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moon_maiden42 | Should we wait to refinance the house? |
We are considering refinancing, because we must. Should we do it now at 6%, or should we wait until the beginning of the year? Trends show a drop is more common in January and it will be after the elections which can also contribute to rate changes. I just hate to lock in now, and have it go lower in two months...what do you think? |
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spongeworthy_us
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You forgot to provide the most important pieces of information: What is your current interest rate and what is your current mortgage balance? If 6% is 1% or more lower than your current rate AND you plan to stay in the house long enough to amortize any fees or points, you should do it. True, it may go lower still. But then again, it may also go higher. You can go insane trying to perfectly time mortgage rate movements. And, obviously, the savings you can accrue at a 1% lower mortgage rate is 100 times greater if you have a mortgage balance of $1,000,000 as opposed to a mortgage balance of $10,000 . So without those two pieces of information it is hard to concisely and accurately answer your question.
Another thing to consider is whether you are now on a fixed rate or ARM and whether you are considering going to a fixed rate or ARM. If you're on an ARM, get to a fixed ASAP. even if the rate is a lttle higher. I wouldn't even think about going from an ARM to an ARM or, God forbid, going from a fixed to an ARM to capture a lower rate.
One last thing: believe it or not, another questioner asked a similar but different question on this subject and let slip that he/she had discovered in the worst possible way that their old mortgage had a pre-payment penalty clause in the fine print and it wound up costing him/her $2000 in penalty to get what turned out to be a less-attractive rate. So if you have a pre-payment penalty on your current mortgage, that has to be considered as well.
HTH |
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emoody
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If there is no prepayment penalty involve-then go for it. |
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Amanda H
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if it goes lower it's not going to be by much-- maybe .25% if you're lucky. Add in the interst you'r paying on debts and i"m sure you're better off refy-ing now than waiting-- rates could just as easily go up. |
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Meeee
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If you are at 6% the trend says you should NOT refinance. The rate ould have to go into the 5's for you to even think about having a 3 year recovery period and that is not likely to happen anytime soon. |
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position28
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No way look at the rates for the last 20 years do it now its NOT going to stay this low. |
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wordsmith
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Hello,
This article has some helpful info on a refinance (specifically what mistakes to avoid):http://www.savinathompson.com/Newspaper_Article_Oct_26_2006.htm
And no, it's not an ad for anything - it was originally a newspaper article. Keep in mind that the Fed is meeting again soon and most people believe that they're going to drop the rate slightly, but no one can be sure. The Fed has raised rates 17 consecutive times since June, 2004. The current rate has been holding pretty steady at 6.25% for the 2nd qtr. If it makes you feel any better, rates are still historically low - but we won't see rates drop back down to the 5% range...According to economists, that was an anomoly.
You said that you "have to" refinance - hopefully you're not refinancing for debt consolidation as many people do. We're going through a virtual tidal wave of foreclosures in the U.S. right now for a few reasons:
1. People got into ARM's during the real estate boom and didn't take into consideration that the rates would go up at some point, while their income would stay the same.
2. People refinanced for vacations, cars, etc. and didn't put anything away for savings.
3. People refinanced for debt consolidation and, once they were debt-free became overconfident in their spending, getting themselves right back into financial trouble again.
If you are refinancing to pay bills, keep in mind that you're transferring that debt to your home, so be careful not to rack up bills again and be sure to pay off the refinance within 5 years. When you leverage yourself out, you could be asking for trouble....
Unfortunately, a lot of people don't qualify for loans that they would have 2 years ago, so, whatever you decide to do, I would start talking with your lender right away about options. |
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dshope007
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6% isn't that bad, and you could always re-finance if it drops significantly.
There is always the chance that it will go up not down. |
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dquinones1983
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The rate actually depends on the program, your credit score, and whether you can go conforming. