Hello all. Thank you in advance for any advice given.

I purchased my first home in April 2008. Fixed rate 30 year mortgage, 6%, and put 10% down. Since then, I have always paid on time, and have also been paying extra money during some good times against the principal. I have no credit card or student loan debt, and own my car outright. The only real debt I have is the 2008 homeowner's $7500 tax credit, which I started paying off in 2010, $500 or so a year.

I have received an offer from my mortgage holder, Chase, to refinance my mortgage with no closing costs, appraisal, or other fees. They are offering 4.125% on a current balance of $72000. I have been playing with some refinancing calculators online, but most of them (not surprisingly, as they mostly are on bank sites) give some info but also want me to talk to that bank.

I have not refinanced before; I understand the basic principles but want to make sure I don't make a poor decision at the age of 32, with lots of time to regret it. So... Is Chase just trying to screw me? Or do I have an actual opportunity?

I will prefice this by saying that costs will vary from State to State. But here in Ohio, I would expect the normal closing costs (before any lender credits) to be in the neighborhood of $1975. That would be for underwriting, title fees, title insurance, recording charge, etc.

Now to offset those closing costs, you would need a lender credit of roughly 2.75% (2.75% of the loan amount $72,000 = $1980.

Based on a number of the lenders I work with, in order to get this amount of lender credit today, you would be looking at 4.125%. So I don't think they are screwing you.

I assume they will be doing a HARP refinance, and if they are your current mortgage company it should make the loan process pretty simple.

One thing that I would think about is that you have now paid into that loan for 3.5 years. Do you really want to start back over at 30 years? They should be able to do a 25 year, or even a 20 year.

Hope that helps. I'm more than happy to answer any other questions you might have here or you can email me at tc DOT strait AT gmail.com

Thanks. I sent you an email.

http://www.bankrate.com/finance/news/ba ... ement.aspx

See article link above. Sounds like you have a rare opportunity. It's good that you're skeptical ... and you should continue to be; however, I recommend taking advantage of this gift. I only wish that I received an offer like that ... I'm having to do it the old-fashioned way (which is expensive!).

Um...can you explain this? Why are you paying back a tax credit? Did you take out a loan against it? That statement does not seem to make much sense.

I agree with TC - you seem to be getting a decent deal but not a great one. I would shop around, especially if you can manage to bring some money to the table. If you did not need the lender credit, that is if you were able to pay some of the fees with cash, you should be able to get a better rate. A lower rate will almost certainly be better in teh long run.

DoingHomework,

When the First Time Home Buyer Tax Credit was created, it was a tax credit of 10% of purchase price capped at $7,500. This credit was actually an interest free loan, as it had to be paid back. I believe the pay back terms were $500 a year for 15 years. There were also other stipulations along the lines of: If the house was sold, then the remaining balance was due on that year's taxes. (Do not quote me on this, as I bought my house in 2009) This was part of the Housing and Economic Recovery Act of 2008

The credit was changed to a true credit capped at $8,000. I believe this transition occured at the start of 2009. This one had a provision that if you did not keep the home as your primary residence for a minimum of three (I think) years then you would have to pay it back. This was done as part of the American Recovery and Reinvestment Act of 2009.

Wow, I learn something new every day!

Still, in that case I'm no sure I would consider it a debt like other debts. Maybe technically it is but it seems more like deferred taxes to me. I think at worst I would consider it an additional mortgage.

Yup. Another fun thing about it was that you could be considered a "first-timer" if it had been more than three years since your last home purchase... good times...

Almost all First Time Homebuyer programs (bond money through States, down payment assistance through municipalities, etc.) consider you a First Time Homebuyer as long as you haven't owned a property in the last 3 years.

Not sure why, but it has worked out for my clients a few times.