Does it make sense for me to refinance?

[Anonymous]

Anonymous wrote:When we refinance I make sure we make Yemenis the still mean we will finish 30 years 9or earlier) than our original loan. Otherwise, if you constantly refinance you are paying more and more into the future. People often just look at the amount their monthly rate goes down and don't count the additional months/years tacked on at the end.

I hate auto correct.

I make sure we keep our payments high enough so that we will pay off our new loan at the same time as our original loan.

[Anonymous]

Anonymous wrote:When we refinance I make sure we make Yemenis the still mean we will finish 30 years 9or earlier) than our original loan. Otherwise, if you constantly refinance you are paying more and more into the future. People often just look at the amount their monthly rate goes down and don't count the additional months/years tacked on at the end.

Right but here we're only losing one year and the odds of us ever refinancing again are pretty small. Also, we could take the $150 per month we're saving and pay down the loan sooner so we'd still be on the same timeline or better than the original mortgage.

[Anonymous]

Anonymous wrote:

Anonymous wrote:When we refinance I make sure we make Yemenis the still mean we will finish 30 years 9or earlier) than our original loan. Otherwise, if you constantly refinance you are paying more and more into the future. People often just look at the amount their monthly rate goes down and don't count the additional months/years tacked on at the end.

I hate auto correct.

I make sure we keep our payments high enough so that we will pay off our new loan at the same time as our original loan.

ha, ok, got it. I was only able to read the second part of your post when I responded. Yes, I was thinking of doing something along this line with the extra $150. I only have to shave off a year so it wouldn't even take that many payments to get us back on track.

[Anonymous]

Anonymous wrote:OP again. Can someone talk to me about how the lender credit works? I just checked this morning and the lender credit is now $7.2K! I mean, obviously it can be used to cover the funding fee and closing costs. How much of the escrow (taxes and insurance) can it fund? Can it fund the escrow for the whole year? If so, we'd walk away with at least $1,000 profit from this and a lower rate.

yes, most of the times you can fund escrow, pay insuranca/HOA fees etc. However, if your lenders credit is more than that - I would check if you can lower your rate slightly for smaller lenders credit, so you can utilize all of it.

[Anonymous]

Anonymous wrote:

Anonymous wrote:OP again. Can someone talk to me about how the lender credit works? I just checked this morning and the lender credit is now $7.2K! I mean, obviously it can be used to cover the funding fee and closing costs. How much of the escrow (taxes and insurance) can it fund? Can it fund the escrow for the whole year? If so, we'd walk away with at least $1,000 profit from this and a lower rate.

yes, most of the times you can fund escrow, pay insuranca/HOA fees etc. However, if your lenders credit is more than that - I would check if you can lower your rate slightly for smaller lenders credit, so you can utilize all of it.

Right, yeah 3.25% is the lowest rate Amerisave is offering. I had the same concern about forfeiting some of the lender credit. However, if I can fund the escrow account for the full year property taxes, insurance and the VA funding fee should use up the entire amount. That was my question though was how much of the escrow I can fund at once. Can I fund the whole year or only that portion of the year that has passed?

HOA fees aren't escrowed under my mortgage so I couldn't use it to pay those.

[Anonymous]

Yes, Amerisave will not cut you a check, but you can come out cash positive by funding your escrow account. Usually they tell you how much you need to fund, don't know if you can tell them you want to fund more. Another way of "paying" more at closing would be to close at the beginning of the month-- then you will have a lot daily interest I think.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:OP again. Can someone talk to me about how the lender credit works? I just checked this morning and the lender credit is now $7.2K! I mean, obviously it can be used to cover the funding fee and closing costs. How much of the escrow (taxes and insurance) can it fund? Can it fund the escrow for the whole year? If so, we'd walk away with at least $1,000 profit from this and a lower rate.

yes, most of the times you can fund escrow, pay insuranca/HOA fees etc. However, if your lenders credit is more than that - I would check if you can lower your rate slightly for smaller lenders credit, so you can utilize all of it.

