Posted on: 16th Dec, 2008 01:57 pm
our family currently has a 7-year arm that we are four years into. we are locked in at 4.875% but it will adjust in three years. the financial decision on whether we should refinance to a 30-year loan is very complicated and i was hoping you guys could help.
we don't know how long we will stay there but we have no plans to move. i'm not an expert on this but here is my pros/cons breakdown as far as i understand, any advice would be appreciated:
pros:
- lock in at a low rate now for the life of the loan
- no risk of a huge increase in house payments after three more years
cons:
- pay closing costs of $2500 (or whatever)
- pay a point ($2000) to lower the rate to 5.00%
- restart the amortization schedule over so will be paying down less principal than we are now'
- pay a higher rate for the next three years than we would have
what are your guys' thoughts? thanks!
we don't know how long we will stay there but we have no plans to move. i'm not an expert on this but here is my pros/cons breakdown as far as i understand, any advice would be appreciated:
pros:
- lock in at a low rate now for the life of the loan
- no risk of a huge increase in house payments after three more years
cons:
- pay closing costs of $2500 (or whatever)
- pay a point ($2000) to lower the rate to 5.00%
- restart the amortization schedule over so will be paying down less principal than we are now'
- pay a higher rate for the next three years than we would have
what are your guys' thoughts? thanks!
I would move on a 30 year today. Prices awfully low, probably won't stay around for that long.
Start mortgage process now. Do not lock yet.
Rates are at 5% and no points and probably a little better.
Find a lender who charges no points. When loan is porcessed and ready to close, a 15 day lock is a better rate than a 30 or 45 or 60 day lock. If rates drop, get better rate with zero points. If rates rise a little, pay up to 1 point to be at 4.875% or better. Once you have 30 fixed you have ease of mind forever. Never wonder for next 4 years if you could have refinanced or should have refinanced.
Rates are at 5% and no points and probably a little better.
Find a lender who charges no points. When loan is porcessed and ready to close, a 15 day lock is a better rate than a 30 or 45 or 60 day lock. If rates drop, get better rate with zero points. If rates rise a little, pay up to 1 point to be at 4.875% or better. Once you have 30 fixed you have ease of mind forever. Never wonder for next 4 years if you could have refinanced or should have refinanced.
Hi jasongross!
Welcome to forums!
As rates have lowered in the recent times, it would not be a bad option to refinance to a 30-year loan. But yes, you will have to bear with the pros and cons that you have mentioned in your post. JohnatAFC has given you sound information and I think you should follow it. Though you will have to pay a higher rate for the next three years, you will know the amount that you will have to keep aside for you mortgage payments every month. This will help you in maintaining your budget as well.
Feel free to ask if you have further queries.
Sussane
Welcome to forums!
As rates have lowered in the recent times, it would not be a bad option to refinance to a 30-year loan. But yes, you will have to bear with the pros and cons that you have mentioned in your post. JohnatAFC has given you sound information and I think you should follow it. Though you will have to pay a higher rate for the next three years, you will know the amount that you will have to keep aside for you mortgage payments every month. This will help you in maintaining your budget as well.
Feel free to ask if you have further queries.
Sussane
Hi JohnatAFC,
I have gone through your post and found it to be informative. You seem to be an experienced person in the field of mortgages. A lot of experienced lenders and mortgage experts are a part of this community. Why don't you join the community and be a part of it? You will have a great time participating here and interacting with the community professionals.
Hope to see you soon as a community member.
Thanks,
Brian Dela Cruz
I have gone through your post and found it to be informative. You seem to be an experienced person in the field of mortgages. A lot of experienced lenders and mortgage experts are a part of this community. Why don't you join the community and be a part of it? You will have a great time participating here and interacting with the community professionals.
Hope to see you soon as a community member.
Thanks,
Brian Dela Cruz
jason, with recent developments (see this morning's news), it would seem that refinancing now is going to afford you a favorable interest rate.
