Posted on: 28th Jan, 2008 08:48 am
I am looking to refi my mortgage, hopefully with my existing lender, and take some cash in hand. I live in Buffalo, NY and although we missed the housing explosion of the last 5 years or so, we also are missing the major bust right now as new home and existing home sales haven't dropped very much and housing values still are climbing, althought maybe at 2 percent a year, but the beats a loss.
Anyway, two weeks ago, mortgage rates with my lender for a 30 year were about 5.15, last week after the fed cut, they shot up to 5.5 and that's where they are now.
My credit score is about 710, and my wife's around 705. We'll shop if we have to but I'm, wondering if I should lock in a rate or float it with the expectation they may drop somewhat.
Anyway, two weeks ago, mortgage rates with my lender for a 30 year were about 5.15, last week after the fed cut, they shot up to 5.5 and that's where they are now.
My credit score is about 710, and my wife's around 705. We'll shop if we have to but I'm, wondering if I should lock in a rate or float it with the expectation they may drop somewhat.
this week you should shop.
a lot of companies will start reporting losses....and hopefully Countrywide will be one of them (tomorrow)
If they report the losses tomorrow..then the rates will drop..and you will need to lock a rate in this week. After that...nobody will know for a while
a lot of companies will start reporting losses....and hopefully Countrywide will be one of them (tomorrow)
If they report the losses tomorrow..then the rates will drop..and you will need to lock a rate in this week. After that...nobody will know for a while
Rates could always go up or down. I recommend, if you are comfortable with all the other terms and fees and payments, locking in. You can look at it a million different ways but if rates go up or down who cares as long as you get a good deal and are happy with the outcome. It is like you said about the housing market. Not long ago there was someone here unhappy about the price they paid for their house after others close by started selling for less. But when you think about it, 20-30 years from now, nobody will care and all the values will have gone up. Same thing with rates, you could wait forever, but the longer you wait the more you pay to the current lender as interest, instead of starting to pay down a new loan.
Rates could go up or down? Wow, earthshattering :) But seriously, the difference between 5.15 and 5.5 over the life of the loan is thousands, so it's not as nonchalant as "Well in 30 years all houses will have appreciated."
Thanks for the input. I hope to see rates at my lender drop and then lock in somewhere around 5.25. I forgot to mention that my current mortgage rate is 5.625 so even though I'd like to take cash out of the equity, I rally don't want to have a higher rate!
Thanks for the input. I hope to see rates at my lender drop and then lock in somewhere around 5.25. I forgot to mention that my current mortgage rate is 5.625 so even though I'd like to take cash out of the equity, I rally don't want to have a higher rate!
amazingly enough, none of us in the lending field have crystal balls so as to foretell the rates next week, or even next hour.
your sarcasm, jonas, is unwarranted. i agree with eric that rate-shopping isn't worth the trouble in general, and that if you find a deal with which you can be happy, you ought to take it.
kicking yourself after locking in because rates went down afterward is a useless and meaningless exercise. kicking the banker/lender because rates went down is downright idiotic.
if you are at 5.625% right now, it would seem rather meaningless to refinance unless you were going to be gathering loads of cash in the process or reducing your loan term (say, from 30 to 15 years) or saving quite a bit on the rate.
it is always painful when borrowers argue with their lenders about rates, when the forces that drive rates are so much out of the lenders' control.
your sarcasm, jonas, is unwarranted. i agree with eric that rate-shopping isn't worth the trouble in general, and that if you find a deal with which you can be happy, you ought to take it.
kicking yourself after locking in because rates went down afterward is a useless and meaningless exercise. kicking the banker/lender because rates went down is downright idiotic.
if you are at 5.625% right now, it would seem rather meaningless to refinance unless you were going to be gathering loads of cash in the process or reducing your loan term (say, from 30 to 15 years) or saving quite a bit on the rate.
it is always painful when borrowers argue with their lenders about rates, when the forces that drive rates are so much out of the lenders' control.
No George, it is OK! I understand the comments and I am going to address them.
In my area the average home price is $150,000. Now say the payment on that is $899.93 @ 6% for 30 years fixed.
Here is my example.
If you can get a rate of 5.5% your payment would be $851.68
If you can get a rate of 5.15% your payment would be $819.04
Thats a difference of $391.68 per year OR $11,750 over 30 years
Now here is where it gets interesting. For every month you wait. You pay $899.93 out and $750 is just for interest to the bank.
So you see what I am saying. Yes it will save you money to get a lower rate, that is obvious. But how long do you wait. If you think it will happen in weeks, obviously wait. But if it takes months, you are losing the potential savings anyway.
I have seen people wait 6 months for things to happen only to find out they lost a lot of potential anyway. Now if you plan on staying in a home for 30 years it could make sense in the long haul to wait it out. But if you are like the average and only stay 5 years or so then lets look at that math.
