We have an ARM right now at 6.125. We have only been in the house for 5 months but we really want a fixed rate.
2006-12-07 08:02:00 · 6 answers · asked by Rockinrobin 3 in Business & Finance ➔ Renting & Real Estate
Refinancing will mean closing costs. How much will you save? How long do you think you'll live there? The average mortgage loan life is 5-7 years, most people sell or refinance within 5-7 years. If you really think you'll be there longer than 5 years, then refinance when the monthly P&I savings will be greater than your closing costs.
Let's say closing costs are $3,600 for example. If your new loan has payments $50 less than your current loan, then you'll break even in 72 months (3600/50). So if you live there more than 6 years (72 months) then you'll start to save money.
There is no rule of thumb, like 1 or 2 points lower. That's bunk.
There are No Closing Cost loans also, but you're paying for it one way or the other--No Closing Cost loans have much higher interest rates.
Also, beware of people who tell you to avoid prepayment penalties. They aren't always a bad thing. They're usually only for the first 2-3 years, so if you don't intend to refinance in the next few years, who cares if you have a prepayment penalty? Rates with PP are lower than without PP.
Interest rates, curiously enough, are down this week. For an A-paper borrower I have a 30-year fixed rate loan at 5.875%. Your interest rate will depend on your LTV, DTI, and credit/employment history. Shop around.
Good luck.
Rick
http://www.fairwaymortgagelending.com
2006-12-07 08:09:06 · answer #1 · answered by Anonymous · 0⤊ 0⤋
Ok so you have an arm thats not good. but you have a good rate. Do you know if you have a pre payment Penalty? If not you have 2 options you can ride the rate of 6.125 untill it goes up then refi, or you can do it now get locked into a fixed rate and fixed payment. It really does not matter what your Appraisal is, I can do loan ammounts of 110% of value.
2006-12-07 16:08:33 · answer #2 · answered by firebaugh 1 · 0⤊ 0⤋
According to all the people I've talked to (friends in real estate, etc.), NOW Is the time to refinance, and lock in a FIXED RATE mortgage!
As much I love the Democrats, there seems to be this weird backlash against them (it happened during Clinton's presidency), that makes conservatives think they must raise Interest rates to stave off the inflation they THINK liberals will cause! SO...they create the problem they feared!
Look at Greenspan during the Clinton era. Now, however, everything's flattened out, but not gone up by much (interest-rate-wise). So if you can get a 5-6% fixed rate, TAKE IT!
If the Dems win the presidency in '08, the rates will almost CERTAINLY rise, through no fault of the Dems, but their naysayers!
2006-12-07 16:13:20 · answer #3 · answered by Gwynneth Of Olwen 6 · 0⤊ 0⤋
Do it as soon as you can if possible !
The rule of thumb is when the percentage rate is 2 points under what you have now if you had a fixed rate !
The ARM is always good when you get in but it should have been your last choice in long term financing, sorry !
2006-12-07 16:09:05 · answer #4 · answered by ricardo v 3 · 0⤊ 0⤋
Your best bet would be to do a "no cost" refi into a 30 year fixed, assuming you owe at least $180-200,000. You'd probably get 6.25-6.375%, but you don't have to eat into equity to pay for the closing costs, you just pay for it through a higher rate.
This is the cheapest way to handle this, at least in the first 5-7 years.
And make sure you don't have a prepayment penalty...
2006-12-07 16:04:37 · answer #5 · answered by Anonymous · 0⤊ 0⤋
Make sure that your appraised value is higher than your loan value.
2006-12-07 16:06:19 · answer #6 · answered by Anonymous · 0⤊ 0⤋