Refinancing Your Mortgage? This Is What I Asked My Mortgage Broker

I’ve been contemplating for a while about refinancing our mortgage and have finally decided to take steps and get the ball rolling. This morning I sent my mortgage broker the following email with some questions. Hopefully I’ll get a response today.

Hi XXXXX,

This is XXXXXXXXX at XXXXXXXXXXXX. I’m currently considering refinancing my mortgage. I’m looking at both the 5 year fixed and the 10 year fixed but it all depends on the rates and my ability to transfer my mortgage. If you could answer the questions and provide any additional insight that would be greatly appreciated.

Whats is the current 5 year fixed rate that you are offering?

What is the current 10 year fixed rate that you are offering?

How much would the break fee be?

Will they either waive or decrease the break fee if i sign with you again?

Do they offer any blending options ?
For example if I sign a 10 fixed I would continue to pay my current mortgage at 4.89% until its finished and then the remaining years at the 10 year rate

If I sign a 10 year fixed mortgage what are the requirements for transferring my mortgage if I move to a more expensive home?

Regards,
XXXXXXXXXXXXX

What’s my current mortgage?

I currently have a 5 year fixed rate mortgage at 4.89%. I still have a little over 3 years left on that mortgage unfortunately.

Why I asked these questions?

I only inquired about fixed rates for a couple of reasons:

I’m worried about inflation and high interest rates in the future
I may be interested in doing the smith maneuver and I consider having both the heloc rate and mortgage rate variable as doubling your risk.
I’m not really interested in a variable rate mortgage. I figure there are enough variables in life already I might as well have a few constants.

A large part of this decision will be based on the break fee and whether the savings are worth it in the long run. This is why I also asked about minimizing the break fee and blending options. Finally it doesn’t matter if I sign a 5 year mortgage or a 10 year mortgage I know that I’ll most likely be moving in 3 years. The last thing I need is to be hit with another break fee so for any of this to be viable I need to be able to transfer the mortgage to a new home. Hope this helps out any that wants to start looking into refinancing their mortgage.

What kind of experiences have you had with refinancing your mortgage recently?

-mfd-

{ 3 comments… read them below or add one }

1 No Debt Guy August 27, 2009 at 11:27 am: I am curious about the response you received. Just looking at your situation I can almost guarantee that there is no saving in refinancing even if it was to a three year term.
2 mfd August 27, 2009 at 1:14 pm: @No Debt Guy - You are correct. The interest differential was going to kill me. There would have been some savings but not enough to make it worth the trouble. It was especially a problem since the 10 year rates hadn’t dropped below what my 5 year rate is. My mortgage broker also said that the various refinancing options (the fees and blending options) that banks offer change quite frequently. He suggested that we revisit this when/if rates return to a more amiable number or when the break fees is much lower.
3 No Debt Guy August 27, 2009 at 1:28 pm: Normally a refinance will only help if people have run up some high interest debt they would like to clean up or if they need their payments reduced for cash flow reasons and they take a longer amortization period.

Unfortunately folks who run up high interest debt normally don’t frequent financial blogs so they can’t take advantage of the refinance advice.