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View Full Version : Financial gurus? The Feds just cut the rates again - do you refinance or wait?


Grumpy's Gal
01-22-2008, 10:03 AM
http://money.cnn.com/2008/01/22/news/economy/fed_rates/index.htm?cnn=yes

The feds just cut drastically. Some believe they will continue to cut........

At what point do you refinance? How long will it take for the banks to drop mortgage rates? Just curious......:confused3

sahm1000
01-22-2008, 10:27 AM
I was listening to the Today show yesterday and they said that interest rates (for morgages) are at their lowest since the summer of 2005. Their advice was to go ahead and refinance if your rate was higher.

I know the Fed just announced another drop today in rates but my understanding has always been that morgage rates drop/raise ahead of Fed announcements. The question is whether they will drop them further later on. I would also think since the housing market has slowed down the mortgage brokers might be getting a little hungry for some business and will possibly be getting even more competitive in the near future.

I hope this is the case since we are doing some home improvements and looking to refinance in the next month or so!

AnnaS
01-22-2008, 10:34 AM
We refinanced many, many years ago so things/formula might have changed now. If I remember correctly, we were told that if the current rate was 2% lower that your mortgate rate to refinance.

disneysteve
01-22-2008, 11:21 AM
I think it usually takes a month or two for the mortgage rates to catch up with the lower fed rates, so I'd wait if I could.

ICF
01-22-2008, 11:27 AM
We refinanced many, many years ago so things/formula might have changed now. If I remember correctly, we were told that if the current rate was 2% lower that your mortgate rate to refinance.


We did it about 5 years ago and was told it should be at least 1% lower. We're @ 5.375% now, so I doubt that we will refi again.

Toby'sFriend
01-22-2008, 12:24 PM
I think it depends on what type of mortgage you are refinancing from.
If you have an ARM and you can refi into a decent Fixed rate, I'd get out while the getting is tolerable within the next month or so in that situation.

If you are just looking to lower the rate on a fixed loan, I think usually you need at least a .5% to 1% drop from your current rate to justify the standard closing costs.

You also need to look at your remaining term vs what you are refinancing into. For instance, we've paid 8 years on a 30 year loan. We really wouldn't want to reset that to a new 30 years --- so we'll be looking at 15 year loan rates.

disneysteve
01-22-2008, 12:31 PM
You also need to look at your remaining term vs what you are refinancing into. For instance, we've paid 8 years on a 30 year loan. We really wouldn't want to reset that to a new 30 years --- so we'll be looking at 15 year loan rates.

This is our situation. We are 5 years into a 25-year loan, so I'm looking at 15 also. We could pay off our house and our home equity loan and still have a lower payment and shorten the term by 5 years.

madge
01-22-2008, 12:43 PM
deleted :)

suzydisney971
01-22-2008, 01:18 PM
Our mortgage broker just told me that she can get me a rate 1% lower than our current rate and reduce our loan to 30 years (we have a 40 year fixed loan). We bought the house in October 2007 (so have only paid 3 months into the loan). We would end up saving 10 years and $50 each month. But our closing costs would be almost $2000. So we aren't sure if we should wait or refi now. We would like to refi but coming up with an extra $2000 right now is a bit tight, not to mention with our luck the rates may come down even more. We are trying to put more money into our savings to use if need be when I'm on maternity leave in August. Our mortgage is our only outstanding debt. We also want to do some remodeling in April. So we aren't sure what to do. It's our first house so we are very inexperienced to all this financial stuff. WWYD?

scottygirl
01-22-2008, 01:47 PM
30 year fixed mortage rates are not tied to the fed funds rate. Here is a good article for you to read. HTH. http://finance.yahoo.com/loans/article/104264/Fed-Cut-What-It-Means-for-Your-Mortgage

tinaluis
01-22-2008, 02:09 PM
Our mortgage broker just told me that she can get me a rate 1% lower than our current rate and reduce our loan to 30 years (we have a 40 year fixed loan). We bought the house in October 2007 (so have only paid 3 months into the loan). We would end up saving 10 years and $50 each month. But our closing costs would be almost $2000. So we aren't sure if we should wait or refi now. We would like to refi but coming up with an extra $2000 right now is a bit tight, not to mention with our luck the rates may come down even more. We are trying to put more money into our savings to use if need be when I'm on maternity leave in August. Our mortgage is our only outstanding debt. We also want to do some remodeling in April. So we aren't sure what to do. It's our first house so we are very inexperienced to all this financial stuff. WWYD?

