Illinois59 Posted December 18, 2008 Report Share Posted December 18, 2008 I am seeing where some banks are now offering 30 year fixed rates under 5%. Do we have any finance wizards in here that could shed some light on the do's and dont's of refinancing? I owe about half of what the house is worth and it sure seems like cheap money. My current rate is 6.25% Any advice would be greatly appreciated. Quote Link to comment Share on other sites More sharing options...
popgun Posted December 18, 2008 Report Share Posted December 18, 2008 Be very careful and research everything you can first. Maybe these links will help. http://www.federalreserve.gov/pubs/refinancings/default.htm#calculators http://zwicke.nber.org/refinance/index.py I think as a general rule the interest rate should be at least 2% lower than the original. There are a lot of factors involved that must be considered. ....popgun Quote Link to comment Share on other sites More sharing options...
rookieee Posted December 18, 2008 Report Share Posted December 18, 2008 hold of to the first quarter it will go under 5.75,if not under that check your equity line and at what fix rate. some banks are under 4.18 at this time hope that help Quote Link to comment Share on other sites More sharing options...
Randy Posted December 18, 2008 Report Share Posted December 18, 2008 I was always told if you can save 1%,....go for it!! Quote Link to comment Share on other sites More sharing options...
MCH Posted December 18, 2008 Report Share Posted December 18, 2008 (edited) Can't speak for other banks, but for us, there's really no "magic number". Re-fi's for lower interest rates are rare. When they do happen, it's normally after they discuss their options with the loan officer and decide that it is in their best interest. For us, at least, there aren't many fees associated with a re-fi of a loan we're already servicing. Now, if you're wanting to shop your mortgage, then you'll be looking at quite a bit of fees. One thing you might want to wait for is the new RESPA changes(Jan 2010, I believe). They will require banks to give you a Good Faith Estimate at application(normally within 3 days). The Good Faith Estimate will have a range of expected fees for you mortgage loan. The changes will also require banks to add additional items such as interest rate and proposed payment. If you don't want to wait, most banks are already working on becoming compliant with the new regulations. If you ask for a Good Faith at application, they may be able to supply you with one. Here's a sample one: Good Faith Estimate Good luck with whatever you decide. Since I do this for a living(at a small hometown bank), I'm here if you have additional questions....just PM me. Edited December 18, 2008 by MCH Quote Link to comment Share on other sites More sharing options...
Loomis1228 Posted December 18, 2008 Report Share Posted December 18, 2008 Can you re-fi for a shorter term (slightly higher interest rate) and keep around the same payment? The only way I would refinance would be to pay it off quicker. Quote Link to comment Share on other sites More sharing options...
popgun Posted December 18, 2008 Report Share Posted December 18, 2008 Can you re-fi for a shorter term (slightly higher interest rate) and keep around the same payment? The only way I would refinance would be to pay it off quicker. I don't see that this would be advantageous for you. It would be better to use your amortization schedule and whenever you can afford it, pay an extra principle payment. (That is your payment minus the interest.) If you do not have an amortization schedule, your loan institution will print one out for you either free or for a very small charge. You will still be paying your mortgage off early, with no refinancing fees or charges. ....popgun Quote Link to comment Share on other sites More sharing options...
stevebeilgard Posted December 18, 2008 Report Share Posted December 18, 2008 Can you re-fi for a shorter term (slightly higher interest rate) and keep around the same payment? The only way I would refinance would be to pay it off quicker. now you're talkin'. i'd wait a bit. i think you'll see 4 1/2% rates within 3 months. maybe much sooner. then, check out the points you have to pay, and see from there. finally, keep your payments the same and you may well be able to pay off a 30 year loan in 15-20 years. the timing is good, but better is to arrive soon. Quote Link to comment Share on other sites More sharing options...
popgun Posted December 18, 2008 Report Share Posted December 18, 2008 I don't know why exactly that I happened to look at your profile Loomis1228, but it says that your occupation is banking. Would you tell me what bank, so that I can move my money. I'd hate to think that someone is handling my money that is asking a question like this. How did you get into banking? Maybe your profile is needing an update. Are you really a professional pool player and you make bank shots? Just kidding. ....popgun Quote Link to comment Share on other sites More sharing options...
