wtnhunt Posted January 19, 2012 Report Share Posted January 19, 2012 Opportunity to convert our farm loan mortgage rate down again and thinking rates probably won't get any better than they are right now, but thought the same thing when we originally took our loan. Cost me a conversion fee(this time will be $350) to save quite a bit over the life of the loan. Talked to the bank yesterday and they are offering to convert down to a 3.75 fixed from our current 4.65 fixed on the balance of our 15 year note(we have about 30 months down), just wondering if the rates will go down any more than they are now, if I remember right we are allowed one conversion a year. Quote Link to comment Share on other sites More sharing options...
MCH Posted January 19, 2012 Report Share Posted January 19, 2012 From what I've heard, the Fed has all but promised that rates won't go up in 2012. That doesn't mean that they won't go down, but most experts are guessing that rates will stay the same throughout the year. From a personal perspective, I can't see how rates could go down further, so I would do the conversion. Although, I would ask to see all fees associated with the conversion and not just the conversion charge. Quote Link to comment Share on other sites More sharing options...
wtnhunt Posted January 19, 2012 Author Report Share Posted January 19, 2012 From what I've heard, the Fed has all but promised that rates won't go up in 2012. That doesn't mean that they won't go down, but most experts are guessing that rates will stay the same throughout the year. From a personal perspective, I can't see how rates could go down further, so I would do the conversion. Although, I would ask to see all fees associated with the conversion and not just the conversion charge. Thanks Kevin, I will be sure to ask her about any other fees. Original contract had the agreement that we could take advantage of conversions for the one time fees with no additional charges or fees. I converted once before and the fee was I think $300 then if I remember right, the banker who originally wrote our loan called me about a year after we took the loan and we took advantage of the lower rates then. I wrote a check and we signed the papers and it was a done deal, no hidden fees or charges that I am aware of. Bank is farm credit services, one of the few banks I found that would write a loan for us to build a log home. Lady I talked with wants to throw the $350 conv fee back into the loan but I would rather just pay it out of pocket again. Quote Link to comment Share on other sites More sharing options...
Mystery Hunter Posted January 19, 2012 Report Share Posted January 19, 2012 I think he is right also. Go ahead with the conversion as I do not see the rates going down this year. If the conversion is only a fee of 350.00 Pay it off also instead of putting it onto your balance. You would be paying a fee to have it added on, in the form of Interest! Anytime you have an option of paying cash for a service, do it rather than adding it onto your loan. A penny Saved is a Penny earned!! Thats why you are going with a smaller fixed rate in the first place. To save Money and get payments lowered or pay it off earlier! I am not sure what your balance is your paying or will convert to the lower rate but should save a lot more than that 350.00 fee. Quote Link to comment Share on other sites More sharing options...
LETMGROW Posted January 20, 2012 Report Share Posted January 20, 2012 (edited) Money is not cheap to buy. I'd run the numbers over the period of the outstanding balance and see what the total savings were. If you are only going to save $ 300 and it was going to cost $ 350 then I'd pass it up. The bank should be able to plot this schedule out for you. A savings is a savings. If the rates go down, and I don't see them doing this soon, you can review this again. The Farm Credit Service has a good reputation. Discuss this more with them, and good luck. Lynn I just went back and reread your post. Down .9 percent? This sounds like a good deal to me. Edited January 20, 2012 by LETMGROW Quote Link to comment Share on other sites More sharing options...
wtnhunt Posted January 20, 2012 Author Report Share Posted January 20, 2012 Money is not cheap to buy. I'd run the numbers over the period of the outstanding balance and see what the total savings were. If you are only going to save $ 300 and it was going to cost $ 350 then I'd pass it up. The bank should be able to plot this schedule out for you. A savings is a savings. If the rates go down, and I don't see them doing this soon, you can review this again. The Farm Credit Service has a good reputation. Discuss this more with them, and good luck. Lynn I just went back and reread your post. Down .9 percent? This sounds like a good deal to me. The $350 conversion fee would be recovered inside of a year, approximately 9 months. Between the first conversion which we paid for, a rate cut last year for all qualifying farm credit loan holders, and this conversion we are looking to cut the total interest we end up paying the bank by somewhere around 45 percent if my math is right. This conversion will save us around $5500 over the loan granted we do not pay it out early and it will also lower our payments a little each month. Only other thing I have considered with the current rate situation was a refinance loan, if we did a refinance we could drop our payments a bit more, but would be extending out 30 more months and end up paying more over the long run. Quote Link to comment Share on other sites More sharing options...
LETMGROW Posted January 20, 2012 Report Share Posted January 20, 2012 I'd spend $ 350 any day to save $ 5500. As far as the refinance, I guess you would have to crunch the numbers to see how it works out. Lynn 2 1/2 years relief without any payment might be a benefit to look forward to. P.S. Read my signature. Apply? Quote Link to comment Share on other sites More sharing options...
MCH Posted January 20, 2012 Report Share Posted January 20, 2012 Only other thing I have considered with the current rate situation was a refinance loan, if we did a refinance we could drop our payments a bit more, but would be extending out 30 more months and end up paying more over the long run. The only time I ever recommend to my customers that type of refinancing is if they are struggling financially. A few have good intentions and will tell me that they're going to refi but still pay the larger payment....that seldom holds true for the life of the loan. Quote Link to comment Share on other sites More sharing options...
stevebeilgard Posted January 21, 2012 Report Share Posted January 21, 2012 consider this, arti. refinance with the same monthly dollar amount, but reducing your years to repay by (x) amount of payments. i'd just go for it. in a few years, you'll be glad you did. and for all the following years. we haven't seen interest like this since the mid 1940's Quote Link to comment Share on other sites More sharing options...
fly Posted January 21, 2012 Report Share Posted January 21, 2012 Yes - do it, the fees are nothing compared to the savings over the long haul. Only way I'd say no is if you planned to sell in the next couple years. Can't see rates going much lower. My guess is they will go up in March when people start wanting to move as the weather gets nice. Quote Link to comment Share on other sites More sharing options...
Ravin R10 man Posted January 26, 2012 Report Share Posted January 26, 2012 Feds say they are keeping rates low into 2014 Quote Link to comment Share on other sites More sharing options...
wtnhunt Posted January 31, 2012 Author Report Share Posted January 31, 2012 Guess we shoulda waited a week or so, rates are down another .2 today from the conversion rate we took. Without doing the math guessing it would have knocked another $1200-1400 + off the total. Oh well, just the way it goes I guess. Quote Link to comment Share on other sites More sharing options...
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