What questions should I ask a mortgage broker when refinancing a condo in Wisconsin?
Its a huuuuuuuuuuuge topic, and to answer your question in full will require a book, with a small booklet of legal advice attached to it. I'm not going to write it here, but I'll give you some very specific points to start your research with: ARM/Baloon - big NO NO. Don't touch that. Get rid of those you have any way you can, and then never ever do it again. That's the kind of crap that got us into the housing bubble mess to begin with. Especially with the rates as low as now, the only future with ARM/Baloon is that you're going to pay more, way more, than your initial period payments. Rates - the rates now are very low. They were even lower 12-24 months ago, but are still extremely low. Make sure you get a fixed rate loan, in order to lock these rates in for the remainder of the loan. Any ARM loan will have higher rates in the future. So go with FIXED RATE. Period - fixed rate loans are given for periods up to 30 years. The shorter the period, the lower the rate. However, at the level they're now, you're practically getting money for free (the APR is comparable to the inflation) even for 30 yr/fixed loans. PMI - private mortgage insurance - since you don't have much equity, the lender is likely to require you paying PMI. This is a significant amount of money you pay until you have at least 20% equity. It changes from lender to lender, so shop around and compare. Government assistance - that's what the broker was referring to. There were programs allowing people refinance even under-water mortgages. Check what programs are still available in your area. Some banks will not refinance with less than 20% equity, but some government assistance programs may help you get a loan even if you don't have enough equity. Closing fees and points - that's the money out of your pocket. Shop around, these vary wildly. Generally, Credit Unions, being non-profits, are cheaper on this item specifically, while comparable to big banks on everything else.
Check with you local bank where you have an account. Sometimes they can offer a discount that results in a good rate.  I just refinanced a month ago with Bank Of America and their rates were very competitive.  What set them aside from the rest was their low closing fees. Otherwise I would shop around on bankrate.com and it will show you results of both local and online mortgage brokers.  It will list the rates and expected fees.  The also list an average national rate so you can compare the rate you are considering and see if there could be a better deal elsewhere. It would help if we had numbers to walk you through the analysis. Current balance, rate, remaining term, and the new mortgage details.  To echo and elaborate on part of Ben's response, the most important thing is to not confuse cash flow with savings. If you have 15 years to go, and refinance to 30 years, at the rate rate, your payment drops by 1/3. Yet your rate is identical in this example.  The correct method is to take the new rate, plug it into a mortgage calculator or spreadsheet using the remaining months on the current mortgage, and see the change in payment. This savings is what you should divide into closing costs to calculate the breakeven. It's up to you whether to adjust your payments to keep the term the same after you close.  With respect to keshlam, rules of thumb often fail. There are mortgages that build the closing costs into the rate. Not the amount loaned, the rate. This means that as rates dropped, moving from 5.25% to 5% made sense even though with closing costs there were 4.5% mortgages out there. Because rates were still falling, and I finally moved to a 3.5% loan. At the time I was serial refinancing, the bank said I could return to them after a year if rates were still lower. In my opinion, we are at a bottom, and the biggest question you need to answer is whether you'll remain in the house past your own breakeven time. Last - with personal finance focusing on personal, the analysis shouldn't ignore the rest of your balance sheet. Say you are paying $1500/mo with 15 years to go. Your budget is tight enough that you've chosen not to deposit to your 401(k). (assuming you are in the US or country with pretax retirement account options) In this case, holding rates constant, a shift to 30 years frees up about $500/mo. In a matched 401(k), your $6000/yr is doubled to $12K/year.  Of course, if the money would just go in the market unmatched, members here would correctly admonish me for suggesting a dangerous game, in effect borrowing via mortgage to invest in the market. The matched funds, however are tough to argue against. "The issues of trading with unsettled funds are usually restricted to cash accounts.  With margin, I've never personally heard of a rule that will catch you in this scenario.  You won't be able to withdraw funds that are tied up in unsettled positions until the positions settle.  You should be able to trade those funds.  I've never heard of a broker charging margin interest on unsettled funds, but that doesn't mean there isn't a broker somewhere that does. Brokers are allowed to impose their own restrictions, however, since margin is basically offering you a line of credit.  