Refinancing made easy: Our story

While surfing around this evening, I found a story at USA Today about how mortgages are at a 37-year low. A 30-year fixed-rate mortgage averages about 5.28% right now.

I don't usually pay much attention to these stories. We refinanced our first house (from a 9% 30-year loan to a 5.75% 15-year loan), but our current mortgage is in a kind of phantom zone: We have a $207,000 balance at 6.25%, with about 25 years remaining. We think our home is worth about $350,000 ($333,500 according to Zillow), even after the wild swings in housing prices over the past few years.

The USA Today article piqued my curiosity, so I jumped over to Bankrate to see what sorts of loans were available. The site gave me three options:

The best option would give us a 5.00% rate and a monthly payment of $1111. (Our current monthly payment — principal and interest only — is $1386.60.) We could conceivably save $275 per month by re-financing.

But then I noticed an ad for a company called AmeriSave. It touted rates as low as 4.25%. A 4.25% 30-year mortgage? My jaw dropped. Literally. Could this be real? I clicked over, filled out the initial form, and took a gander at the rates they offered:

A payment of $1018 per month? That's $378 less than we're paying now! Yes, I do see the $6634 in fees and points. Yes, I understand that it will take us 18 months to recover these costs. That's fine. We still plan to live in this house forever (or until we can afford to relocate to Wells, England).

As a reminder, Kris and I have a mortgage prepayment plan in place. For the past year, we've paid $2000 every month, knocking off a a few hundred dollars in principal each time. We would continue to pay $2000 every month even with a new loan, so we're looking for a low interest rate and low fees.

So, my book proposal is on hold for a day. I'm spending my Friday digging into mortgages. I have several tasks on my agenda:

  • I'm going to call AmeriSave to find out more about their rates.
  • I'm going to call my current mortgage company to see what sort of rate they can offer.
  • I'll go through the process at MoneyRates.
  • I've e-mailed my mortgage broker to see what he can do for me. (And he replied almost immediately — at 10pm on a Thursday!)

It seems strange to be devoting a day to this when it hadn't even been on my radar until an hour ago. But it's moves like this that can save big bucks in the long run. In All Your Worth, Elizabeth Warren encourages readers to “count the dollars, not the pennies”. When you make smart choices on the big expenses, you have more freedom to spend what you want on the small expenses. By refinancing, I'm trying to count the dollars. (When we refinanced our first house, we were able to keep the same payment, but cut the term from 26 years to 15 years.)

Meanwhile, Jason B. wrote in yesterday with a story about his efforts to refinance in this crazy market:

I'm refinancing my mortgage from 6.375% to something lower. I originally locked in my rate at 5.25% just in case it went higher. But the rate dropped to 5.0%.

I realized my $300 application fee was less than what I'd save in just 9 months of interest at the lower rate, so I called up and they agreed to keep my application open, charge an extra application fee (instead of starting over with all the paperwork) and lower my rate. But now the rate has dropped to 4.875% and could go even lower! I guess I'll just keep paying the $300 until the rate still drops. But it feels wasteful.

Next Steps to Refinance Our Mortgage

I recently had lunch with Winston, the Get Rich Slowly intern. We talked about our families, our finances, and our plans for this site. Winston mentioned that, at my prompting, he and his wife were refinancing their home. “The local credit union was able to give us a deal,” he said. “We got a 15-year loan at 4.625% for just 1/3 of a point.

“I'm embarrassed to admit that I haven't done anything about my mortgage,” I said over my plate of General Tso's chicken. “I wrote that article, and meant to refinance, but then I got sidetracked. I should do this tomorrow.”

I paused for a moment and then added, “Actually, I guess I have done something. I filled out the information for Lending Tree, but I've decided not to have anything to do with them. They send me email every frickin' day. I hate that. I finally wrote them a nasty note telling them to go away.”

Winston laughed. “That's why we went with the credit union. We were going to use another guy in town who had a slightly better rate, but he was a jerk. He wouldn't leave us alone. We used the credit union instead.”

Heeding My Own Advice

The next morning, I called two places: my credit union, and the company that currently carries our mortgage. The credit union never got back to me, and I had to wait on hold for about half an hour with our mortgage company, but eventually I did get to speak to somebody. “I apologize for the delay,” he said. “We're swamped.”

Because we were dealing with our existing mortgage company, and because Kris and I have made huge strides in our finances during the five years since we bought this house, qualifying for a refinance was easy. “This is going to be a breeze,” the mortgage guy told me after he saw our credit scores (J.D.: 792, Kris: 809). “Other than your mortgage, you don't have any debt!”

