Re: Refinancing

From: Scott Barnett <sab@crisp.net>
Subject: Re: Refinancing
Date: Sun, 22 Nov 1998 22:47:22 -0500

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>I have a 30 year Mortgage that was Just bought by PNC Mortgage Corp.
>I have 25 years left with a balance of approximately 98,000.  My current
>interest rate is 8.125%.  I asked PNC could they refinance my Loan
>in house without any closing cost and Points.  They could refinance the loan
>today 10/12/98
>at 7.25 % with the following Fees.
>
>$500.00 out of pocket fees:
>   * covers cost of application, appraisal and Lock in Fee.
>   
>0.25% ($245) origination fee ( I still don't know what this is)
>
>$375.00 Attorney Cost.
>
>Total $1120.00
>
>My Questions are:
>
> 1.  Are these fees above reasonable for refinancing a NPNC mortgage ?
>
Yes.  Although there are some people on this list that will tell
you it is not really a NPNC mortgage.  That means literally 0 costs.

> 2. Is 7.25 a good interest rate to refinance a 8.125 interest mortgage ?
>       This would give me a annual savings of about 600.00 per year.
>
No - I'm refinancing now at 6.625% for 15 years.  The 30 year rate was
6.75%.  You should be able to do half a point better, if you're going to
pay the > $1000 for title/survey/fees/etc.

> 3. In refinancing my 30 year mortgage in which I have paid 5 years into,
>should
>     I get a new mortgage with a lower rate for the 25 years or should I
>refinance for
>     30 years ?
>
This could be a long answer - but some very smart people on this list
can explain that the length of the mortgage doesn't matter - you can
pay off the 30 year mortgage in 25 years by prepaying the principle.
One thing to consider though is if you shorten the term, you may be
able to reduce the interest rate.  For example, the bank I'm refinancing
with has different rates for 10 (6.5%), 15 (6.625%), and 30 year (6.75%)
mortgages.

> 4.  Is there ever a situation you would refinance a mortgage for a longer
>period than you
>      have left of your you current mortgage, even if the NEW  interest rate
>is lower ?  IF so why ?
>
See answer above.  The length of the mortgage is really just the
*maximum* time you have to pay it back.  You can reduce it by
paying off the principle faster than the amortization schedule for
the term you negotiate with the bank.

> 5. Based on the Prime Interest rate at anytime what would be considered a
>good and fair mortgage loan rate ?
>      Prime + ? 

Again, I've seen rates between 6.5 - 6.75% here in NJ.  Not sure if
this goes nationwide, but that shouldn't matter either, since a lot
of banks can provide mortgages in most states!

- --
Scott Barnett
sab@crisp.net 


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