MCH Posted December 18, 2008 Report Share Posted December 18, 2008 the timing is good, but better is to arrive soon. It will arrive at almost the same rate as real estate prices are falling, though...so be careful. Oklahoma has been fairly sheltered from the economic woes, and even so, Oklahoma City has seen almost a 10% decline in appraised R/E. Couple that with most of the larger banks tightening their lending belts and timing may be a huge issue. Quote Link to comment Share on other sites More sharing options...
tectonic007 Posted January 20, 2009 Report Share Posted January 20, 2009 Yes you should. Right now banks are at around 5% near me. Talking to the banks, they are starting to raise interest rates again because they are getting overwhelmed with re-fi's and they are trying to slow things down. Its unlikely that rates will drop to below 5% anytime soon. And even if they do.......if it drops another point...you can always re-fi again. For my re-fi, I am keeping my payment the same, which means I can pay off my home in 10 years. With extra payments, I can cut it in half. Quote Link to comment Share on other sites More sharing options...
fly Posted January 20, 2009 Report Share Posted January 20, 2009 The bad thing about re-finance is that since you've been paying your mortgage you've been primarily paying the interest with a little principle. As the years pass you pay less interest each month and more principle. Refinance starts over with more interest again. However, if I could refinance a 30 year fixed from 6.25 to 4.75 I'd do it. You could likely do a 20 year for even less. Your monthly payment might be a little more, but you'll save money by paying it off sooner. Know one knows exactly what will happen with rates, but I'd say it's likely they will go even lower over the next few months. With the economy things are a bit strange, but historicaly in April/May rates start going up again. I'm not an economist, but have followed the interest rates quite a bit and re-financed a couple times. Quote Link to comment Share on other sites More sharing options...
WHISKEYSWAMP Posted January 20, 2009 Report Share Posted January 20, 2009 I'm currently in the process of refinancing... I have 16 years (original loan was 20 years) left on my mortgage with a fixed rate of 5.75%. I haven't locked in yet but my mortgage company will if the rate gets back down to 4.75% where it was a couple weeks ago... unfortunately I missed it then. The main reason I want to refinance is to add my equity line to the mortgage which includes land I bought in the UP, Michigan.. it has an adjustable rate. I will refinance for a 15 year loan and pay on a biweekly schedule which will allow me to pay the loan off in 13 years. Quote Link to comment Share on other sites More sharing options...
pendog Posted January 20, 2009 Report Share Posted January 20, 2009 I'm currently in the process of refinancing... I have 16 years (original loan was 20 years) left on my mortgage with a fixed rate of 5.75%. I haven't locked in yet but my mortgage company will if the rate gets back down to 4.75% where it was a couple weeks ago... unfortunately I missed it then. The main reason I want to refinance is to add my equity line to the mortgage which includes land I bought in the UP, Michigan.. it has an adjustable rate. I will refinance for a 15 year loan and pay on a biweekly schedule which will allow me to pay the loan off in 13 years. I got approved for the 5.75% as well, we look to pay it off in 6 years with the amitorization schedule. Basicly consolidating all our loans into one. We will be saving lotsa$$$$$ with this better rate. Quote Link to comment Share on other sites More sharing options...
c_lou Posted January 20, 2009 Report Share Posted January 20, 2009 We are currently going from a 5/1 ARM ammoritized to 30 years to a 15 year loan. We got a rate of 4.75%. Our payment is going to go up about $200, but we should be able to make the payoff in about 11 years. The only way I would re-fi right now is if I can go to a shorter term loan. Quote Link to comment Share on other sites More sharing options...
Recommended Posts
Join the conversation
You can post now and register later. If you have an account, sign in now to post with your account.