Timeline for Mortgage refinancing - Deciding on points and no-cost
Current License: CC BY-SA 4.0
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| Sep 6, 2021 at 22:03 | comment | added | Ark-kun | Thanks for the "Home Mortgage Interest Deduction" link and quote. I'm still reading the doc, but it looks like it does not change anything for me, because my loan is already too big. Only the interest on the first $750k of the loan is deductible, but my loan is >$800k. So whether I decrease the loan (say to $770k) or increase the loan to (say to $830k), the interest I can deduct will remain about the same (~=0.0237 * $750k). | |
| Sep 6, 2021 at 21:57 | comment | added | Ark-kun | "you are borrowing the closing costs at 2 or 3% for 30 year": Yes, I understand this: "The loan becomes significantly bigger (+$19,056). The monthly payment with no-cost 2.375% will be $3203 - $76 more compared to $3127 I'd get if I paid the closing costs. So, I'm exchanging paying $17835 right now for paying $76 for 360 months totaling $27360. Seems OK..." | |
| Sep 6, 2021 at 12:16 | history | edited | mhoran_psprep | CC BY-SA 4.0 |
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| Sep 6, 2021 at 12:01 | comment | added | mhoran_psprep | If you roll the cost into the mortgage, then you are still paying the closing costs. In fact you are borrowing the closing costs at 2 or 3% for 30 years. | |
| Sep 6, 2021 at 8:43 | comment | added | Ark-kun | "The new mortgage will be for more than what was needed to acquire the house. Some of the interest you pay will not be tax deductible" - Hmm. I was not aware of this. This sounds a bit strange. When buying the house, I borrowed 80% of the house value. (I could borrow less, but decided on this maximum amount.) Over the years the proportion has changed the loan amount is less than 80% of the house value. If I do cash-out refinance where I restore the loan value [up] to 80% of the house, I do not see why it would be different from the normal mortgage. | |
| Sep 6, 2021 at 8:37 | comment | added | Ark-kun | "There are no no-cost refinances." - I've described how this works and included the relevant math. The closing costs are rolled into the new loan amount. So the loan is bigger and I pay more each month, but I do not pay a big lump sum in the beginning. It's similar to HELOC or the mortgage itself - take a loan to spread payments over time. | |
| Sep 5, 2021 at 15:10 | history | edited | mhoran_psprep | CC BY-SA 4.0 |
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| Sep 5, 2021 at 11:41 | history | answered | mhoran_psprep | CC BY-SA 4.0 |