay keep your home and pay off your loan … See, if you were to sell, say in 1-2 year, you might actually be worse off. Because that $9046 interest you paid went down the toilet. Also, you mentioned you refinanced before too. You also need to count how much interest you flushed down the toilet as a result of your first refinance….

Someone else can check my math.. Because i did this with a half brain and in a hurry.

[an]

flu, I would say it’s down the toilet. I would say, it would be like renting your home for $9k over 8 months, which is $1130/month. Seems like a pretty cheap rent for a SFR. Do forget that if you refi, your interest payment will be lower by around $150/month from day one as well. After 2 years, that $3600. So, you save $3600 while “flushing down the toilet” $9k. If you consider $9k as flushing down the toilet, then the other side of that equation is she gets to live there for free over 8 months.

You’re right about what I did and am doing. Rates/rebate are not linear. Example would be, a no cost loan on absolute mortgage is 3.375% but if you bump to 3.5%, you get about $3500 back. So, for $24/month more, you get $3500 up front. If rates drop again in a few months, you can refi again and keep that $3500. If you do it 2-3 times a year, that’s over $7k, which more than enough to pay for your property tax, insurance, and part of the interest you “flushed down the toilet”.

So, my answer to ninaprincess is, it depends on what kind of loans you did. If you did it like me and get credit back, then no, if you do 0 point, then yes. If you do a no cost loan, then it depends on how long you plan to keep the place.

[Coronita]

[quote=spdrun]If you can repay early without penalty, what’s the difference? It’s actually nice to have the flexibility of a longer time-frame/lower payment even if you don’t use it.

Since the Bernanke Bucks are available, may as well use ’em.[/quote]

Actually, there’s a lot of people who feel that way, especially with Bernanke at the printing presses..

The thought process goes like this…
1)Today’s dollars is worth a lot more than tomorrow. So better off to push out as much debt as you possibly can

2)With a lower monthly payment, you will qualify for more loans on your second or third home…That’s actually a pretty valid point

I think this part is a kinda of a personal comfort…Some people feel comfortable having 30 year mortgage over their head. Me, if I were to refinance into a 30, I wouldn’t be done until I was in my sixties.. I plan on retiring a lot earlier than that (I was shooting for 40, but healthwise, insurance is a problem…yes even with obamacare..but seperae issue)…

The other issue I think is if you’re a perpetual refinancier, the 30 year for me is kinda discomforting.. because the principal reduction is really really low. It’s not really a big deal in the long run, but I guess mentally I don’t like to feel I’ve just given the bank so much money for nothing…

There’s the other thought process is that well, you can take out a 30 year loan and make 15 year payments, and if some emergency comes up, revert back to the 30 year payment. Yes, this is probably a good strategy too…..Well, historically, the difference between 15 and 30 year loan rates was big enough and the thought process is that if you are already going to make 15 year payments, just get a 15 year loan anyway…But these days, rates are so much floored both the 15 and 30, it’s really not *that* much different anyway…

Then there’s the other thought process that if you plan on making your primary your rental, you want to get a 30 year loan so you can cash flow as much as you can… Good point too. But here’s the deal on that one… You only need to really worry about that IF you think rates are gonna jump really quickly…If you think rates are gonna stay low for some time, you can take your candy ass time on a 15 year up until maybe a few months when you *think* you might move out (but not really) into a 30 year. That way, you’ve taken advantage of the principal paydown all along the way, and your principal has shrunken significantly, that you can then take out the 30, and make ridiculous monthly.

However, the other thought process is that some of these houses you shouldn’t have as rentals anyway because you tie up too much equity for it to cash flow with a loan..But the other thought process is that interest rate is so low anyway, it doesn’t matter. But the counter to that argument is that interest rates are low (for now)….But most likely not in the future…

So in other words that’s my long ass way to say yes, I’ve sat through all the scenarios and thinkng about all the ands ifs and buts…And that I have become utterly paralyzed in what is the best decision…Ultimately I think the best decision is to settle on what you feel comfortable with..

Ultimately, my relative get’s the cake for being a pure genius. She got a 1 year IO loan 1 million loan on with a 1.5% rate…For the past 5-6 years….They have on hand, and stick it in an safe investment that produces 4-5% tax deferred .. And since the loan is IO, everything is deductible on schedule A. Lol….

[Coronita]

[quote=AN]flu, I would say it’s down the toilet. I would say, it would be like renting your home for $9k over 8 months, which is $1130/month. Seems like a pretty cheap rent for a SFR. Do forget that if you refi, your interest payment will be lower by around $150/month from day one as well. After 2 years, that $3600. So, you save $3600 while “flushing down the toilet” $9k. If you consider $9k as flushing down the toilet, then the other side of that equation is she gets to live there for free over 8 months.

You’re right about what I did and am doing. Rates/rebate are not linear. Example would be, a no cost loan on absolute mortgage is 3.375% but if you bump to 3.5%, you get about $3500 back. So, for $24/month more, you get $3500 up front. If rates drop again in a few months, you can refi again and keep that $3500. If you do it 2-3 times a year, that’s over $7k, which more than enough to pay for your property tax, insurance, and part of the interest you “flushed down the toilet”.

So, my answer to ninaprincess is, it depends on what kind of loans you did. If you did it like me and get credit back, then no, if you do 0 point, then yes. If you do a no cost loan, then it depends on how long you plan to keep the place.[/quote]

yeah yeah yeah I know:) I’m not saying it’s a flush flush in reality. For me, it feels like a flush.. Totally irrationale thinking. Maybe if I were to do over, I would get a 30 year. But I’ve gotten use to the 15 year, and like seeing this come off my books earlier…

Whather it’s 15 year or 30 year, I think we all agree.. It’s cheap money these days…So refi away.

I’m deferring refing until I get approval on a the other property I hope to close this year. Then I’ll refi everything. My primary, my rentals…Probably will tap the heloc too, since the rate is 3% and I can beat that…

The point is, I want to drive my today’s cost up so I recognize as close to a $0 gain as possible over the next few years. And meanwhile, I’ll looking at some tax deferred or tax-exempt investments for the money I borrow that hopefully will beat the loan rate.

[ninaprincess]

I will refinance. Thank you for your advice.

[Author]

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