Houston Mortgage Refinance: 4.125% 30 fixed, or 4.375% refinance?

Another Houston Texas Refinance Story: 

Today is Tuesday, July 29.

Here’s another pretty typical refinance deal.   My client has perfect credit, stable job…you know the drill.   740+ credit.  He could go anywhere to get his loan and I’m glad he called me.  But he’s more interestd in the ”getting the lowest rate.”

 His home is with 300K and he wants to refinance his 241K loan amount.   And just like everybody he wants the lowest possible 30 year fixed rate because he current has a 5.75%.   

Here are the numbers:

241K loan amount, Today’s real rate:  4.375% (THIS IS THE NO POINT RATE) his payment is $1208

Or he can chase the rates and buy the rate down with .78 of a point and get a 4.125%.   Which rate would you want?  A 4.125% fixed rate or a 4.375%.  

Again, numbers don’t lie so if he went with the 4.125% his payment would be $1172.

When you think “rate” the 4.125% is clearly the best choice but when you go a little deeper and just do some basic match you punch $1208-$1172 into your home’s calculator and press enter:   $36.

$36.  Yeah, I know.  Is that all?

So if he paid points on his refinance he’ll save a whopping $36 but remember the point will cost him $1887 in fees.   I wonder how long it will take him to “pay for this point”?   

 How long will it take to pay for the sexy rate?

After all the point is an investment–he’s gunna have to pay higher fees upfront in order to get that lower mortgage rate.

Back to the black calculator:   $1887/$36 savings = 52.41.   Okay, so now we know it’s gunna take nearly 53 months to pay for this sexy rate.  That’s almost 4.5 years!  Is it worth it to pay higher lender fees to refinance?  You decide. 

Imagine doing a loan today and putting your kids thru college and part of a master’s program (5 years) and THEN you start to benefit from this loan.  See whatta mean?

My suggestion is to simply look at the numbers and have clear financial goals.  The clearer your financial goals the easier it is to see what loan (if any) makes the most sense.

When you think “rate” you almost always get a loan that makes you feel good psychologically.
If you think “numbers” you almost always get a loan that makes you feel good financially.    

And Remember, as a rule, www.Mylendingplace.com doesn’t charge points when doing loans or refi’s  but if you want to buy the rate down 1-2-3-4 points.  Just let us know.  It’s your loan!  We would love to help you. We help people all over Texas buy or refinance.  

And if you want to buy a home and avoid PMI we offer 95% NO PMI purchase mortgages.
If you’d like more information regarding a Texas refinance or a home equity loan please call us at 512-996-8194

Austin Refinance | Dallas Refinance | Houston Refinance | El Paso Refinance

Texas FHA VA Mortgage Rates