Right, yeah 3.25% is the lowest rate Amerisave is offering. I had the same concern about forfeiting some of the lender credit. However, if I can fund the escrow account for the full year property taxes, insurance and the VA funding fee should use up the entire amount. That was my question though was how much of the escrow I can fund at once. Can I fund the whole year or only that portion of the year that has passed?

HOA fees aren't escrowed under my mortgage so I couldn't use it to pay those.

HOA is not escrowed, but it should be paid for 6(? don't remember exactly) months as part of closing, we prepaid whole year in order to use credit

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:OP again. Can someone talk to me about how the lender credit works? I just checked this morning and the lender credit is now $7.2K! I mean, obviously it can be used to cover the funding fee and closing costs. How much of the escrow (taxes and insurance) can it fund? Can it fund the escrow for the whole year? If so, we'd walk away with at least $1,000 profit from this and a lower rate.

yes, most of the times you can fund escrow, pay insuranca/HOA fees etc. However, if your lenders credit is more than that - I would check if you can lower your rate slightly for smaller lenders credit, so you can utilize all of it.

Right, yeah 3.25% is the lowest rate Amerisave is offering. I had the same concern about forfeiting some of the lender credit. However, if I can fund the escrow account for the full year property taxes, insurance and the VA funding fee should use up the entire amount. That was my question though was how much of the escrow I can fund at once. Can I fund the whole year or only that portion of the year that has passed?

HOA fees aren't escrowed under my mortgage so I couldn't use it to pay those.

HOA is not escrowed, but it should be paid for 6(? don't remember exactly) months as part of closing, we prepaid whole year in order to use credit

OP here. We paid a month or two when we bought the house so I assumed it would be the same. The credit is now $7K and the closing costs (including the VA funding fee) would be like $4.5K so that only leaves $2.5K left over so we could close early in the month and use up the whole credit.

DW had a good point that we're basically throwing away the first year of interest payments if we refinance. Part of me thinks it would be great to knock .5% off the rate and then part of me thinks she has a good point and we're just extending the loan.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:OP again. Can someone talk to me about how the lender credit works? I just checked this morning and the lender credit is now $7.2K! I mean, obviously it can be used to cover the funding fee and closing costs. How much of the escrow (taxes and insurance) can it fund? Can it fund the escrow for the whole year? If so, we'd walk away with at least $1,000 profit from this and a lower rate.

yes, most of the times you can fund escrow, pay insuranca/HOA fees etc. However, if your lenders credit is more than that - I would check if you can lower your rate slightly for smaller lenders credit, so you can utilize all of it.

Right, yeah 3.25% is the lowest rate Amerisave is offering. I had the same concern about forfeiting some of the lender credit. However, if I can fund the escrow account for the full year property taxes, insurance and the VA funding fee should use up the entire amount. That was my question though was how much of the escrow I can fund at once. Can I fund the whole year or only that portion of the year that has passed?

HOA fees aren't escrowed under my mortgage so I couldn't use it to pay those.

HOA is not escrowed, but it should be paid for 6(? don't remember exactly) months as part of closing, we prepaid whole year in order to use credit

OP here. We paid a month or two when we bought the house so I assumed it would be the same. The credit is now $7K and the closing costs (including the VA funding fee) would be like $4.5K so that only leaves $2.5K left over so we could close early in the month and use up the whole credit.

DW had a good point that we're basically throwing away the first year of interest payments if we refinance. Part of me thinks it would be great to knock .5% off the rate and then part of me thinks she has a good point and we're just extending the loan.

You are not throwing anything away, you paid the interest of the loan that was due and some principle, it would be dumb to continue paying a higher interest rate because the loan is one year into its term. You can always calculate what the payment would be at the new rate and a 29 year term and pay that every month (but make sure the bank is applying the extra to principal). Your payment still should be less than it currently is, if you pay the entire amount you save then it will shorten your repayment even more. Not refinancing when there is no additional cost rolled into the principal and the rate is lower is what would be a waste.