Contact your existing mortgage holder (not your broker) to see if they will do a no closing cost refi to keep your business. I've done that 2x with Wells Fargo and both times my out of pocket costs were very minimal.

suzydisney971
01-22-2008, 02:11 PM
Thanks. That did help. We have Wells Fargo too. My husband is home tomorrow, I'll have him call. Thanks alot. Just still wondering if we should refi or should we wait it out another month or so in case mortgages drop even lower. Not sure if we should take the chance now or wait. Anyone in the same predicament?

Banana magic
01-22-2008, 02:19 PM
We are in the process of refinance right now. We decided to take advantage of the 5.0 rate on a 15 year since we currently have a 4.875 rate on an adjustable that is due to adjust in 3 years. We locked in, then rate went to 4.875 the next day, so we relocked and are just going with that. We figured the rate is the same as we have now, but for a fixed 15 year instead of an adjustable. It did go down to 4.75, but now it is back to the 4.875 again. We were just debating if we should have waited or not in light of the latest news, but we are into it now, so we're taking what we have. Hopefully we won't kick ourselves for not waiting, but its a gamble either way.

madge
01-22-2008, 02:34 PM
Not sure if we should take the chance now or wait. Anyone in the same predicament?

we're not in exactly the same predicament, but similar in that we are looking at refinancing. LOL. Our loan isn't set to readjust for another 2 years - we have a 7 year ARM, and planned to sell the house before the loan adjusted. Due to several circumstances and fueled by the current market, we've decided to stay in this house and make it a home. When we started discussing our options a few weeks ago, we were just going to borrow a small portion of our equity, make the improvements, and refinance the whole thing as soon as we were finished with the remodel. I'm not sure that isn't still the best thing to do ... but, I'm definitely doing my homework first!

shelly3girls
01-22-2008, 03:26 PM
This is our situation. We are 5 years into a 25-year loan, so I'm looking at 15 also. We could pay off our house and our home equity loan and still have a lower payment and shorten the term by 5 years.

This is similar to our situation. We are 3 years into a 15 year mortgage but we have a HELOC from major renovations / addition needed to make our house even inhabitable. We can now refinance into a new 15 year combining the two saving over $300/month (and locking in the current floating rate on the HELOC). We will continue to pay the extra money and look to pay off the 15 in the same 12 we have now. Today we were quoted 4.875%. We have not decided if we will do it now or wait a little.

flakypuff
01-22-2008, 03:57 PM
My dH is a REAL ESTATE APPRAISER. There is something that no one has mentioned and I think it may be something you should know.
Yes, rates have gone down..great...maybe not.
As the market is trying to adjust the values have also gone down.
Some may find that they want to refi only to find the value of the house has gone down not leaving enough or any equity or leaving them owing more that the house is worth.
People are floored sometimes...my dh looks like the bad guy and feels so bad but it is the value..he doesnt control that.
just last week this very thing happened.
A nice young couple wanted to refin. They bought this beautiful home with min down only 3 years ago. They bought the house for 650,000. The dh changed jobs and is making a little less. The wife is a nurse expecting her first child and wants to cut back hours. they were hoping that the refi would free up some cash...not so.
The house value is approx. 580,000. The homes around them are priced for sale in the med 5's and have been on the market for 9 months...
The bad news is not only did the cost of the home drop but they dont even qualify for the mortgage they have now so they cant refin for the same amount because the income is lower and the value is lower..scared1:
sadly the people that will benifit the most from a refin are the ones who will have a tuff time being able to do it:sad2:

MKCP5
01-22-2008, 05:53 PM
we got 6.375 last spring on our 1st home. when can you refi the 1st time? What kind of rates are refi rates? The same as traditional or lower?

disneysteve
01-22-2008, 06:00 PM
we got 6.375 last spring on our 1st home. when can you refi the 1st time? What kind of rates are refi rates? The same as traditional or lower?

You can refi anytime as long as there is no pre-payment clause on your existing loan. Refi rates are the same as purchase rates.

