Refinancing advice with an example

Refinancing question: Any advice with re-financing my home morgage would be appricated: First, a little background.

We found a very good townhouse in a great neighborhood for $275,000. The owners wanted to close quickly and we didn’t want to lose out on it. So I took on a bad interest only morgages. One for $219,000 at 5.5% for 5 years but the killer is $55,000 on the second interest only morgage at prime rate, so it’s been increasing every month.

I’ve managed to pay off all my other debt, car payments and credit card and my credit score is pretty good in the 740-750 range. So I want to refinance to one fixed morgage and this is where I need some help with people more experiance at it…

I was given an offer of a fixed 30 year morgage at 5.85% for a monthly payment of $1,678(not including insurance and tax which is ruffly $2,000 per year). I asked if there was a way to lower the per month payment and they also offered a fixed 40 year morgage at 6% for a monthly payment of $1,578 (not including insurance and tax which is ruffly $2,000 per year).

Do you know if these are good rates? I’ve gone to 5 different lenders/brokers and this has been the best offer. Any help or feedback would be appricated.

Answer: The rates are decent but to check, put a query out on Lendingtree.com. I’d go with a 30 year mortgage max, however.

And don’t be afraid to bargain. If you find a lower rate on LendingTree, take it back to the brokers and see if they will match. Also, look carefully at the closing costs. Some places have a low rate but then load you up on closing costs. Make sure you get a firm quote on that – otherwise you may get to the closing table and find $400 for doc prep and $100 for Fedex added. Closing costs are also highly negotiable, if you get down to 2 lenders with the same rate, see which will go lower on closing costs.

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