All time low mortgage rates! Thinking about Refinancing
I just caught the headline in the paper. Checked it out at Bankrate Clicked on some of the advertisers & wouldn't you belive that 9 out of 10 don't publish the same rate on their web page [img]/forums/images/icons/mad.gif[/img] [img]/forums/images/icons/mad.gif[/img]
In any case, looks like it would be advantagous for us to refi. We are currently 11 months into a 30 year fixed at 6.5% (we didn't pay any points)
Lowest published are 5.25% with 2.5 points, but this doesn't seem to exist. Best verified rate so far is 5.375 with 2.5 points.
I keep hearing "don't pay points" But why [img]/forums/images/icons/confused.gif[/img] The monthly savings in a lower mortgage payment will pay the points & closing costs (est $3K) off in less than 4 years!
Re: All time low mortgage rates! Thinking about Refinancing
Its not a good deal to pay points in general...think about it, if you had paid points 11 months ago the last time you refinanced, you wouldn't be able to refinance now (you would but the savings would all be eaten up). SO if you pay points this time, and as you say it takes 4+ years to break even, than what happens if you want to refinance or sell the house (or payoff the mortgage, even better) between now and then?
Personally, at 6.5% I would sit still...don't be lulled iunto refinancing every time you see a 1/4 or 1/8% drop...6.5% is near a 40 year low.
Re: All time low mortgage rates! Thinking about Refinancing
<font color="blue"> Personally, at 6.5% I would sit still...don't be lulled iunto refinancing every time you see a 1/4 or 1/8% drop...6.5% is near a 40 year low. </font color>
0 point loans are at 5.875% right now.
I should have mentioned that we don't plan on moving anytime soon if ever. Especially after all our home improvement adventures are complete [img]/forums/images/icons/tongue.gif[/img] . We bought a house big enough for our future family. It would take winning the lottery for us to consider moving in the next 15-20 years.
When we bought the house, we kind of rushed into it (the price was right & the house "felt right"). Turns out it was a good thing we hurried as another couple put their bid in a day later. I really didn't get a chance to calculate the cost/benefit analysis of paying the points and just went along with the mortage broker who said "you don't want to pay points"
Re: All time low mortgage rates! Thinking about Refinancing
<font color="purple"> Its not a good deal to pay points in general </font color>
It's been quite a while since I refinanced (1987); we just sold that house with a 15 year mortgage fully paid, and that was a good feeling [img]/forums/images/icons/smile.gif[/img]
Also, rules may have changed since then. At that time, there were points and there were points, and depending on how they were defined, some of them were deductible. At that time I had 3 points (or 3.5, forget which). One of the points was fully deductible that first year, and another of the points was deductible spread out over the life of the loan, 1/15th each year. I never understood the nuances; had the accountant do all that. I think it had something to do with some of the points being defined as finance charges.
Re: All time low mortgage rates! Thinking about Refinancing
<font color="blue">I keep hearing "don't pay points" But why The monthly savings in a lower mortgage payment will pay the points & closing costs (est $3K) off in less than 4 years!
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Paying points is dead money. We never know what the future will bring. Then again if it is less than four years to recoup to closing costs I would be tempted.
I do not know how the small town banks work in your area but I just kept talking to the privately owned bank in our town. They finally gave me a lower rate, 5.15% and no points. Since I already had other morgages with them for commercial property we split the closing costs. If I pay off the morgage in less than 5 years I have to come up with a $3000 penalty.
They are always interested in listen and I try to be a good customer. The only time I get pushy is on the long term stuff like morgages or lines of credit.
Re: All time low mortgage rates! Thinking about Refinancing
<font color="blue"> They finally gave me a lower rate, 5.15% and no points. </font color>
Tim, sounds like you got a good deal. What is the term on that loan? Is it fixed rate or Adjustable?
<font color="blue"> We never know what the future will bring. </font color> Too true. But as the lottery commision says, you can't win if you don't play. [img]/forums/images/icons/tongue.gif[/img]
Re: All time low mortgage rates! Thinking about Refinancing
Call your current lender and ask if you qualify for a cost-free refinance offer. I'm currently going through my 3rd in the last 4 years. Sign and notarize 4 papers and send them in AND I'll get to skip November payment. They will only refinance the principal balance, i.e. no cash back deals, and you can't have a 2nd mortgage lienholder. There are drawbacks in that you are resetting the loan duration and increasing the interest/principal ratio each time you refinance, but it lowers that monthly payment and makes the full term payoff amount go down! Paying points towards a mortgage loan requires a carefull examination of your current tax situation. A real estate agent will always suggest no points because they want as hassle-free closing as possible.
Re: All time low mortgage rates! Thinking about Refinancing
I know I lucked into these lower rates. Sence we applyed for our building loan in June, and the fact that we still have not closed yet,[delay, after delay on the new house] we have been able to drop about a point. Becouse the loan is not closed yet, we just have to pay a paper work fee, anout $250, whach will be paid back within a year or so.
Re: All time low mortgage rates! Thinking about Refinancing
<font color="blue"> Tim, sounds like you got a good deal. What is the term on that loan? Is it fixed rate or Adjustable </font color>
It is a fixed rate for 15 years. It started out at 6.9% and took a month of phone conversations to get it done. It is like that every time. I wish they would just give me the best they can do and save all of us a lot of time. They know me and that I will shop around for the best deal and then they will finally meet it rather than lose the business.
Re: All time low mortgage rates! Thinking about Refinancing
>>we just sold that house with a 15 year mortgage fully paid, and that was a good feeling
I'll second that...I paid off my mortage very early (had a few good years with my former business) and I don't care what any of the so-called experts say about why it is good to have a mortgage, because it is tax-deductible and you can earn more than that if you invest he money etc etc etc.
Until you have actually paid it off, and owe nobody ANY money, you can't beleive what a liberating feeling it is.
I look at these extremely low rates, and I'll be honest, I have been tempted to borrow the money and just put it in the bank for some future need, but I keep going back to the feeling I had when I first became debt free.
You wouldn't beleive how little money you actually need to live on once you get rid of those balls and chains (i.e. mortgages, car payments credit card bills and student loans).
In todays economy, it is nice to know you can get by on a very very little bit of money if you need to.
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