Another Re-Fi discusion - help me think this through - Page 2

[velochic]

Originally Posted by heatherdeg 

But ask what that's made up of because chances are it's including funding an escrow account with a quarter of property taxes and 3-12mo of homeowners insurance. 

Those are called "pre-paids".  Not included in the "closing costs".  These will appear as separate items in the disclosures (because the gov't now makes them itemize these things rather than lump them all together).

[heatherdeg]

Originally Posted by velochic 

Originally Posted by heatherdeg 

But ask what that's made up of because chances are it's including funding an escrow account with a quarter of property taxes and 3-12mo of homeowners insurance. 

Those are called "pre-paids".  Not included in the "closing costs".  These will appear as separate items in the disclosures (because the gov't now makes them itemize these things rather than lump them all together).

When you get verbal quotes, they often tell you what you have to shell out at the closing table and call it all "closing costs" despite the fact that some of them are prepaids--which is why I said she needs to ask.  I've had it go both ways but most of the time they're just telling you what you will need to show up with at closing outside of your down payment (which includes the prepays).

[velochic]

Originally Posted by heatherdeg 

Originally Posted by velochic 

Originally Posted by heatherdeg 

But ask what that's made up of because chances are it's including funding an escrow account with a quarter of property taxes and 3-12mo of homeowners insurance. 

Those are called "pre-paids".  Not included in the "closing costs".  These will appear as separate items in the disclosures (because the gov't now makes them itemize these things rather than lump them all together).

When you get verbal quotes, they often tell you what you have to shell out at the closing table and call it all "closing costs" despite the fact that some of them are prepaids--which is why I said she needs to ask.  I've had it go both ways but most of the time they're just telling you what you will need to show up with at closing outside of your down payment (which includes the prepays).

They're not supposed to word it that way.  It's part of the new "transparency" regulations that went into effect at the beginning of the year.  I'm not saying that some don't ignore that, but for a refi, those pre-paids are usually a wash-out because you already have money accumulated in escrow.

[Ellien C]

Originally Posted by velochic 

I agree with this.  You need to figure out closing costs as part of this, as well (not sure if someone mentioned this already) even though you're planning to stay in your house forever.  Depending on the amount financed and the term you decide upon, those closing costs that you are quoting might wash out the benefits.  I know that at the local credit union the refi for 12 years is 4.125 and closing costs are $750.  (Yes - seven hundred and fifty... I didn't leave a zero off of that.)  The closing costs you have been quoted seem like highway robbery to me!!!!

A HELOC is going to be a couple of points lower (maybe even as low at 2%) than a conventional fixed mortgage, but it's going to be a variable rate most definitely.  However, interest rates, *I* don't think are going to go anywhere soon.  My opinion, and in any case is a gamble, albeit a fairly safe one.  Check that out and explore using that for the roof.

I would refinance your existing mortgage to get the rate and term down.  Use the HELOC to finance the roof and pay that sucker off ASAP, ahead of everything.  I wouldn't hold off on ROTH contributions.  I tend to think of these things in long terms.  Your earnings on investments compound, so you're not giving up $10,000 right now... you're giving up $50,000 down the line.  That is, I wouldn't look at your Roth contributions as the initial investment, but what it will cost you in the long run.  A HELOC is going to cost you a lot less than the potential compounded earnings on investments.

Under no circumstances borrow against your 401(k).  That's just my 2 cents and I'm literally typing my thoughts and not proofreading it, so I hope it makes sense.  Good luck!  You sound like you know what you're doing, so go with your gut.

totally tracking with Velo- here. Wasn't really serious about borrowing against the 401K - but threw it out there as an option. I'd probably put the last 4K on a 12% credit card before I did that! But I completely agree about losing out on the Roth money later.

To answer another OP - we do pay into an escrow account for property taxes and home insurance as part of our monthly mortgage payment. (We've never had PMI). Hadn't thought about getting money back, but I seem to remember that happening the last time we did a refi. I think we've refinanced twice since 2000 when we bought the house.

Am now looking for a mortgage broker - 6K seems like a LOT to go with the same company that already has our mortgage. I thought it was a lot last time we did it (DH led the charge) but I didn't shop around. He got all panicky and was like - WE HAVE to REFI now - which is what he's sounding like now.
 

[heatherdeg]

Originally Posted by velochic 

Originally Posted by heatherdeg 

Originally Posted by velochic 

Originally Posted by heatherdeg 

But ask what that's made up of because chances are it's including funding an escrow account with a quarter of property taxes and 3-12mo of homeowners insurance. 

Those are called "pre-paids".  Not included in the "closing costs".  These will appear as separate items in the disclosures (because the gov't now makes them itemize these things rather than lump them all together).

When you get verbal quotes, they often tell you what you have to shell out at the closing table and call it all "closing costs" despite the fact that some of them are prepaids--which is why I said she needs to ask.  I've had it go both ways but most of the time they're just telling you what you will need to show up with at closing outside of your down payment (which includes the prepays).

They're not supposed to word it that way.  It's part of the new "transparency" regulations that went into effect at the beginning of the year.  I'm not saying that some don't ignore that, but for a refi, those pre-paids are usually a wash-out because you already have money accumulated in escrow.

Hmmmm... interesting.  I wonder when those went into effect because I had it happen to me in October on the loan we are waiting to finish--which is not a refi, but I think the rules apply to all loans when it comes to the transparency stuff (I just don't know all the rules  :/ ).  Large, national lender, no less.

Originally Posted by Ellien C 

Am now looking for a mortgage broker - 6K seems like a LOT to go with the same company that already has our mortgage. I thought it was a lot last time we did it (DH led the charge) but I didn't shop around. He got all panicky and was like - WE HAVE to REFI now - which is what he's sounding like now.
 

Usually when people are urging you to do something like yesterday, they don't want you shopping around.  Not always, but usually.  I would definitely talk to a mortgage broker or at least another bank or two.  Good luck!

[Ellien C]

Usually when people are urging you to do something like yesterday, they don't want you shopping around.  Not always, but usually.  I would definitely talk to a mortgage broker or at least another bank or two.  Good luck!

Good point - except it's my husband. I think he has a huge problem with impulse control. He'll do all of this research - subscribes to consumer reports and all and then pulls the trigger on an impulse. Case-in-point - just bought a netbook. After looking at everything he decided to pay extra at the high end computer store because he "assumed" it would out-weigh the cost of shipping. Like we couldn't find free shipping and a lower cost in THIS season? He just wanted the computer THAT day.
 

[texmati]

Originally Posted by mnnice 

This might be a bit off topic, but I think I would engage in some belt tightening and/or slow my retirement savings in order to beef up my emegency fund. 

Twelve grand might seem like a lot to some people, but apparently it's less than a roof and would only be 6-10 months of COBRA for most of families.

I agree with this. I would consider doing a refi regardless to lower your rate, though.