OhMari
01-22-2008, 07:13 PM
You can refi anytime as long as there is no pre-payment clause on your existing loan. Refi rates are the same as purchase rates.


A good rule of thumb, is don't refinance unless you can drop at least .5 point.

We are at 7.25. I just talked to a mortgage broker today and he can get me a 30 yr at 5.75.
a 20 at 5.86
a 15 at 5%

We were always at at 15, but my dh got laid off 5 years ago, and to ease with payments we went to 30. We are now at 25 years. We will probably drop to a 20 year loan, but we are going to wait a bit, to see if they will drop anymore. It is just the beginning.

dvcgirl
01-22-2008, 07:27 PM
I think it usually takes a month or two for the mortgage rates to catch up with the lower fed rates, so I'd wait if I could.

Yep, and I'd wait a bit further anyway because the Fed isn't finished cutting rates. They're at 3.5% now and likely to end up somewhere between 2.5% and 3.0% before they're done.

dvcgirl
01-22-2008, 07:40 PM
The house value is approx. 580,000. The homes around them are priced for sale in the med 5's and have been on the market for 9 months...
The bad news is not only did the cost of the home drop but they dont even qualify for the mortgage they have now so they cant refin for the same amount because the income is lower and the value is lower..scared1:
sadly the people that will benifit the most from a refin are the ones who will have a tuff time being able to do it:sad2:


You're right, and just wanted to add that banks have tightened lending standards in general, so some folks who qualified for a loan a few years ago may not qualify for the same loan today based on new tougher lending practices.

Appraisals have gotten a whole lot more realistic too. Back when housing was going through the roof, in magical fashion, appraisals always came in at least at the contract price. We sold our home in NJ back in 2004 before moving to Orlando (now we're back in NJ), just as the real estate market was taking off. Put the house on the market for an insanely high price....double what we paid for the home just four years before....950K. We got immediate offers the first day and had a contract within three days for full-asking price. Well, we had positively no comps to justify our price....but back then it was a "pie in the sky" environment. There were housing in our town going for that much, but not within a distance that we could count them as a comp.

Still, the appraisal came back at 850K...100 grand less than the price. The sellers didn't try to re-negotiate, but their loan wouldn't go through. No problem...they got another appraiser to come out. That appraisal came in low too....870K. Still, loan won't go through, and based on the interest we had in the house, we don't budge on price. Well, another three appraisals later (five total), we got the appraisal we needed, they got the loan, and we sold the house.

flakypuff
01-22-2008, 09:54 PM
You're right, and just wanted to add that banks have tightened lending standards in general, so some folks who qualified for a loan a few years ago may not qualify for the same loan today based on new tougher lending practices.

Appraisals have gotten a whole lot more realistic too. Back when housing was going through the roof, in magical fashion, appraisals always came in at least at the contract price. We sold our home in NJ back in 2004 before moving to Orlando (now we're back in NJ), just as the real estate market was taking off. Put the house on the market for an insanely high price....double what we paid for the home just four years before....950K. We got immediate offers the first day and had a contract within three days for full-asking price. Well, we had positively no comps to justify our price....but back then it was a "pie in the sky" environment. There were housing in our town going for that much, but not within a distance that we could count them as a comp.

Still, the appraisal came back at 850K...100 grand less than the price. The sellers didn't try to re-negotiate, but their loan wouldn't go through. No problem...they got another appraiser to come out. That appraisal came in low too....870K. Still, loan won't go through, and based on the interest we had in the house, we don't budge on price. Well, another three appraisals later (five total), we got the appraisal we needed, they got the loan, and we sold the house.
Yup..sounds right. the banks are no longer aloud to give you (appraiser) the amount the holder needsso there will be a true value..:teacher:
A very good friend of our is another appraiser but in commerical..
This guy is self-employed(like my dh). In 1 year he went from making 100,000 year to 27,000. We knew things were tight with him but not just how tight until last week. His wife is a sahm due to a child that has special needs. Aparently, they used the cc to pay for oil, electric..just to live. American Express raised the interest to 30% on his business line of credit because he did not (could not) make full payment then charged him 75.00 late fee..we're talking a cc bill of 20,000..he begged amx to drop the fees as he couldnt pay his bills..nop they wouldnt help.:sad1: They told him to use one of the checks from his other cc to pay it off:sad2: He lost his insurance because it was 1700 a month and he wanted to put some food on the table...he applied for help and got turned down:scared1: because he is a corp he gets benifits...:sad2: poor poor guy. one year..just one year. His hot water tank broke last week and the oil man said he had to pay for the oil he owed (900)before he would install a new tank..then had to pay for the tank the same day..he had NO money or cc left to pay for one.. The bank will not refin his house because his income has dropped so much he does not qualify..thats when he confided in my dh. I am so worried.. my dh is also self employed:scared:
Sorry I got so OT guys..I guess i needed to vent. Thank you