If you can get a rate of 5.5% your payment would be $851.68
If you can get a rate of 5.15% your payment would be $819.04
Thats a difference of $391.68 per year OR $1,958.40 over 5 years
So see in this example over 5 years it only takes less than 3 months to make it not worth waiting. You have lost the potential savings because of the interest you are paying on your current loan.
Let me know if you have any questions.
In my area the average home price is $150,000. Now say the payment on that is $899.93 @ 6% for 30 years fixed.
Here is my example.
If you can get a rate of 5.5% your payment would be $851.68
If you can get a rate of 5.15% your payment would be $819.04
Thats a difference of $391.68 per year OR $11,750 over 30 years
Now here is where it gets interesting. For every month you wait. You pay $899.93 out and $750 is just for interest to the bank.
So you see what I am saying. Yes it will save you money to get a lower rate, that is obvious. But how long do you wait. If you think it will happen in weeks, obviously wait. But if it takes months, you are losing the potential savings anyway.
I have seen people wait 6 months for things to happen only to find out they lost a lot of potential anyway. Now if you plan on staying in a home for 30 years it could make sense in the long haul to wait it out. But if you are like the average and only stay 5 years or so then lets look at that math.
If you can get a rate of 5.5% your payment would be $851.68
If you can get a rate of 5.15% your payment would be $819.04
Thats a difference of $391.68 per year OR $1,958.40 over 5 years
So see in this example over 5 years it only takes less than 3 months to make it not worth waiting. You have lost the potential savings because of the interest you are paying on your current loan.
Let me know if you have any questions.
We have seen day after day of drops in the stock market and in the bond prices.
Today we see a market gain.
Rates are becoming very unpredictable lately. When they should go down they drop slightly or stay stable but at the first opportunity to justify an increase they shoot up.
Those reports started coming out today and the market was up despite the loss at Countrywide.
I would expect rates to increase over the next 30 days as a result of the rate cuts, stimulous plans going into approval stages, and tax refunds infused into the economy.
I hope I am wrong though....
Today we see a market gain.
Rates are becoming very unpredictable lately. When they should go down they drop slightly or stay stable but at the first opportunity to justify an increase they shoot up.
Those reports started coming out today and the market was up despite the loss at Countrywide.
I would expect rates to increase over the next 30 days as a result of the rate cuts, stimulous plans going into approval stages, and tax refunds infused into the economy.
I hope I am wrong though....
I think people are unaware that rates are, just like the rest of our economy, based off what people are willing to pay and what investors are willing to invest at.
Rates are not controlled by 1 thing and are not cut and dry like most would like to believe.
It is hard for a regular customer to understand that rates not only change daily but can be lower at 9 am than they are at say 3 pm or vice versa.
People keep waiting for 2-3% rates... would you invest your money (if you where an investor) into a risking investment if you couldn't even get as high a return as you get on a CD?
Rates are not controlled by 1 thing and are not cut and dry like most would like to believe.
It is hard for a regular customer to understand that rates not only change daily but can be lower at 9 am than they are at say 3 pm or vice versa.
People keep waiting for 2-3% rates... would you invest your money (if you where an investor) into a risking investment if you couldn't even get as high a return as you get on a CD?
I don't understand FHA Interest Rates. I'm being told by my mortgage person that we're using for a refinance that FHA has their own interest rates??? And, currently they are higher than conventional loans. How do I find out those rates? Or do I have to trust a mortgage person. I've been taken to the cleaners and I have a problem trusting these guys.
Is it true that even if I have 20% equity in my home that I still have to pay FHA Mortgage Insurance?
Yes Holly......unless you are getting a 15 year mortgage......FHA rates typically run a tad higher than the best conventional rates......Fee free to bring your GFE here for us to look at.
While FHA rates are a bit higher then conventional rates on average that only holds true for ltv's less then 80-85% and only for well qualified customers.
As soon as you out of this range then FHA can be more beneficial because the mortgage insurance is lower and because FHA rates dont adjust due to lower credit scores or higher loan to value.
The best way is to compare the 2 loans side by side and see what is better for you. Also make sure that the broker you are dealing with is both licenced and experienced with FHA.
As soon as you out of this range then FHA can be more beneficial because the mortgage insurance is lower and because FHA rates dont adjust due to lower credit scores or higher loan to value.
The best way is to compare the 2 loans side by side and see what is better for you. Also make sure that the broker you are dealing with is both licenced and experienced with FHA.
In reference to the original discussion, "FED Cuts". It's nothing but a political game, exactly same the way they do with the gasoline price cuts. After the last FED cut on Tuesday, 24th of January the average interest rate was 5.375%, 3 days later they increased the average interest rate to 5.875% for a 30 Year fixed and now after the meeting they have dropped it by 0.5% to 5.5% on a 30 Year fixed. Guess what ? It's worsening again!
I might sound complaining but I'm dissapointed. :(
I might sound complaining but I'm dissapointed. :(