You should check to see if your broker has more restrictive rules. I'd guess that you may have heard about restrictions that apply to cash accounts and think they may also apply to margin accounts.  If that's the case and you want to learn more about the rules generally, try searching for these terms: You should be able to find a lot of clear resources on those terms.  Here's one that's current and provides examples: https://www.fidelity.com/learning-center/trading-investing/trading/avoiding-cash-trading-violations On a margin account you avoid these issue because the margin (essentially a loan from your broker) provides a cushion / additional funds that avoid the issues.  It is possible that if you over-extend yourself that you'll get a ""margin call,"" but that seems to be different than what you're asking and maybe worth a new question if you want to know about that." There's several different trade-offs wrapped up in your question. In general, refinancing a mortgage to a lower interest rate makes sense if you are certain you'll be living in the house for N years.  N depends on your closing costs and points.  Basically you need to calculate the break-even point for when the savings from the reduced interest rate exceeds the cost of the re-fi.  When I refinanced, the broker did the calculations for me for a range of options, maybe yours could as well. The trade off in selecting 30-year vs. 15-year is between monthly payment and total outlay.  A 15-year mortgage will have a higher monthly payment, but the total money that is paid out the bank (rather than to your equity) will be less. Using the Heloc to do the down payment seems sketchy; plus then you have two loan payments you're making each month.  Why not keep it simple and look for a $250k loan with 5% down?  Presumably with the current mortgage you already put in a good down payment, and have built some equity up. yes, i am incorporating monte carlo return scenarios for both equity and real estate.  yeah there is a lot to consider in the case of the property being a condo where you have to account for property taxes as well as condo fees.   the two projects have entirely different considerations and it's not like the money that is injected to one is similar to the other (very different) which is why i figured there should be differing discount rates.  in any case, thanks for the discussion and suggestions. "We payed off our Mortgage early...at first in small extra payments to principal, and finally a lump sum.  Each extra payment to principal reduced the balance, and reduced every payment going forward.  I have, somewhere, an excel spreadsheet where I tracked this...  - =CUMIPMT((interestRate/12),term,pymtNumber,balance,balance,0) computed the interest payment due  - =currentPrincipal + CUMIPRINTresultAbove computed the monthly principal payment Occasionally I would update the month-ending Principal balance against what the mortgage company told me.  It was usually off by a little.   My mortgage company required me to specifically contact them for a payoff amount before I wrote the final check.   I've never heard of a mortgage where prepayment of all expected interest following the original schedule is required.  I would guess it is against federal (US) law.  Lets think about that for a moment...  out of ""interest"", I recently computed that for our 30 year loan at 6-5/8% on about 145, we payed a total of 106000 in interest.  That include a refi to 4-7/8 10-years in to a 15-year loan, and paying it off 20 years after the original loan was granted. As far as not paying all the theoretical interest due...  - If they get a fixed dollar amount of service interest back, there's no incentive to me to pay on-time.  I owe the same amount if I pay it today or if I pay it 6 months late, after I gambled the mortgage money and finally won.  (yea, I know they could write the mortgage to penalize me for paying late, but I'm ignoring that)  - if you were requried to pay off all the interest that might accrue, how could you ever sell your home, or refinance, for that matter?  When I refi'd, the new holder payed the old holder 98,000.  If the original holder had required prepayment of all the interest that would be accrued to the original schedule, the new mortgage would've been 200k.  It would just never be a good deal to buy a home if mortgages worked under that term. I have had a car loan that worked differently -- they pre-computed the total interest due and then divided it over the term of the loan equally.  I could pay off early and they stopped collecting interest." Do you know how SoFi's business model works? They're usually pretty conservative with their loans and refinancing. But I guess if they were looking to expand into riskier loans then it sounds like they've got some red tape that'd hold them back. Thank you for the explanation, much appreciated. I am a real estate agent. I know you are in Canada, but will let you know that in the US, agents are not to supposed to offer this kind of advice. They can refer you to a bank or mortgage broker, but should not be giving this type of financial advice.  That said, it's a HELOC, it would be rare for your bank to be willing to just add to your mortgage at the current low rate. Still, ask the bank holding your loan.  Is the second home to rent out or a vacation/summer home for you to live in?