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My Latest Refinance

I have a rental property that had a mortgage with a dozen years left to go. The remaining balance, $72,000 and a rate of 5-7/8%. I recently got a letter from Chase telling me they’d offer a refinance with little effort on my end, no appraisal, no income check. It would cost $1800 in fees, however. The new rate, for a 10 year loan would be 4-3/8. So, a back of napkin calculation tells me I’d save just over $1050 in interest the first year, and would break even by the second year. By pulling the remaining time down to 10 years, combined with the bank adding the $1800 fee to the mortgage,  I wind up with a slightly higher payment, $62/mo higher. But in the end, it’ll be worth getting rid of this mortgage two years sooner and seeing the rent check as an income. That’s what I did yesterday afternoon, talk to Chase for a half-hour or so, and scan/email some forms back and forth.

  • Evan July 7, 2011, 9:35 am

    I am amazed how painless and cheap it seems to be…meanwhile there are those that really need to refi and can’t get ENOUGH paperwork in lol.

    I tried to refi with my mortgage lender (and holder) HSBC. They basically said it was going to cost me 7K. Did the crossover, wasn’t worth it.

  • JOE July 7, 2011, 1:20 pm

    I almost didn’t do it. My first step was to keep the time the same, and add the refi expense to the principal. This showed me to be ahead by $40/mo. With my main mortgage having nearly 9 years left, and plans to pay in 6, I wasn’t planning to pay off the rental any sooner than 10 years anyway. So, for very little effort, I did the deal.

  • Royal July 8, 2011, 12:34 pm

    Appears after factoring in the 1800 fee, you still save $10K in interest by going to the lower rate and 12 to 10 years. As you mentioned all income after that, certainly sounds like a win all around.

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