CajunDixie
01-22-2008, 10:30 PM
We were thinking about doing a re-fi in the spring but may bump tdhat up a bit. The housing market hasn't really hurt us here as we are in an area of second homes. The lakers keep the property values up so we have quite a bit of equity in our house.

Reading flakypuff's post it reminds me of some of the poeple we have come into our office. People that have lost their jobs and refuse to lower themselves by taking a totally different job. Their excuse is they don't want to accept a job they are over qualified for but they will come in and ask the township to pay their utilitiy bills and rent/mortgage. And they'll go to the food pantry for food and household items. :confused3 Yet the grocery 3 blocks away is hiring. An appraiser, especially one that has no appraisals to do, could easily have gotten another temporary job to pay the bills. I printed out a job list today for a whole range of jobs and it was 18 pages long in a font size of 9 or 10. They guy was making $100,000 a year and maybe the cost of living there is quite a bit higher but it blows my mind when someone that has made that much money has nothing now....seriously where did it all go? Can they sell unneeded stuff on Ebay? If they have multiple autos maybe sell one? Cut internet and cable and extra phone services?

HenDuck
01-23-2008, 12:20 AM
We have 28 years on a 30 year mortgage at 5.625%.

My broker told me today he can get us a new 30 year mortgage at 4.875% (with points). That reduces our mortgage around $250/month.

But I waiting until he can offerme 4.625% or less. That will be the 1% decrease and $300/month less in payments.

I believe it will come down a bit more, so does my broker.

But if I already had the 4.625% offer, I'd probably go for it.

My philosophy is: if the economy is going to tank, I might as well benefit from it somewhere! We did the same thing during the last housing slump and it was a godsend.

PlutoPony
01-23-2008, 06:18 AM
One thing to consider when looking to refi is WHO to go with. Was checking rates with b&m banks this morning and ran across an article from yesterday on Wachovia Q4 earnings.... they're down 98% from what analysts predicted, because of write-downs from a mortgage company they bought a couple years ago. In the past, they've been one of the most conservative banks around until they started taking a little more risk to improve earnings, like many banks. OOPS! Not saying Wachovia isn't a stable bank or shouldn't be used now (they didn't lose money, are still paying their dividend, haven't been downgraded as a savings institution, they're just not as good a stock investment as before) -there are many many lending institutions in MUCH worse shape. But we do need to do more research to determine who to take loans from ...... Just something to keep in mind.

T. Lynn
01-23-2008, 06:27 AM
We refinanced in 2003 and dropped 2 points. We also did it because of the terms.

It was thru our same finance company (Wells Fargo), close at home (mailed paperwork to you and just had it notorized), could only refinance what you currently owed, no closing costs or fees. They were trying to keep their current customers because rates were dropping and people were going elsewhere.

We went from a 30 yr @ 7.5% (with 24 years remaining) to at 15 yr @ 5.625% and then no fees at all. We dropped almost 10 years off our loan from what we had left to what we went to.

It was great and we now have 10 years left. Couldn't beat that deal!!!

MKCP5
01-23-2008, 07:02 AM
We refinanced in 2003 and dropped 2 points. We also did it because of the terms.

It was thru our same finance company (Wells Fargo), close at home (mailed paperwork to you and just had it notorized), could only refinance what you currently owed, no closing costs or fees. They were trying to keep their current customers because rates were dropping and people were going elsewhere.

We went from a 30 yr @ 7.5% (with 24 years remaining) to at 15 yr @ 5.625% and then no fees at all. We dropped almost 10 years off our loan from what we had left to what we went to.

It was great and we now have 10 years left. Couldn't beat that deal!!!

