Personal Finance

anyone mind taking a crack at my refi situation?

  • Last Updated:
  • May 10th, 2010 10:03 pm
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Deal Addict
Feb 4, 2008
3132 posts
177 upvotes
I am sure that the calculations are correct but some of the logic may be flawed.

You talk about making a $9700 lump sum payment and use it in your comparisons. If you have that money available you should not add it to the balance for a refinanced comparison.

The other flaw is the assumption that the variable rate will not increase. I would love access to 1.95% for the next three or four years but that rate will increase. How much and how fast? No one knows for sure.

If you do decide to refinance see if you can get a hold of a chunk of cash to maximize your prepayment. If you are able to prepay 20% then that will reduce your penalty by 20%. Then simply refinance to your original mortgage amount and pay back the 20% you borrowed to make the lump sum payment.
www.mortgagecalculatortoolkit.com

Do your mortgage math correctly!
[OP]
Newbie
Jan 29, 2007
58 posts
So, just before the banks increased their 5-year fixed rates I was able to sneak in this gem of a deal:

CIBC 3% cash bank on a 380k loan effective rate is ~3.26%

OR

I am also offered prime - 0.6%

IRD is approx $4,785
(I am doubling up until my anniversary date in which I will put in my 20% lump sum payment and then break!)

I cannot decide which option to choose!
I am very comfortable with prime rate increasing, and plan to pay as if rates were about 5%. (will most likely pay $2500/month)

Any opinions/speculations will be extremely helpful. I feel as if I've read every single blog/article/post out there!
Deal Addict
Feb 4, 2008
3132 posts
177 upvotes
reddie wrote:
May 10th, 2010 7:28 pm
So, just before the banks increased their 5-year fixed rates I was able to sneak in this gem of a deal:

CIBC 3% cash bank on a 380k loan effective rate is ~3.26%

OR

I am also offered prime - 0.6%

IRD is approx $4,785
(I am doubling up until my anniversary date in which I will put in my 20% lump sum payment and then break!)

I cannot decide which option to choose!
I am very comfortable with prime rate increasing, and plan to pay as if rates were about 5%. (will most likely pay $2500/month)

Any opinions/speculations will be extremely helpful. I feel as if I've read every single blog/article/post out there!
In your situation comparing the fixed vs the variable is a toss up. That is really no help at all, but that is the way it is looking at the two different rates.

Where the variable does win though is the penalty for breaking the mortgage before the end of the term. It is my understanding that CIBC will claw back all of the cash back and you will be stuck with the three months interest penalty. With the variable you will only have three months interest.

If I were in your situation i would take the variable.
www.mortgagecalculatortoolkit.com

Do your mortgage math correctly!
[OP]
Newbie
Jan 29, 2007
58 posts
I am also worried about the claw back as I do not intend to keep the house for over 5 years. If i did take the CIBC, I would probably end up trying to rent out the house so that I wouldn't have to pay back the bonus!

thanks again for your help and being a great contributor to this forum!
[OP]
Newbie
Jan 29, 2007
58 posts
the equivalent rate was from a link i followed on another post

it was called "cashback analysis" on a google doc.

sorry i can't remember who created the page!

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