Where do you Refi in NH?

Question

Hey BP members,

I’m looking to refinance my personal home mortgage while the rates are so low. I have a few questions:

Am I better off going through the same lender that I got my mortgage through, or trying to shop around? (Or is that a bad look?)

Is it more worthwhile to save the extra money I’m saving from my PITI every month to add to my “investing fund”, or keep the same monthly payment and pay down my debt?

Thanks in advance!

Troy Zsofka · Answer

@Jon Proulx -

Shopping lenders for the best rate is definitely not something you should be hesitant to do. You are the customer, and they need to compete for your business.

As far as paying additional principal, it really depends on your situation. If you have nowhere else to put the money, then sure, buy yourself some equity. However, the amount of interest you will be saving is very small given the current rates. Preferably, you have something else in which to invest that money that gets you a greater return than the interest you're paying. Invest at, say 10%, borrow at 3%, make a 7% arbitrage. A good way to look at is that every additional dollar you pay towards your principal has just been invested at the rate of return of your mortgage interest rate. In other words, if you refinance into a 3% rate, then every extra dollar you put towards it is a dollar you are investing at 3%. Not super attractive, but certainly a risk-averse strategy...

Bob Bevis · Answer

@Jon Proulx Rates are crazy low so it's a great time for a refinance.  I've used a company called OwnUp on four different occasions for investment properties (all in NH) and I'm currently doing a refi on my home.  I used Tyler Stinson as my rep.  Their technology shops for the lowest rates from multiple providers.  I just got a 2.25 on a 15 year fixed.

As for your second question, it depends on your investment goals and individual situation.  Money is cheap so I'm using as much leverage as possible but also see value in paying down my home.  Best of luck.

Jon Proulx · Answer

@Bob Bevis - very interesting, I didn’t know that kind of service existed. I’ll definitely look into that.

@Troy Zsofka - I really like that way of looking at investing the remaining money, I never thought of it like that.

Great points from both of you, thanks for the advice.