Wow! That's amazing!! I will kep watching and waiting. Maybe we can change in a few months

MiNNiE2185
01-23-2008, 08:39 AM
Me and my husband bought a house in april of 2007. The house was 97,900 and our loan amount is 50,000 @ 8.25 for 30 years. We have to pay a penalty if it is paid off in 5 years or less and the interest rate is a fixed rate..Since we bought the house, me and the hub both got better paying jobs, so right now our mortage (with escrow) is under 800.00...would a refi even help?? I am unsure if we should consider a refi...would we have to pay that penalty, or is our loan even enough to be considered for a refi...What should we do?

EthansMom
01-23-2008, 08:41 AM
It's a little more difficult to decide for us. We are 3.5 years into a 7/1 ARM at 4.5%. So, we still have 3.5 years left at 4.5%. But, if rates drop to 5% with no points, it might make some sense for us to refi, especially as we think we'll be in this house for longer than 3 or 4 years. (At the time we bought the house, 3 years was long term for us. Now, we're looking a bit more down the road.)

leight
01-23-2008, 10:05 AM
we're in a different situation. We waited to make our first purchase until this year and are starting to look now. Should we wait to get preapproved again until the mortgage rates have been dropped or does that matter? Last year we were approved for $230k and our credit has improved since then and dh is now full time vs part time so our income is up 15k. I am looking at homes in the 220k-250k range but am really looking to get a $230k loan- will keep our payments within $100 of our current rent.

Thanks!

If U Had Wings
01-23-2008, 10:39 AM
Wow, I really need to start paying more attention to rates. I bought my place back in 2000 before the market started going nutty in my neighborhood. Even now condos the same size as mine in my complex are selling for $90-$100,000 more than what I bought for. Crazy.

I didn't realize the rates are as low as they are. My rate is currently 8.5%. It may be well worth it for me to look into refinancing, especially as my property value have been going up as well. My only problem at this moment would be the cash for closing costs. How much do they normally run?

shelly3girls
01-23-2008, 11:10 AM
Wow, I really need to start paying more attention to rates. I bought my place back in 2000 before the market started going nutty in my neighborhood. Even now condos the same size as mine in my complex are selling for $90-$100,000 more than what I bought for. Crazy.

I didn't realize the rates are as low as they are. My rate is currently 8.5%. It may be well worth it for me to look into refinancing, especially as my property value have been going up as well. My only problem at this moment would be the cash for closing costs. How much do they normally run?

Given that a new rate could possibly be significantly lower than your current rate (depending on your credit) it may benefit you to refinance and include the costs in the new mortgage. You would be mortgaging a slightly larger amount but if you dropped your rate 2.5% you may still save a large amount.

chris1gill
01-23-2008, 12:46 PM
we got 6.375 last spring on our 1st home. when can you refi the 1st time? What kind of rates are refi rates? The same as traditional or lower?

I just looked and a 30 year fixed is at 5.5% & the 20 year fixed is at 5.125% at penfed.com which is where we have our mortgage.. we just got the mortgage two months ago & now our closing costs would be the same if we refinanced, and maybe more they told me :confused3 The problem is, it's not a house we want to keep, but due to the market, we might have to because I'm not selling it for less than 5 when it was worth more than 7 just two years ago. The appraisal two months ago was at 575, so we are more than comfortable with our amount of equity in the home.... but still I'm debating this in my own head, say we don't sell for 3 years or more? obviously refinancing might have been the better option, but say we sell almost immediately which is certainly possible... I just don't know what to do.... But back to your question, I'd refinance from that 6.375 rate right now, today...

suzydisney971
01-23-2008, 12:53 PM
We have a loan of $217,000 and have 39 years left (took a 40 year for lower payments and we just bought the house in October) and our rate is 6.875%. Our broker is now offering me 5.875% on a 30 year which is good but I'm hoping that it will come down a little bit more. I think I'm going to wait a little while longer. Every month I send in an extra $100 towards the principal so at the end of the year, it will be an additional 1200 off principal so I'll be able to pay it off before the 40 years and I'm also putting extra aside in an envelope in case we have a tough month (I'll be taking maternity leave in August unless something happens and I have take leave sooner and it won't be paid so we'll have the mortgage payment set aside for at least one month