As a reminder, our current mortgage balance is $207,000 at 6.25% with 25 years remaining on the loan. Our monthly payment (including taxes and insurance) is $1671, but we pay $2000 every month in an effort to eliminate the debt sooner.

The mortgage guy quoted me two options:

  • A 30-year fixed rate at 4.96% with no points and closing costs of $2556. Our monthly payment (including taxes and insurance) would be $1409.
  • A 15-year fixed rate of 4.625% with no points and closing costs of $2556. Our monthly payment (including taxes and insurance) would be $1909.

I completed the refinance application over the phone. The next morning, UPS delivered the documents for us to sign. It wasn't until last weekend that I had time to read the paperwork, though. I called back with several questions, gathered the required documentation, and yesterday I sent the forms back to Maryland.

Assuming no hitches, we should have a shiny new lower mortgage rate in about a month!

A Difficult Decision

To this point, refinancing has been simple. The most difficult part of the process is choosing which term we want: 15 years or 30 years. It's true that we've been paying $2000 per month toward the mortgage, so we know that we could manage the $1909 payments for the shorter term. On the other hand, dropping our required payment to $1409 gives us a great deal of flexibility should something go wrong.

Kris, the Excel-master, created a financial spreadsheet to play with various repayment plans:

Ultimately, we chose the 30-year mortgage. It's worth it to have the increased flexibility. Since we hope to continue accelerating this loan, our final payment is projected to be around 2023, only fourteen years away. We made extra sure that this new loan agreement had no penalty for early payoff.

Note: There's talk in Congress of driving mortgage rates down to 4%. If you think this is likely to happen, then it makes sense to wait before refinancing. Kris and I decided we'd rather take advantage of a good rate now than wait for a great rate in the murky future. Do what works for you.

Stephen Popick, the administrator for the GRS discussion forums, also refinanced recently. He managed to pick up a 4.375% rate for 15 years, freeing an additional $300 of cash flow each month. Stephen, an economist, writes: “Inflation right now is at an annual rate close to 4%, and the five-year average is 3.2%. So when you're refinancing at rates around 4% you're paying close to inflation, which essentially means that you're paying little to nothing in net present value with your loan.”

That's what makes an economist happy, apparently. Me? I'm just glad to trim $262 off of our required monthly payments so that even more of our extra money goes directly to paying down the principal each month!

Mission Accomplished: Our Shiny New Mortgage

We did it! After two months of hemming and hawing, Kris and I finally closed on our mortgage refinance, dropping our rate from 6.25% to 4.96%. Bright and early yesterday morning, we made a trip to the title company, and we signed all of the documents. We were out of there in only half an hour.

How'd we do it so fast? Don't I advocate reading all contracts before you sign them? Absolutely. So when then the title officer called on Friday, I let her know in advance that I needed to read everything first.

“Thank you for telling me,” she said. “I'll give you your copy of the documents so that you can read them at home over the weekend.”

And that's just what I did. It took several hours, but I leafed through all 107 pages, looking for anything alarming. I can't claim to have understood all of the arcane legalese, but I gave it my best shot (with Google's help), and I didn't find anything that raised a red flag.

Because I'd read everything in advance, closing was a breeze. The title officer was amused when she noticed I was making tick marks on a piece of scratch paper. “Are you counting how many times you sign your name?” she asked. I sheepishly admitted that I was. (Over the course of 107 pages, Kris and I signed our names 29 times. We initialed 21 items.)

Now we're done, however, and we have a new mortgage. Our payments (for principal and interest) have dropped from $1386.60 to $1137.70 — a savings of $248.90 per month. It will take about a year to repay the closing costs, but then the new loan will save us money over the next 29 years. (Well, not actually 29 years. We'll continue to accelerate our mortgage payments.)

Remember: Saving money on the little things every day is great, but saving money on the big things can make an awesome difference to your budget. You'd have to wash a lot of baggies to save $250 a month!

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Leslie
Leslie
11 years ago

We refinanced after your article about it right before Christmas. We got 4.825% on a 15 year with right around $1600 in closing cost (no points or origination fees). We only had 8 years left on our existing 15 year loan but we refinanced to another 15 year mortgage. It lowered our payment by almost $400. Our plan is to pay at the same rate we have been paying and still pay it off in about 8 years. But, this gives us the flexibility of a lower payment should a job loss or other financial crisis occur.

