Posted on: 02nd Mar, 2011 07:34 pm
I took out a 30 year fixed rate loan for 310,000 about six years ago. I have $282,000 left to pay over 23 years and nine months. My mortgage lender recently wrote to me asking whether I wanted to reduce the term to 20 years and the fixed rate to 5%. They estimate that my monthly payment will go up by $41. Sounds like a good deal but am I missing something?
Should have said that the rate I pay now is 5.75%
no, it's not a good deal at all. at that loan amount you can currently refinance to a 20 (or 30) year fixed with no fees at 4.875% (4.875% apr).
yes a refinance would benefit you in this case, but the offer you received is not the best out there. i would actually suggest you look into a lower rate, possibly paying a small fee at closing or including it in principal and reducing your monthly payment while still shortening the term and saving you interest in the long term.
find a good loan officer in your state to assist you.
yes a refinance would benefit you in this case, but the offer you received is not the best out there. i would actually suggest you look into a lower rate, possibly paying a small fee at closing or including it in principal and reducing your monthly payment while still shortening the term and saving you interest in the long term.
find a good loan officer in your state to assist you.
Alec, it is impossible to say that the 5% rate for a 20 year fixed rate is a good or bad deal in your case and that you could get a 4.875% fixed rate with no fees without more information.
One main factor would be your credit scores. For example, at a middle score of 680, then 5.00% for a low cost or "no cost" 20 year fixed rate loan might be about right. With a top credit score of 740 or higher, then you would qualify for perhaps 4.875% or maybe even 4.750%, depending on the lender. Keep in mind that interest rates are very volatile at the moment, so what you are quoted today may not be available tomorrow.
Bottom line even at 5.00% for a 20 year fixed rate loan, especially with little or no closing fees, it would still be a good deal compared to the 30 year 5.75% rate that you currently have.
One main factor would be your credit scores. For example, at a middle score of 680, then 5.00% for a low cost or "no cost" 20 year fixed rate loan might be about right. With a top credit score of 740 or higher, then you would qualify for perhaps 4.875% or maybe even 4.750%, depending on the lender. Keep in mind that interest rates are very volatile at the moment, so what you are quoted today may not be available tomorrow.
Bottom line even at 5.00% for a 20 year fixed rate loan, especially with little or no closing fees, it would still be a good deal compared to the 30 year 5.75% rate that you currently have.
"Alec, it is impossible to say that the 5% rate for a 20 year fixed rate is a good or bad deal in your case and that you could get a 4.875% fixed rate with no fees without more information. "
I can say it without question that as of 3/2/2011 a 20 year at 5%, even with max pricing adjustments would still be too much for a 310K loan amount. If your credit score is too low, you would simply not be approved and rate would be a non issue. If you qualify for a conventional mortgage based on conforming criteria, even with a 620 score 5% is too much.
I can say it without question that as of 3/2/2011 a 20 year at 5%, even with max pricing adjustments would still be too much for a 310K loan amount. If your credit score is too low, you would simply not be approved and rate would be a non issue. If you qualify for a conventional mortgage based on conforming criteria, even with a 620 score 5% is too much.
Gregorio, I suggest you find a new vocation as you obviously are clueless when it comes to the mortgage business.
My example was a 680 credit score which as of today there are lenders that would offer a 5% 20 year fixed rate loan with little or no closing costs. With a credit score of 740 or higher the rate with the same fees would come down. Plain and simple. If there is a lender who will provide someone who has a 620 score a 20 year fixed rate mortgage under 5% with little or no out of pocket closing costs, please provide a name rather than saying 5% is too much. Again, this is a bogus claim which is par for the course with you.
Where you get your information and numbers from I have no idea. All I can say is none of the posts I have read from you make any sense and I would advise anyone reading them to proceed with caution before following your advice.
Also I am not sure if it is the website policy to allow anyone to blatantly promote their business online as you are doing with your Get Quote link. Based on your responses you would not be someone I would want to consider doing business with. I'm sure there are others that feel the same way. Hopefully people can be forewarned about you before making what could amount to a serious financial mistake. Rest assured, whenever I can, I will do my best to prevent that from happening.
My example was a 680 credit score which as of today there are lenders that would offer a 5% 20 year fixed rate loan with little or no closing costs. With a credit score of 740 or higher the rate with the same fees would come down. Plain and simple. If there is a lender who will provide someone who has a 620 score a 20 year fixed rate mortgage under 5% with little or no out of pocket closing costs, please provide a name rather than saying 5% is too much. Again, this is a bogus claim which is par for the course with you.
Where you get your information and numbers from I have no idea. All I can say is none of the posts I have read from you make any sense and I would advise anyone reading them to proceed with caution before following your advice.
Also I am not sure if it is the website policy to allow anyone to blatantly promote their business online as you are doing with your Get Quote link. Based on your responses you would not be someone I would want to consider doing business with. I'm sure there are others that feel the same way. Hopefully people can be forewarned about you before making what could amount to a serious financial mistake. Rest assured, whenever I can, I will do my best to prevent that from happening.
Jim,
What I would suggest to you is that you use caution in your defamatory statements. Unlike you, I have posted my licensing information and credentials and don't hide behind anonymous names, offering mortgage advice without proper credentials. My reputation is impeccable and it's a shame that this site allows wannabe mortgage know-it-alls like you to post the garbage that you do without any accountability. The person this site should look into is you... they know exactly where to find me should they need to.
What you know about this poster's situation and what I know are 2 completely different things and I firmly stand behind what I said.
Once again,I strongly suggest you temper your statements before you find out exactly how much I know about the mortgage and legal vocation.
Last warning... your words are defamatory.
If you know so much about mortgages, what is your NMLS number, what is your licensing information. Please post it.
What I would suggest to you is that you use caution in your defamatory statements. Unlike you, I have posted my licensing information and credentials and don't hide behind anonymous names, offering mortgage advice without proper credentials. My reputation is impeccable and it's a shame that this site allows wannabe mortgage know-it-alls like you to post the garbage that you do without any accountability. The person this site should look into is you... they know exactly where to find me should they need to.
What you know about this poster's situation and what I know are 2 completely different things and I firmly stand behind what I said.
Once again,I strongly suggest you temper your statements before you find out exactly how much I know about the mortgage and legal vocation.
Last warning... your words are defamatory.
If you know so much about mortgages, what is your NMLS number, what is your licensing information. Please post it.
To pay off existing $282,000 mortgage at 5.75% in the next 240 months you would have to voluntarily pay $1,979.88 every month which is $170 a month more than the $1,809.08 you are required to pay.
If a new 20 year mortgage at 5% would be about $50 more than you pay now, that would be $120 less a month than if you just pay off existing loan in 20 years. That saves $120 a month with the new loan at 5% and over 240 months saves $28,800 or $1,440 a year.
If closing costs are around $3,000, saves $25,800 or $1290 a year and break even on costs in 28 months.
Refinance to 20 fixed at 5% or less if you can get a lower rate but that rate is about correct.
If a new 20 year mortgage at 5% would be about $50 more than you pay now, that would be $120 less a month than if you just pay off existing loan in 20 years. That saves $120 a month with the new loan at 5% and over 240 months saves $28,800 or $1,440 a year.
If closing costs are around $3,000, saves $25,800 or $1290 a year and break even on costs in 28 months.
Refinance to 20 fixed at 5% or less if you can get a lower rate but that rate is about correct.