chris1gill
01-23-2008, 01:13 PM
We have a loan of $217,000 and have 39 years left (took a 40 year for lower payments and we just bought the house in October) and our rate is 6.875%. Our broker is now offering me 5.875% on a 30 year which is good but I'm hoping that it will come down a little bit more. I think I'm going to wait a little while longer. Every month I send in an extra $100 towards the principal so at the end of the year, it will be an additional 1200 off principal so I'll be able to pay it off before the 40 years and I'm also putting extra aside in an envelope in case we have a tough month (I'll be taking maternity leave in August unless something happens and I have take leave sooner and it won't be paid so we'll have the mortgage payment set aside for at least one month

Our lender is Pentagon Federal credit union penfed.com & they are offering 5.5% today, the rate dropped at noontime....

To the person with an 8.5% rate, if you can qualify to refinance, I wouldn't give it a second thought....

disneysteve
01-23-2008, 01:20 PM
We have a loan of $217,000 and have 39 years left (took a 40 year for lower payments and we just bought the house in October) and our rate is 6.875%. Our broker is now offering me 5.875% on a 30 year which is good but I'm hoping that it will come down a little bit more.

Every month I send in an extra $100 towards the principal

(I'll be taking maternity leave in August unless something happens and I have take leave sooner and it won't be paid so we'll have the mortgage payment set aside for at least one month
I agree on waiting. You should definitely do better than 5.875%, especially in a month or two as rates fall farther.

As for prepaying, that's a whole different debate. I'm generally opposed to it because it generally isn't a good return on your money, though in your case, at 6.875%, it isn't so bad. Even so, if you expect to refinance (as you should) and anticipate a period of unpaid leave in the near future, it might be better to stop the extra payments for now and build up your cash reserve.

Julia M
01-23-2008, 01:55 PM
A couple of questions....

when estimating a monthly payment, do you use the APR or "rate"?

We currently owe another 9 years (almost exactly 9, we started in Jan) and pay $2333 per month (6.375 rate). AT our current payments for nine more years, we owe about 250K

I am thinking if we can get a refi on the approximately 180K we owe, at about 5% for 10 years, we can lower our payment to about $1700 per month, and even with paying an additional year, we'd save about 40K.

DD is currently in 7th grade. In July 2009, we'll want to pay her high school tuition in a lump sum. THat will add alot to our budget. (We already pay one high school tuition!) Having a lower mortgage would be nice!

Julia

Minnie824
01-23-2008, 03:14 PM
We've never done a refinance...could someone explain the closing costs? I looked online and we can change from a 30 yr to a 15 yr for only $100 more a month and I want to do this, but the estimated closing costs are over $4000, including a required advance? What the heck is that about? It seems like a lot of fees/costs.

suzydisney971
01-23-2008, 03:51 PM
I agree on waiting. You should definitely do better than 5.875%, especially in a month or two as rates fall farther.

As for prepaying, that's a whole different debate. I'm generally opposed to it because it generally isn't a good return on your money, though in your case, at 6.875%, it isn't so bad. Even so, if you expect to refinance (as you should) and anticipate a period of unpaid leave in the near future, it might be better to stop the extra payments for now and build up your cash reserve.



I do add to my savings account every pay period (every 2 weeks) so we have money put away for an emergency. It's about 1/3 of my yearly salary so we would be ok for a couple of months especially since I'm also putting money aside for a mortgage payment during the month I'm off. (The baby is supposed to be born August 10th so I'll get paid before I go on leave and the mortgage is due on the first, so I won't worry about August but plan on paying September with the money I'm putting aside now and my DH will continue to work so that will pay for other bills)

disneysteve
01-23-2008, 07:30 PM
The baby is supposed to be born August

That's great. He/she will share a birthday with none other than ME!:upsidedow

crisi
01-23-2008, 07:39 PM
As for prepaying, that's a whole different debate. I'm generally opposed to it because it generally isn't a good return on your money, though in your case, at 6.875%, it isn't so bad. Even so, if you expect to refinance (as you should) and anticipate a period of unpaid leave in the near future, it might be better to stop the extra payments for now and build up your cash reserve.

We paid ours off almost 2 years ago - had a 6.25% adjustable that was going to go up this year - maybe last year - can't remember. But I wanted to get out from under the adjustable.