And, like you, the whole process was quite easy.

JerichoHill
JerichoHill
11 years ago

JD

I even ran that mortgage by my fellow economists. They’re also refinancing I think.

JH, aka Stephen

Kevin D
Kevin D
11 years ago

I called my mortgage company right after I saw your article in Dec. of 2008. My wife and I bought our first home in earlier that year so I wasn’t sure how we would make out refinancing that early. We got a new rate of 5%, down from 6%, and we would be saving a little over $150 on our monthly payment.

Since it was an FHA loan he was able to “streamline” the mortgage which saved us a considerable amount on the closing costs. It ended up costing us about half of what we were paying for a monthly mortgage payment.

Jason B
Jason B
11 years ago

Refinancing was dead simple through my credit union, and my previous mortgage lender called me *yesterday* a week after I finished refinancing to reply to the emails I sent *weeks ago* through their web site asking for my options. He didn’t seem to be aware that I’d already left his institution.

Sam
Sam
11 years ago

We are also in the middle of a REFI, we went with a 25 year loan (we are 4 years into a 30 year term at present). We could have gone with a 20, 25 or 30 year at our locked in rate 4.78 (no points). We decided to go with 25 year term because while we would like to pay off the mortgage earlier, and we plan to, we want to have some flexibility if and when we have kiddos. But we didn’t go with 30 years because we didn’t want to add more time onto our current loan.… Read more »

MitchK
MitchK
11 years ago

JD,

Thanks for using numbers and showing us exactly what your situation is in regards to what most people consider a very personal topic. A real-world example is really invaluable.

Also, I agree with your decision. The flexibility of the 30-year is a huge factor in case of any emergencies.

Beth @ Smart Family Tips
Beth @ Smart Family Tips
11 years ago

We looked into refinancing right after your last article on the topic. I called my current lender and couldn’t get through. I used their online form, which indicated I’d receive a call back within 15 minutes; it took them two days to get to me. They, too, said they were swamped. While the rates they provided were good, the closing costs were extremely high. Also, the woman I was working with kept sending these horribly written emails with loads of typos and nearly incoherent sentences. There were emoticons scattered throughout each of the emails. As a result of the high… Read more »

Ron@TheWisdomJournal
11 years ago

I tried the Lending Tree route as well and was mildly disappointed in the rates I was quoted. Anywhere from 4.5% to 5.5% but all had points and/or fees that made me say “wait a minute.” Not only that but I get 12 phone calls and 5 emails each week. Looking at these rates against the backdrop of a local bank with 4.25% rates (no points) and our nanny state Federal government attempting to offer 4% fixed 30 year loans and I’m glad I waited.

Frugal Dad
Frugal Dad
11 years ago

While it’s true that a 15-year loan always pays off in 15 years, I agree with J.D. that opting for the 30-year mortgage provides a little more flexibility month to month. In a pinch I would rather owe $1400 per month than $2500 per month. In good months it might make sense to throw $2500 at the mortgage, but it is nice to have that as an option, rather than a requirement.

Sandy E.
Sandy E.
11 years ago

Suze Orman gives the following advice re refinancing — if you’ve paid off say 5 years on your current mortgage, then you should refinance into a new 25 year loan. Please don’t make the mistake of refinancing into a 30 yr. loan, for that extends your total mortgage term to 35 years.

This really makes sense to those who do not intend to do any prepaying once they refinance.

Kim
Kim
11 years ago

Does anyone know if you can refinance student loans?

the weakonomist
the weakonomist
11 years ago

I think JD made the right choice as well on the 30-year. Since you would be on schedule to pay it off in 14 years on a 30, it made perfect sense to go ahead and give yourself that cushion should you need it.

Jen
Jen
11 years ago

I think you should write some articles for those that want to take advantage of these rates and have great credit, but are having trouble getting financing because we don’t have enough equity in our home because our value has dropped so much. It’s a bit frustrating because every loan officer says we are perfect to work with its just we don’t live in the best of places and our value has dropped considerably in the past 5 years. Yuck!

The Personal Finance Playbook
The Personal Finance Playbook
11 years ago

@ Kim – sure you can…if you can find someone willing to do so. When you consolidate you are essentially refinancing several small loans into one big one. The big one pays off all the small ones and you have a new rate based on market conditions and your specific risk profile. It’ll be harder to find someone to refinance these than a mortgage, but it’s definitely possible. If you have a home, you could even refinance extra out of it and use the money to pay off your student loans if they’re at a higher rate than current rates.… Read more »

Miranda
Miranda
11 years ago

I’m actually holding off. Some Senators are trying to add a 4% interest rate into the stimulus bill for those who want to refinance or buy. I’m going to wait to see whether it flies. Because then that could be a really sweet deal.

jtimberman
jtimberman
11 years ago

Since you didn’t go with the 15 year (that would be my advice), do this. Pay the 15 year mortgage’s payment. Just set that amount up for your automatic payment on the 1st of every month and let ‘r rip.

familybalancesheet
familybalancesheet
11 years ago

We decided to refinance after my credit union sent us an email a few weeks ago promoting 4.99%, 15 years with NO points, NO prepayment penalties and NO costs. I immediately applied online and was approved that same day. We only have 10.5 years left on our existing mortgage that has a rate of 5.74%. But when I apply our current payment to the new mortgage we will pay off our new mortgage in less than 8 years and save over $9000. We are going for it!

Nicole II
Nicole II
11 years ago

I have been meaning to call about my refi with my credit union ever since I read your first post. I rent out my home and live in an apartment- so it is an investment property now (it wasn’t when I first bought it) and so I was wondering if anyone else has had success refinancing their rental properties… I have good credit- the house is in a market that has held up pretty well and actually appreciated over the three years I’ve owned it (in SLC near the Univ. of Utah) Anyways, would love to hear from folks who… Read more »

Kristen
Kristen
11 years ago

I have a question with regards to refinancing, not sure anyone will know the answer. We have an 80/20 loan. The 80 is fixed at 6 and the 20 is variable. Is there a way to refinance in to ONE fixed rate mortgage now that we are in a better position financially, or does that even make sense to do.

Also, if you are not sure you are in your “forever” house and you may sell in 3 – 5 years, does it make sense to refi still?

Shara
Shara
11 years ago

JD: Great for you! And Nicole: if you originally financed with an owner occupied you probably already have the best rate you will get. Rental properties are going to finance for 1-2% higher than owner occupied. They are significantly more risky and the prices reflect that. And if you don’t have at least 20% equity in it most banks won’t even talk to you. 10% was the minimum four years ago when the market was hot, and they have really backed off over the past couple years after getting burned. Other than that, I’m not reading comments today because reading… Read more »

Denise
Denise
11 years ago

I’m trying to convince my friends to refinance. They got an 80-20 piggy back loan that they really can’t afford, and the piggy back has an adjustable rate that is going to reset to 25 percent!!!! It’s also Interest Only. I know, awful. But they are resisting because they can’t afford to pay any more than they already are. They are going to have to because they are going to pay more either way, and if they don’t refinance, they will likely lose their house. Ugh. As for us, we did a 15 year fixed rate on our current house.… Read more »

JerichoHill
JerichoHill
11 years ago

It would be a horrible decision to mandate 4% mortgage rates across the board. The 4% rate will likely only apply to a small subset with the most pristine credit.

Further, it would be very difficult to find buyers who would want to invest in 4% loans.

http://blogs.wsj.com/economics/2009/02/02/lower-mortgage-rates-hard-to-achieve/?mod=googlenews_wsj

Further, the main thrust of the 4% mortgages would NOT APPLY TO REFINANCES. They’re almost strictly being spoken off as new home loans. This is an important point.

http://www.msnbc.msn.com/id/28165488/

Nicole II
Nicole II
11 years ago

Shara you are great. Thanks for the info!

urbantux
urbantux
11 years ago

I have thought about refinancing but I have an 80/20 loan and everything I hear is that I will have to pickup PMI because noone is willing to mess with those second loans anymore. Also at what point is it worth while, I currently have a 5.65 on my primary mortgage, is less than 1% worth it?

Sam
Sam
11 years ago

We went with what Suze Orman recommends, according to Sandy E, we are 4 years into a 30 year mortgage so we are refinancing into a 25 year mortgage so we don’t add any more time to our loan. We will continue to pay at our current rate so we will cut more time off our loan. We would also like to refi two of our investment properties but we are focusing our efforts on getting our primary home taken care of and then we will look at our investment properties. One was a primary home (Mr. Sam’s) when he… Read more »

deb
deb
11 years ago

Where are you all finding such good rates? We live in metro Detroit so it must be our area, the rates are still to high. We have 2 mortgages (one was for a remodel a few years ago) and we’ve been paying both down early. One is 5 7/8% and one is 6 1/4% – we paid the first down early and when we added the 2nd with the higher rate we now pay that one down. Our credit scores are both in the 800’s and although home values have gone down we have enough equity in ours to not… Read more »

KC
KC
11 years ago

We had a similar experience as far as credit scores and bankers surprise that you did. Our banker said we had the highest score he’d seen all year and that the loan (we were moving so we were taking out a loan instead of refi) would be a breeze. Funny thing is my credit score was 5 points higher than my husband’s and I don’t even have an income!

