AboutKindred Beisinger penname K D Elizabeth Beisinger Expertise I can answer questions pertaining to budgeting, savings, debt reduction, and total freedom from debt. I can assist in prioritizing expenses and obligations. I am willing to share and offer guidance in realistic money management, modest investments, and financial freedom. I am not an investment counselor, broker or accountant, I am a missionary that does not do fund raisers or ask for donations.
Experience I live comfortably and have been debt free since I was 40.
Question You may be getting lots of questions right now with the financial crisis. I
actually have an interesting question for you. I did as the "real estate"
professionals my question but since they need to make money right now, I
fear they will all say, yes, refinance. I need to ask someone I could trust for an
honest answer to best make my decisions. So here goes:
We currently have a conventional mortgage through my credit union (then got
sold to Central mortgage company) but our interest is at 6.875%. We do not
pay PMI, etc. Our home was purchased at $300 and we put down at least
20%..so we owe, 228.5k....My husband does not feel we should pay PMI
because we put down more than 20%. However credit scores are in the high
500s hence the other banks wanting the PMI. I talked to Bank of America
today and they said on FHA they offer 5% right now and with the PMI it would
come out to be like 5.25-5.5%. We have a 30yr loan...we are not sure how
long we will stay here...at least 5yrs if not more but we do not believe this will
be our final home for our family. We have NEVER paid late on our mortgage
and I have it taken out automatically.
Question is: Would it be worth the savings by refinancing, paying more
closing costs, to get a 5% rate and have to pay PMI whereas now we have
6.875 but do not pay that...??
Thanks so much...I greatly appreciate it! I know with lower interest rates, we'd
like to try and take advantage and feel that we deserve it since we did not buy
a home we couldn't afford and should be rewarded for our loyalty and good
payments, etc.
Answer Dear Heather,
Unfortunately, people who take care of their business and have not over extended are not going to be rewarded in our country right now. I think, and I want you to know, this is only my opinion. I have real hesitation about all this so called refinancing opportunity. Not to sound like a conspiranoid, but I wouldn't want a mortgage that is government backed and I think right now, any major money move will potentially make your lien holder, the government. For now that is the US government, but where this economy is really going to land, none of our leaders know.
I am not recommending to anyone that they refinance for a reduced rate at this time. It is my opinion that the reduced rates are just to kick start all the real estate middle men and lenders, again. All this refinancing ends up putting very high closing costs back on the home owner and that money goes into the pockets that helped cause this crisis.
I wouldn't refinance right now, if you are not in fear of foreclosure. It is a very simple matter to figure though. Just bring up an amortization chart with what you owe, the interest you are paying, and then the offer for a reduction. Then figure how much cash will be needed for closing, etc. and weigh it out. I don't think you'll see much savings. And many times with these refinancing situations, even though you may pay a little less, the taxes and insurance are not figured into the payment, so that comes out of your pocket in a lump sum, annually.
I hope this helps.
I wish we were living in a time that people that were working hard and taking care of business were rewarded.
Kind Regards,
KID
www.eingedi.us
P.S. I just completed a book called "Simply Abundant." I'd be delighted to send you a copy as a gift. I'm probably a bit more simplistic than most would choose, but it's a pleasant read, none the less.
Check out the cover at: www.kdliz.com, and you can contact me from there, if you like.