But if interest rates drop as low as some people are thinking, we may take out a mortgage for about a third of our home value and throw it into short term CDs, repay the mortgage, and wait for the inevitable rate hike to make more on conservative investments than we pay in mortgage interest.

firsttimer2007
01-23-2008, 10:01 PM
We just got 4.64% on a 15 year fixed

strasfamily
01-23-2008, 10:28 PM
They did a segment this morning on our local news on who should refinance. They stated that the typical closing costs are $2500. Subtract the difference in savings with the new interest rate versus the old interest rate, and then divide that number into the $2500. This will give you the amount of months it will take you to recoup the closing costs. If you know that you will be in your house for longer than that figure, than refinancing will make sense.

Disneyoverload42
01-23-2008, 10:42 PM
Call your mortgage holder - some loans can qualify for "streamlined" refinancing with very little paperwork & very little closing costs. I think FHA & VA loans do as long as you've never been late on a payment. I just got something from our mortgage company yesterday about it. You can also roll the closing costs into the loan (though I personally wouldn't recommend that but to each their own). Also see what closing costs you can "discount" like title insurance if you get it through the original title insurer can usually be gotten cheaply.

Muushka
01-24-2008, 07:43 AM
If anyone has Citi Mortgage

Bolded it because this was such a great deal. 3 years ago they dropped us from 6.125 to 5.875 with no closing cost. I received that notification in the mail.

2 weeks ago I was on their site in my stuff and there was a note there that we could refinance down to 5.375 for no closing costs again. By the time I got them on the phone (4 days later-they were pretty busy) it was lowered to 5.25%.

Bottom line, if you have Citi Mortgage, check the internet for your account. There might be a nice surprise waiting for you!

T. Lynn
01-24-2008, 08:33 AM
I would be hard for me to refinance again. I have 10 years left and I wouldn't want to revert back to a 15 year loan.

tinaluis
01-24-2008, 09:10 AM
I would be hard for me to refinance again. I have 10 years left and I wouldn't want to revert back to a 15 year loan.


You can get a 10 year loan on a refinance. We did the last time we refinanced in 2004 through Wells Fargo. Most banks don't list their 10 year mortgage rates, you may have to call to ask what the rates are. Our rate in 2004 was 4.875%.

dvcgirl
01-24-2008, 09:30 AM
We paid ours off almost 2 years ago - had a 6.25% adjustable that was going to go up this year - maybe last year - can't remember. But I wanted to get out from under the adjustable.

But if interest rates drop as low as some people are thinking, we may take out a mortgage for about a third of our home value and throw it into short term CDs, repay the mortgage, and wait for the inevitable rate hike to make more on conservative investments than we pay in mortgage interest.

Interesting strategy. I'm reading that they'll go as low as 2.5%....but we'll have to see. It's interesting watching the Europeans. Their markets tanked and so far their central bank hasn't caved to the markets like ours has. Apparently the German bankers in particular are incredibly fearful of inflation. Their fathers and grandfathers told them tales hyper-inflation following WWI. They needed a wheel barrel full of money in order to buy one loaf of bread. Our fed is more sensitive to memories of the market crash of 29.

Ultimately though, rates are going to have to go up.....

T. Lynn
01-24-2008, 09:30 AM
You can get a 10 year loan on a refinance. We did the last time we refinanced in 2004 through Wells Fargo. Most banks don't list their 10 year mortgage rates, you may have to call to ask what the rates are. Our rate in 2004 was 4.875%.

Thanks for the information. I did call Wells Fargo since that's who we have our loan through. The lowest fixed term loan is a 15 year. If we went to a 10 year, it would be an ARM loan.

TheRatPack
01-24-2008, 12:02 PM
We are currently at 6.375 and we are fixed for 30 years (almost in the house for 2 of that 30). We wanted to refinance to a 15 at a lower interest rate but the lowest they could give us yesterday was 5.5%. Not even 1 full % rate drop :( We figured we'd hold off. If rates go up...we'll just pay more on the mortgage and still come out around 15 years. If the rates drop...we'll refinance when they are a full % less to justify closing cost...etc.

It actually makes our payments go up a bit, where as when we did this with our first home about 10 years ago we dropped enough that our payment was lower...that was nice :)