Faculties
Faculties
11 years ago

I went with a mortgage broker, who found a lower rate than I could have on my own. I agree with the person who warns you that you are extending the life of your loan, JD. You should see if you can get a 15-year loan through a mortgage broker at a low enough rate that you have the smaller-size payment AND a short loan term. I got 10 years at 4.5% — it was a smaller loan amount, but the monthly payment is $673. I’m overpaying each month and you can imagine how fast this mortgage is disappearing. Also,… Read more »

Kristina
Kristina
11 years ago

I don’t think much about how much I’m “saving” each month in payments — my concern is the interest rate. Given that I’d want to be out of debt as fast as possible, I don’t aim for lower monthly payments on anything. Rather, the thought of paying interest to the bank drives me crazy. For that reason, I would have chosen the lower 15 year interest rate. Given that you and Kris already pay more than $1900 per month and given that you are both responsible with your money and are unlikely to find yourselves in a dire financial situation,… Read more »

Finally Frugal
Finally Frugal
11 years ago

I would love to refinance to take advantage of lower interest rates and lower my payments. At this point, any breathing room in my budget would be a blessing. However, since I purchased in mid-2006, my equity has gone down the toilet and I’d end up paying PMI—decreasing any savings I’d see in my monthly payment. Add this to the fact that I’m staying put—for the short term—but when the market improves, I want to sell my house and get into something cheaper. So refinancing now (unless it was completely free) wouldn’t make much sense. . . . I like… Read more »

J.D.
J.D.
11 years ago

I should note that although Kris and I have opted for the 30-year loan, we have until a few days before closing to switch to a 15-year loan instead. We’re not locked into the longer term yet.

Sandy E.
Sandy E.
11 years ago

J.D. you can always get a 20 yr. loan too — that’s what I did once when I refinanced my house some time ago. Run the numbers to see if you’d be more comfortable w/a 20 yr. than with the 15 yr., and you can always prepay too.

JKING
JKING
11 years ago

JD: Have you heard of the Total Money Makeover by Dave Ramsey? I don’t have the book to reference right now, but I think he gives specifics as to why people shouldn’t refinance and/or taking the 15 year fixed mortgage over 30. Additionally, I wanted to know if you or anyone had an opinion on his book.
Thanks!

Gary LaPointe
Gary LaPointe
11 years ago

Can you explain what you mean by “accelerating” the loan by $100 a year? (and what’s your starting point).

Thanks!

Alan Cordle
Alan Cordle
11 years ago

I got our mortgage through a broker locally five years ago and I also got quotes from Lending Tree. When I quoted the lower closing costs from some of the LT people to the local broker, he matched them — no problem. Now I just went the LT route last week for a refi. My FICOs are all over 800, so I’m telling all of the lenders they have to be extra competitive to get me. We’ve also called our credit union and I intend to contact our local guy again. Congrats on your rate and 15 years — woohoo!

Alan Cordle
Alan Cordle
11 years ago

PS — Is Winston willing/able to name the company he used?

Keith
Keith
11 years ago

If you have great credit, can one refinance if you have less than 20% equity in the home? When researching, I get conflicting information.

Erica Douglass
Erica Douglass
11 years ago

Hi J.D.,

My two cents: I’d go with the 15-year loan. Getting the 30-year loan is a decision based in fear (“I might not have enough money to pay this in the future.”) The 15-year loan is a decision based in abundance (“We’re already paying that much every month and have a substantial cushion.”) You are responsible, have a safety net, and have no other debt. In addition, your blog income is going up over time. Make the abundant decision instead of the fearful one…and reap the rewards of paying your house off early.

