Posted on: 01st Dec, 2007 08:20 am
help please, there are so many products out there and i don't want to make a bad descision on a refinance.
appraisal 610
bal. of loan 238
current rate 7.375
cedit scores 742/710
primary residence
expect to be in house 4-5 years max
what makes the most sense for lowering the monthly payment, should i wait a couple weeks/months to lock a rate
we had a 5+1 that was 5.675 that just got whacked a couple months ago
thank you in advance
appraisal 610
bal. of loan 238
current rate 7.375
cedit scores 742/710
primary residence
expect to be in house 4-5 years max
what makes the most sense for lowering the monthly payment, should i wait a couple weeks/months to lock a rate
we had a 5+1 that was 5.675 that just got whacked a couple months ago
thank you in advance
What lender was your 5/1 arm with? I assume it was with a conforming lender.
What matters in this situation is the "break even period". If you plan on staying for 4-5 years max, with closing costs it could take 2-3 years to break even.
Are you saying $610,000 for the appraised value and you owe $238,000 to pay off the existing ARM mortgage? and How often does your current ARM adjust and do you know the "caps"?
What is your current payment?
What matters in this situation is the "break even period". If you plan on staying for 4-5 years max, with closing costs it could take 2-3 years to break even.
Are you saying $610,000 for the appraised value and you owe $238,000 to pay off the existing ARM mortgage? and How often does your current ARM adjust and do you know the "caps"?
What is your current payment?
The 5/1 was with Regions Mortgage and it is conforming
Thank You for the reply,
we owe 238k on the 610k appraised house.
We had a ARM but now it has adjusted to a fixed at 7.375
current payment is 1687.00, we used to pay 1284.00
Thank You for the reply,
we owe 238k on the 610k appraised house.
We had a ARM but now it has adjusted to a fixed at 7.375
current payment is 1687.00, we used to pay 1284.00
wow that's a high rate!!!!
you shouldnt get higher than 6.25% for 30yr fixed UNLESS you had a foreclosure or bankruptcy etc.
Are you going full doc or state?
Appraisals shouldnt be higher than 400.00....Unless it's a million dollar home and they need 2 appraisals.
Some lenders charge a lock fee of 600 (lendingtree)...but that doesnt include the appraisal
you shouldnt get higher than 6.25% for 30yr fixed UNLESS you had a foreclosure or bankruptcy etc.
Are you going full doc or state?
Appraisals shouldnt be higher than 400.00....Unless it's a million dollar home and they need 2 appraisals.
Some lenders charge a lock fee of 600 (lendingtree)...but that doesnt include the appraisal
Ok do you know what the caps of the adjustable rate is?
You can probably get a lower rate but it depends on whether or not the closing costs make it worth it or not. Since you plan on moving in 4-5 years more information is required.
"wow that's a high rate!!!! "
Based on what? It looks like a fair first adjustment to me. Subprime loans adjust up to 4% in the first round. 1.5% is not out of the ordinary.
"ou shouldnt get higher than 6.25% for 30yr fixed UNLESS you had a foreclosure or bankruptcy etc"
You could get 6.25% with a foreclosure or bankruptcy. Please don't just quote random things to people. The poster is asking what the best program would be to shop for... I don't think he/she is looking for proposals.
Anyway If you could answer the posts above it would be helpful. I think if a refinance is the best option it will end up being a conforming loan like your first one.
You can probably get a lower rate but it depends on whether or not the closing costs make it worth it or not. Since you plan on moving in 4-5 years more information is required.
"wow that's a high rate!!!! "
Based on what? It looks like a fair first adjustment to me. Subprime loans adjust up to 4% in the first round. 1.5% is not out of the ordinary.
"ou shouldnt get higher than 6.25% for 30yr fixed UNLESS you had a foreclosure or bankruptcy etc"
You could get 6.25% with a foreclosure or bankruptcy. Please don't just quote random things to people. The poster is asking what the best program would be to shop for... I don't think he/she is looking for proposals.
Anyway If you could answer the posts above it would be helpful. I think if a refinance is the best option it will end up being a conforming loan like your first one.
i was writing about the 'adjustment' rate....not stating that's what's being quoted to her.
Not offering proposals but making a POINT that when she shops around she shouldnt get higher than a 6.25% for a 30yr fixed. She should get a lower than that....but just giving her the heads up on it. Also didnt say WITH a BK.
My point is that most lenders take advantage that her rate HAS or WILL adjust to 7.375%. They will normally offer a higher rate due to this.
Also, a product does come with rates, terms, and fees.
Telling a borrower that she should look for a conventional/conforming product is like telling someone to find a car with 4wheels.
I wouldnt recommend an ARM again...get a30yr fixed mortgage, and most likely the lender wont document your income. With your scenario they dont ask for this when your LTV is lower than 80%..and with a 680 score
Not offering proposals but making a POINT that when she shops around she shouldnt get higher than a 6.25% for a 30yr fixed. She should get a lower than that....but just giving her the heads up on it. Also didnt say WITH a BK.
My point is that most lenders take advantage that her rate HAS or WILL adjust to 7.375%. They will normally offer a higher rate due to this.
Also, a product does come with rates, terms, and fees.
Telling a borrower that she should look for a conventional/conforming product is like telling someone to find a car with 4wheels.
I wouldnt recommend an ARM again...get a30yr fixed mortgage, and most likely the lender wont document your income. With your scenario they dont ask for this when your LTV is lower than 80%..and with a 680 score
"The 5/1 was with Regions Mortgage and it is conforming
Thank You for the reply,
we owe 238k on the 610k appraised house.
