We just refinanced our mortgage in December for 5.375, (15 years) which was an awesome rate at the time. But the rates are almost a whole point lower. So, I am thinking about refinancing AGAIN. Of course our scores dropped some due to the refi and my husband bought a new vehicle in January and before that loan we did not have an auto loan on either of our reports. All of our scores all still very close to 700. Any suggestions on this, or are we being too greedy. And more importantly will a bank even consider a refi in just 6 months after the other refi? Thanks for any help.
You can refinance as often as you want. There are no rules for consumers that say you have to wait a certain time before doing it. Are rates low enough to make it worth your time? Maybe. It would depend on how large your mortgage is, what your plans for the property are, and what you want to accomplish. It can't hurt to call your lender and ask them to run some numbers for you.
You need to look at all the costs associated with refi including closing costs to see if it is worth it. Sounds like you are going for adjustable rate mortgages. I'd be careful of those. I would pay down as much equity as possible in the low interest years as a hedge against the rates rising.
Alen, the rates she's quoting are for fixed rate mortgages. The market really is that good right now.
You do need to look at all the costs, including closing costs and do an evaluation. Suppose, for example, that your costs are $2000. You save $50 a month on the payment. That means it takes 40 months (almost 4 years) to recoup the costs. Now the question becomes, how long are you going to stay in the house? Suppose in this example you're going to sell in two years. Then it doesn't make sense to refinance, since you won't have recouped your costs before you sell. This is a very simplified example. There are many things like this that you need to look at. Don't just assume because they say no points (they may not even be saying that!) that you won't incur costs that you need to consider.
Good point Hedwig. What many people do when they consider these refinances after a short term is they pay their escrow deposits out of pocket. In this way they're able to limit the amount they're adding to their mortgage by refinancing. Other options include doing a no cost refinance, where the borrower accepts a higher than market rate in exchange for the lender paying their closing costs.