-Erica

J.D.
J.D.
11 years ago

@Gary LaPointe wrote: Can you explain what you mean by “accelerating” the loan by $100 a year? (and what’s your starting point). About this time last year, I wrote about our mortgage prepayment plan. Our monthly mortgage payment (including taxes and insurance) is about $1670 per month. Our goal was to pay $2000 a month, effectively contributing another $330 to the principal. When Kris wrote the thing about “accelerating the loan by $100/year” that’s shorthand for a plan we keep talking about. We’re paying $2000 a month now. But what if we pay an additional $100 monthly every year? So,… Read more »

Sam
Sam
11 years ago

Also J.D., as I mentioned we are going with a 25 year REFI and my bank offers 15, 20, 25 and 30 year fixed rate mortgage products. You might want to see if you can go with something in between 30 and 15.

And for those who are interested in managing their own escrow payments (i.e. saving and earning interest on monies that are used to pay taxes and insurance) REFI is a great time to opt out of bank escrow payments.

Natasha
Natasha
11 years ago

Interesting post about usda home loans in rural areas. Apparently, the qualifying is pretty straight forward, with better interest rates.

http://www.ireport.com/docs/DOC-206524

http://www.rurdev.usda.gov/rhs/common/indiv_intro.htm

Jane
Jane
11 years ago

We’re British immigrants and moved to the US 4yrs ago. Although we were debt-free when we arrived (and put down 20%), with no credit rating here we couldn’t get a fixed rate loan (very unfair!)All we were offered was a 5/1 ARM at 5.25%. This is due to adjust in Jan 2010 and could go as high as 8.5%. For the past year we have been talking about refinancing into a 30yr fixed. We have 3 kids, the eldest starts college in Fall 2010, so we will need flexibility for several years ahead. We have a small car loan which… Read more »

Ben
Ben
11 years ago

Refinancing rental properties is going to be tough right now. Most rates for rentals are 1-2% higher than owner occupied housing and banks are requiring 20% down. I checked into refinancing my rentals when the 30 yr rate was around 5%. The best I could do was 6.75% and I have 20% equity.

Tyler Karaszewski
Tyler Karaszewski
11 years ago

As a person who’s never had a mortgage, can someone explain to me what the heck a “point” is, why it matters, and how to translate it into a unit I might care about, like dollars?

I’ll gladly trade you some “points” for better interest rates. We can go play some one-on-one basketball, and we’ll start the score at two-nothing, your favor. Now can I have my 4% mortgage rate?

Miss M
Miss M
11 years ago

I tried calling my lender to refinance, but I bought in 2005 and the LA market has been hit hard. Based on their required 20% equity and their online home price evaluator, I’d have to come to closing with $153,000! I owe $325,000 so I would have to pay off half of my mortgage to refi. There are a lot of people like me who bought in the last 7 years and can’t refinance because we’re upside down.

Mike
Mike
11 years ago

You’re now self-employed, right? Did you find it any harder to obtain refinancing as a result?

J.D.
J.D.
11 years ago

@Tyler Good point! 🙂 A “point” in mortgage parlance is 1% of the loan. So, in Winston’s case, one-third of a point is one-third of 1% of his loan amount. Points are paid to buy down the interest rate. In 1998, for example, when Kris and refinanced our house, we paid some amount (one point? half a point?) to buy the interest rate down from 6-1/8% to 5-7/8%. This can be a fantastic deal if you plan to be in your home for a while. It can be lousy deal if you sell before recovering the costs of the points.… Read more »

PlantingOaks
PlantingOaks
11 years ago

Instead of paying the 15 year amount into the 30 year mortgage, why not pay the minimum to the 30, and pay the extra $600 into an external investment?

When the external investment equals what you still owe on the mortgage, pay the house off outright.

This works on the theory that the stock market (or wherever you invest the difference) will do better than 5% over the next 15 years or however long it would take you to pay it off.

I think that’s likely.

J.D.
J.D.
11 years ago

Mike wrote: You’re now self-employed, right? Did you find it any harder to obtain refinancing as a result? 🙂 Very astute question. Very astute. My answer is: I’m fortunate not to have to find out. We were going to have to do some sort of rigamarole to verify my income (which I’m sure would have been a nightmare to complete), but the mortgage guy ran the numbers just on Kris’ income alone. She just barely managed to qualify for the mortgage herself, meaning that the application is based on her income alone. (If she made $100 less per month, we’d… Read more »

Tyler Karaszewski
Tyler Karaszewski
11 years ago

So it’s sort of like a “down payment” on the loan, except that it doesn’t actually go toward paying the loan off? A $100,000 loan with a 5% rate and 1 point would have a $1000 fee paid at closing, with the loan still having a balance of $100,000, correct?
Just want to make sure I understand that correctly.

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