Need help with refi numbers

[pinkytoe]

We have decided to refinance our current mortgage but grow increasingly confused by all the options. Maybe someone here can help with which option will be best in our situation.
Here are the numbers:
Current mortgage balance: $80,000 30yr mortgage at 5.75% (17 yrs left to pay)
Home equity loan balance: $20,000 10 yr note at 4.75% (8 yrs left to pay)
We would like to refinance both loans for a total of $100,000.
The current value of our house is $350,000.
The credit union that holds the equity loan is offering to combine both as a home equity loan at 3.49% and closing costs of $400 (15 yr). Monthly payment would be $714.
Chase who holds the mortgage will combine both at a rate of 2.85% and closing costs of $4000 (15 yr). Monthly payment would be around $600.
Our plan is to be in the house about three more years at which time we will sell and pay cash for our retirement house in a less expensive area.
However, if we did have to remain in this house for whatever reason, we would pay off the note well before its due date.
Any advice is appreciated as I am thinking too much about it and probably not seeing the obvious.

[try2bfrugal]

Personally, I never pay points or closing costs. We just go for the best rate available with no points / no fees and then if rates drop we refinance again at no cost.

[jennipurrr]

I put both scenarios into a mortgage amortization calculator here - http://www.hsh.com/calc-amort.html

With the 3.49% at the Credit Union you will pay $28,590.48 in interest plus the $400 closing, so $28,990.48 over the 15 year life of the loan.

With the 2.85% at Chase you will pay $23,010.26 in interest plus the $4000 closing, so $27,010.26 over the 15 year life of the loan.

So, really there is very little difference in the overall cost. You may also want to consider the interest the $3,600 difference in closing will earn over the next 15 years. Personally, I would go with the credit union so you can keep that $4,000 cash liquid.

[sweetana3]

Another issue is whether the $4000 is deductible and whether you would get full value on your tax return or still take the standard deduction.

I also vote to keep the $4000 for emergency fund and to use for the house if necessary.

[SimplyMama]

Personally, I never pay points or closing costs. We just go for the best rate available with no points / no fees and then if rates drop we refinance again at no cost.

I'm new here, but since we are in the market right now to refinance, I'm curious about this no fees option.

We have been told that we can refinance from 4.75 on our 30 year and go down to 3 on a 20 year. We have 26 years remaining right now on our mortgage. The payment will remain the same but we will pay more off sooner, as we plan to sell and buy our hopefully final home in 5 years that we will finance over 15 years.

Although we can get no points, and they are waving the appraisal fee, we still have to pay certain closing costs.

How do you get a bank to agree to no fees? There are attorney closing fees involved that are probably the most expensive part of this. How do you avoid those?

[Rosemary]

"No fees" generally just means that the costs are rolled into the new mortgage.

[freein05]

Are the interest rates you are being offered fixed?

[pinkytoe]

Ours are fixed. Going to the credit union today to sign papers. I learned that Texas has the second highest closing costs in the US (after NY). The closing costs at Chase mysteriously ended up being another $1000 when points and discounts were considered. Not paying anyone $5000 for the privilege of refinancing...since we will be paying off the debt or selling within five years if all goes as planned.

[try2bfrugal]

"No fees" generally just means that the costs are rolled into the new mortgage.

Obviously, you have to check the loan papers to make sure that is not the case if you want a true no fee loan.

I go over the closing costs statements with a calculator and a fine tooth comb and refuse to sign if they include any closing costs I did not agree to pay upfront. We don't agree to sign until the numbers all add up.

[try2bfrugal]

How do you get a bank to agree to no fees?

Just ask the lender what the best rate they could give you would be on a no point, no fee loan. Look at the Amerisave site for examples. They have the no point, no fees rates built in to some of their online rate tables. The trade off is paying a slightly higher rate. But every time rates drop you would be free to refinance as long as the loan doesn't have a prepayment penalty.