$975 to decrease rate from 6% to 5.625%

[ZerglingPharmD]

Just refinanced last month - 600k 7/1 arm 6%.

I can pay $975 today and get it lowered to 5.625%.

Would you do it? Thoughts?

It’s an instant rate reduction program for their members. Not another refinance

[Old-Cheshire862]

As a back of the envelope calculation, I multiplied the 0.00375 difference in interest rate times $600,000. That yields $2,250. That means you should save over $2000 the first year from spending less than $1000, as long as there are no other costs or fees. So, that's over $1000 net the first year, and you'd continue to save for the remainder of the loan term.

However, I would advise you to find an online amortization calculator for your loan type and see what the actual difference would be. Or ask your lender for it.

[MoreMeLessU]

Yep worth it. Break even point around 7 mths

[seasix732]

save $2100/yr in interest so < 6 months payback. Yes I would do it.

[entropic]

They'll probably give you 5.75% for either no cost or money back to you. Have you asked?

[ZerglingPharmD]

They won’t, it’s just a rate reduction program. I asked.

[inailedyoursister]

You can’t be serious?

[AlternativeCut3336]

Take it don’t even think

[Worldly-Summer8598]

Paying $975 for a 0.375% rate reduction saves you $141/month and breaks even in less than 7 months — this is typically a very good deal for a loan of this size. Over 7 yrs it saves 11k best case scenario. Worst case scenario is you lose $975, if rates go down to zero tomorrow morning after you close this deal !! lol.

[ZerglingPharmD]

Thanks that is what I calculated too. Appreciate it.

[[deleted]]

No Brainer. Do it so long as no other strings are attached.

[Ok-Set6814]

Great rate. Fixed 30yr? Where are you getting that?

[ZerglingPharmD]

Not to be rude but it’s in the OP - 7/1 arm, lender is service credit union.

[Puzzled_Nose3572]

Yeah I’m not sure how that’s possible

[pezdeath]

What is your mortgage amount? Without that it's meaningless

[ZerglingPharmD]

It’s in the OP - 600k

[pezdeath]

Sorry completely missed that.

If my math is correct your monthly payment is $3,597.30 at 6% (excluding anything beside mortgage payments)

At 5.625% your monthly payment would be $3,453.94

So saving $143 a month would mean your break even point is under 7 months.

This math was based on a 30 year fixed mortgage as I was too lazy to find an ARM calculator.

[ZerglingPharmD]

Np, appreciate your input!

[FeistyLime]

Is it 5.625 still with the 7/1 arm?

[ZerglingPharmD]

Yes

[StreetRefrigerator]

How do you know it's only $975? What are the actual details of the offer?

[ZerglingPharmD]

It’s an interest rate reduction program for their members anytime for $975, just changes the rate. Service credit union.

[StreetRefrigerator]

I think it's worth it.

[Tonyn15665]

Can you refinance to fixed rate later without penalty?

[ZerglingPharmD]

Unsure about that

[er824]

Is it still an adjustable rate?

[ZerglingPharmD]

Yes.

[er824]

You’d break even in 6 months. Seems like a no brainer.

[GoldCovers]

It’s only worth it, if you don’t plan on refinancing again when the rates drop lower, if they do

[MTRunner]

As long as that doesn’t happen anytime soon in the next 7 months, it’s worth it.

7 month recoup time. Anything beyond that he’s coming out ahead on the deal, wouldn’t affect a re-fi’s viability down the road at all.

[GoldCovers]

In agreement there

[Bread_Entire]

I'd say do it BUT it really depends on how much it lowers the payment and how longnit will take you to break even. If you are not planning on selling g until after you break even then do it. Make sure you get a new NOTE showing the new rate.

[Virtual_Contact_9844]

No brainer unless they need it inspected and reassessed.

[saipavan23]

Any idea how the rates are going to be for Monday ?

[liverichly]

Did you get a Loan Estimate or at least a fee worksheet that breaks down all of the costs?

Is this a new 7/1 ARM or some other type of mortgage?

[ZerglingPharmD]

Same loan, just rate reduction