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Old 01-30-2008, 09:44 PM   #1
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Default Any catches to refinancing?

Our mortgage lady called yesterday and said we could refinance with a .84% rate reduction. When asked she said it wouldn't cost us anything. She could just "roll it over".

Are their any weird tax things or any other things that might suprise us? Is the mortgage interest still deductible like normal? Do you have to do anything extra/different with taxes the year after you refinance?
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Old 01-30-2008, 10:21 PM   #2
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I would think it will cost you something. I know ours did. It wasn't as much as the first mortgage since we did it with the same bank, but it was still several hundred dollars if I recall. I can't imagine they would off a refinance for nothing.
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Old 01-30-2008, 10:28 PM   #3
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Well, she'* probably talking about rolling all the fees / charges / etc. into the new mortgage, so yes, it could cost you nothing out of pocket.

BUT...

If it requires a new appraisal, that could affect your property tax (for better or worse).

AND

If you're already "x" years into your "y" year mortgage, and she wants to reset you to year zero out of "y", you may wind up paying more in interest in the end.
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Old 01-30-2008, 10:34 PM   #4
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They cut the prime rate another half point today so you should be able to save even more. The only real 'catch' to refinancing is how long you plan to stay in the home. If you were to refiance & then move in a couple years you pretty much threw away whatever they charge to refiance.

The "rolling over" simply means if they charge $1,000 to refiance & the balance on your current mortgage is 100,000 then the beginning balance on the new mortgage will be $101,000.
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Old 01-30-2008, 10:41 PM   #5
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We've had the house less than a year and a half. We don't have much equity in the house yet. In fact, if property values dropped much, we'd be behind. I don't think it dropped in value though. New home sales seem to be holding around here.
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Old 01-30-2008, 10:49 PM   #6
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Quote:
Originally Posted by J Wikoff
We've had the house less than a year and a half. We don't have much equity in the house yet. In fact, if property values dropped much, we'd be behind. I don't think it dropped in value though. New home sales seem to be holding around here.
your lucky..most people cannot say the same.
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Old 01-31-2008, 12:42 AM   #7
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Hold off refinancing. Rates are projected to drop again next week. (A little insider info since I work in the banking industry).

They're right - there are no out of pocket costs. She'll roll the closing costs of the refi into the mortgage. If your home hasn't gone up in value much (not uncommon in today'* economy) and you haven't paid down on the existing principal, then you'll likely find that the home will not appraise for enough to cover what you need to borrow PLUS the rolled in closing costs.

And, getting a new appraisal due to a refinance will not increase or decrease your taxes. Your taxes are levied differently after the property is owned. A change of ownership will reset the SEV and appraised value. Not a refinance.
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