Should I refinance?

[Anonymous]

My mortgage payment is $1500 a month, my interest rate is 8.55%

I purchase the house in April 2007 for $175,000.  I have $158,000 left on the loan.  I call my mortgage company and they told me If I refinance before march 2009  I will get a pre-payment penalty for $7000.

My mortgage is attach to libor, my credit score is around 630.

I was wondering should I take the hit with the $7000 and save money or should I wait for march 2009.

I have check the calculators online and I saw my payment might drop.  Please help any comments is appreciated.

[Anonymous]

will the new loan save you around $450/month?  That's what paying the penanlty will cost for the next 16 months.  So for 16 months if the new loan is $450 less then you will be breaking even when you factor in the prepayment.

[cthomeloans]

If you refinanced now, you may be able to get an interest rate of 6.5% and if you did, your P & I would be $1,042.91 on a loan of $165,000.  You have to way your options and decide what you would want to do.  This payment would not include your taxes and insurance.

[Anonymous]

It's a complex issue. You can refinance, but your scores are not so great as to guarantee you the best rate. You're also not at 80% LTV yet. You may again run into pre-payment penalties clauses, and it will cost you $7000, plus closing on a new loan.

My gut tells me (I've not run any numbers) to wait it out (Just be happy that you got started). Refinance in 2009, and keep deducting all that interest you pay. You've got 16 months to work on your score, and get to (or close to) 80% LTV. You'll make your savings then.