Background: My wife and I bought a house in 2017 for $235,000 @ 4.125% interest for a 30-year mortgage. We put a 50,000 down payment on the house, bringing our remaining cost down to $185,000. Our mortgage payments are roughly $900 and we pay an additional $200 to the principal. If we continue to pay $200 toward the principal, we would cut our 30-year mortgage by just over 6 years. As of today, we have $163,000 remaining on the house. Thankfully, we are well off enough to not be in any financial trouble and have no issues meeting our mortgage payments at this time.
My wife's uncle works at a mortgage broker, and with the not-so-recent drop in mortgage interest rates, he has been trying to get my wife and I to refinance for a better rate. During the last conversation we had, he had said that he can get our interest rate down to 2.125%, effectively dropping our rate by 2% (from 4.125% today) with a 15-year mortgage. Our monthly payment would increase from $900 to $1100 after refinancing, but this is a wash to my wife and I since we pay an extra $200 anyway. He then said that there would be closing costs involved approximately totaling $5-$7k pending on the escrow requirement/title/etc. By refinancing, he said would we have the ability to take the money out of our existing escrow and use it to fund the new escrow, and the first 2 mortgage payments are waived (the first is actually waived and the second is pushed to the end), so we would not have to pay 2 months mortgage up front. Without rambling too much, we would be able to use the cash back to resolve the closing costs and bring the remaining mortgage payment back down to $163,000.
All-in-all, it sounds like by refinancing to a 15-year mortgage, we would be shelling out the same monthly payment with the ability to payoff the house in 15 years, as opposed to paying off the house in ~24 years (current 30-year net ~6 years from paying an extra $200 continuously).
My wife and I have had a few issues with her uncle with money, and this really sounds all too good to be true. I think he is trying to get one over on us some how by having us refinance and him getting a payout with no long-term benefit to us, and my wife thinks he is genuinely trying to help. I am looking for someone to tell me if refinancing sounds good or if we are getting bullshitted as we do not know enough about the process to make this decision.
Submitted August 10, 2021 at 09:24AM by Boostann https://ift.tt/3ywtpqF
