by Barb
(Kansas City, KS, USA)
Regarding refinancing to a fixed rate mortgage: Kate, I have a adjustable loan at 4.5% on my house. Have been in the house for 5 years. Bought house for 125 thousand. House appraised at around 160 thousand.
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House payments have gone from $836 per month to $910 per month. The monthly payment includes yearly taxes and insurance on the house. Taxes run around $2,400.00 a year.
I asked my lender to give me figures for refinancing the house on the current balance of 92 thousand in order to change it from an adjustable loan to a fixed rate loan.
They sent me the info and said they could do a fixed rate for 5% and a monthly payment of $438.00.
Here is the rub. The info stated the payment was in the principal and interest only. I called to ask if it was set up like the current loan, (covering taxes and insurance), exactly what would that bring it up to. She said it would end up being a monthly payment of somewhere close to $938.00.
Bottom line is that the whole point of refinancing was to not only lock-in a fixed mortgage rate but to get a lower monthly payment. I am not coming out ahead with the deal they are offering.
So the question is... Am I stuck with an adjustable mortgage rate loan as is, or can I actually get a fixed mortgage rate loan that lowers my monthly payments AND covers yearly taxes and insurance? If I set aside my own tax money monthly, I would be paying a couple hundred a month, (and that does not even include what it would cost me to pay for my home insurance out of pocket). Either way I don't really come out ahead.
I was a little ticked at them for not telling me up front when I talked to them that the tax and insurance was not included, (as in the current loan), in their original quote over the phone.
Is there a better way?
You can also ask Kate about your mortgage at Refinancing Advice The Nuts and Bolts.
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