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Refinancing for the first time

Started by VikingAccounting, May 11, 2019, 04:29:36 AM

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Fellow samurais –

As Im sure a lot of you already have, Im considering a refi and submitted an inquiry through Lendingtree... the phone has been going off the hook which is what to expect I guess! In summary below is my fact pattern and considerations:

Current mortgage:

30 year fixed @ 4.875% (yuck!)

Current refi options with 800 FICO score, $380K+ loan and LTV of less than 75%:

Option #1: 30 year fixed @ 4.125% - no points – cost net of lender credits ~$2-3K - monthly savings $170 compared to current

Option #2: 30 year fixed at 4% - I haven't seen a full cost estimate net of lender credits but guessing round $4K – monthly savings $200 compared to current

Option #3: 10/1 ARM @ 3.875% - buydown costing me $500 – cost net of lender credits ~$3-4K – lifetime rate not to exceed 8.75% - monthly savings $220 compared to current

Even at the 30 year fixed the payback period is around 12 months so refinancing makes sense as we're planning on staying for a long time. I was hoping to jump on the ARM bandwagon as I think Sam's rationale makes perfect sense, however the spread seems fairly narrow compared to historical rates... I assume this comes with a "flattened" yield curve? The 25 bps makes for approximately a $6K savings over the first 10 years.

I'd be curious to get people's thoughts on those rates and costs, and how they best negotiated down the rates and costs. The above quotes seems to be about the best I can get from 4 lenders (Amerisave, JW, Quicken and Ally)... Im shopping these rates in FL if the geography makes a difference.

Thank you all for any thoughts and insights!