SEPTEMBER 2, 2010: Article submitted by David Wright, Sanibel Captiva Community Bank
30 Year Fixed Rate Mortgage – 4.125% Not only a catchy headline 30 year fixed rate mortgages really are priced that low for qualified borrowers. Everyone who has a home mortgage should at least meet with their mortgage lender to discuss refinancing opportunities. Consider the numbers: If you have a 30 year fixed rate mortgage of $225,000 priced at 5.375% (a fine rate) your monthly principle + interest payment is $1,259.94. Refinance at today’s 4.125% and your payment falls to $1,090.46. You enjoy savings of $169.48 per month, over $2,000 per year.
Q But David I just refinanced last year can it make sense to refinance again already? is a simple matter of mathematics, if you recover the closing costs in 24 months or so I believe you should strongly consider refinancing. Another strategy may be asking your lender to absorb a portion of your costs to help facilitate the refinance. There may be a lucrative trade-off between rate and fees that works for you.
Q Will I have to pay all those costs again? I just paid for the title policy (or intangibles tax or document stamps or recording fee, insert your least favorite charge here). A Yes you have to pay all the charges again. You may enjoy a reissue credit on your title policy and you should be able to use your existing survey so some savings are available. And as we discussed above your lender may be able to mitigate some of the charges through interest rates.
Q How much are the closing costs on a refinance? For rough calculations, I use a figure of 2%, not exact but a darn close estimator. Incidentally, purchase transactions in Lee County and much of Florida should use 1.5% because a portion of the closing costs is paid by the seller in a purchase transaction.
Q Do you really need my baby pictures for underwriting? A Not really but it almost feels that way. Underwriters are very cautious when evaluating credit applications in 2010. There are no small details, every facet of a credit file is important
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David A. Wright Senior Vice President, Residential Lending 2475 Library Way Sanibel, FL 33957 ph (239) 472-6100 fx (239) 333-2957 m (239) 209-1059
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