Comments on: Beware “No Cost Refinance” Loans http://amateurassetallocator.com/2009/10/19/beware-no-cost-refinance-loans/ Amateur Asset Allocator Fri, 10 Feb 2012 18:16:33 +0000 hourly 1 http://wordpress.org/?v=3.2.1 By: Harriet http://amateurassetallocator.com/2009/10/19/beware-no-cost-refinance-loans/comment-page-1/#comment-14883 Harriet Tue, 29 Mar 2011 13:51:19 +0000 http://amateurassetallocator.com/?p=2707#comment-14883 While I understand the article, there could be valid times when someone might want to embark on a no-cost refinance mortgage. I've been quoted a regular "cost" mortgage for 4.75% vs a no-cost mortgage for 4.875%. Since I don' t have a lot of excess cash around, I would have to borrow more to cover the costs of refinancing on the 4.75% loan, while the 4.875% would just be my current mortgage balance. Consequently, the monthly payment - in this case - would be more for the 4.75% costed loan vs the 4.875% no-cost loan. Both rates are better than my current 5.25% (which I am only into by about 14 months). And there is a reasonable chance that I may be able to eliminate PMI; my current loan was at 85% LTV and carries $52/month PMI charge which won't come off for another 3.75 years or so. Since buying the property, I have made some improvements (fenced in the rear yard, added a large garden shed, cut down dead/dying trees). And similar properties in the same development have recently sold for more than I paid (an average of $30,000 more than I paid) so the property is likely to appraise for more than it did when I bought it, thus eliminating the PMI as well. While I understand the article, there could be valid times when someone might want to embark on a no-cost refinance mortgage. I’ve been quoted a regular “cost” mortgage for 4.75% vs a no-cost mortgage for 4.875%.

Since I don’ t have a lot of excess cash around, I would have to borrow more to cover the costs of refinancing on the 4.75% loan, while the 4.875% would just be my current mortgage balance. Consequently, the monthly payment – in this case – would be more for the 4.75% costed loan vs the 4.875% no-cost loan. Both rates are better than my current 5.25% (which I am only into by about 14 months). And there is a reasonable chance that I may be able to eliminate PMI; my current loan was at 85% LTV and carries $52/month PMI charge which won’t come off for another 3.75 years or so.

Since buying the property, I have made some improvements (fenced in the rear yard, added a large garden shed, cut down dead/dying trees). And similar properties in the same development have recently sold for more than I paid (an average of $30,000 more than I paid) so the property is likely to appraise for more than it did when I bought it, thus eliminating the PMI as well.

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