We had a ARM but now it has adjusted to a fixed at 7.375
current payment is 1687.00, we used to pay 1284.00"
Wow, it really doesn't get much better than that as far as mortgage deals go. You will get the lowest rates available. Now for the break even period and how that works.
You have a 40% Loan to Value
You have a current payment of $1687... When can this rate adjust again? Do you know the cap of the adjustment?
If you got a new rate of 6.25% / 30 years fixed your new payment would be $1496 that is based on a loan amount of $243,000 which includes $5000 for closing costs. I assume you have the taxes paid up and the homeowners so that would save you on closing costs.
Here is how to decide whether to pay a higher rate or not. It is not always the best idea to get the lowest rate. The closing costs are just as important as the rate.
Here is the total breakdown for 2 examples using 1 with closing costs and 1 without.
$243,000 Loan amount
$5,000 Closing costs
6.25% interest rate
$1496.19 payment
OR
$238,000 Loan amount
$0 closing costs
7% interest rate
$1583.42
DIFFERENCE OF
$87.23 per month
That's $1046.76 per year difference
Now what does that all mean. If you go for the lower rate and pay closing costs and you sell or refi before 5 years is up you lose money. If you go for a higher rate with lower closing costs and you sell or refi before 5 years you make money.
So really it all depends on what your plans are and what you want to accomplish.
Let me know if you have any questions.
Thank You for the reply,
we owe 238k on the 610k appraised house.
We had a ARM but now it has adjusted to a fixed at 7.375
current payment is 1687.00, we used to pay 1284.00"
Wow, it really doesn't get much better than that as far as mortgage deals go. You will get the lowest rates available. Now for the break even period and how that works.
You have a 40% Loan to Value
You have a current payment of $1687... When can this rate adjust again? Do you know the cap of the adjustment?
If you got a new rate of 6.25% / 30 years fixed your new payment would be $1496 that is based on a loan amount of $243,000 which includes $5000 for closing costs. I assume you have the taxes paid up and the homeowners so that would save you on closing costs.
Here is how to decide whether to pay a higher rate or not. It is not always the best idea to get the lowest rate. The closing costs are just as important as the rate.
Here is the total breakdown for 2 examples using 1 with closing costs and 1 without.
$243,000 Loan amount
$5,000 Closing costs
6.25% interest rate
$1496.19 payment
OR
$238,000 Loan amount
$0 closing costs
7% interest rate
$1583.42
DIFFERENCE OF
$87.23 per month
That's $1046.76 per year difference
Now what does that all mean. If you go for the lower rate and pay closing costs and you sell or refi before 5 years is up you lose money. If you go for a higher rate with lower closing costs and you sell or refi before 5 years you make money.
So really it all depends on what your plans are and what you want to accomplish.
Let me know if you have any questions.
If you plan on staying at the home 4-5 years tops but it could be less id go with no closing costs loan at the lowest rate you can get. If everything you saying is correct you should be able to get a no closing cost loan at less then 7% if you lock within next couple of days.
What that means to you is this:
Your rate goes down to say 6.75 or so and becomes fixed so you don't have to worry about it adjusting ever again.
You don't have to add anything onto the loan balance to get this done so as far as you are concerned its free ( the lender will pay the loan officer for giving you higher then market rate )
Your payment will go down. (about $150/mon)
And you can sell it anytime you like.
Another way if you going to stay there a while you can get 5.875% rate and add about 5-7k on top of your loan in closing costs. Your new payment will save you $280/mon meaning you will recoup your costs in 17-25 months and the rest will be your profit.
You can do it either way but no matter what you choose it is definitely a benefit for you to refinance.
If you have any questions please don't hesitate to contact me.
What that means to you is this:
Your rate goes down to say 6.75 or so and becomes fixed so you don't have to worry about it adjusting ever again.
You don't have to add anything onto the loan balance to get this done so as far as you are concerned its free ( the lender will pay the loan officer for giving you higher then market rate )
Your payment will go down. (about $150/mon)
And you can sell it anytime you like.
Another way if you going to stay there a while you can get 5.875% rate and add about 5-7k on top of your loan in closing costs. Your new payment will save you $280/mon meaning you will recoup your costs in 17-25 months and the rest will be your profit.
You can do it either way but no matter what you choose it is definitely a benefit for you to refinance.
If you have any questions please don't hesitate to contact me.
Great advice Eugene, when there is apparent benefit to have in the form of refinancing, and the homeowner doesn't know for sure how long they would be in the loan for... the "no closing costs" refinance is a good solution.
You should very easily be able to get a 30 year fixed loan with an interest rate between 5.8% and 6.125% very easily.
This is a no brainer.
This is a no brainer.
I agree with Chris...the rates that I see for a 30 yr. fixed are right now typically better than for the 5 yr ARM, especially with retail pricing where the lender rebate will take care of the mortgage broker's compensation. On that point, ask your mortgage broker for choices, i.e., ask what the price would be for each interest rate between wholesale and full retail. They'll know what that means, and should be able to guide you so that you are comfortable with the financial decision that meets your goals. Even if they were just an eighth above, that's not much to pay for the added security. The money you'll save in lower interest should far outweigh whatever your non-closing costs are, given that you're Ok with a two year payback period or so.
Yes, you can easily add it to your loan balance so you don't experience the cash flow effect, (just the little extra each month because your loan balance is higher) but you'll certainly experience it when you sell.
Yes, you can easily add it to your loan balance so you don't experience the cash flow effect, (just the little extra each month because your loan balance is higher) but you'll certainly experience it when you sell.
You should qualify for a 30 year fixed rate between 5.50% and 5.75%. Here are some mistakes that many people make when comparing mortgage loans. Follow these rules and you will get excellent terms on your refinance.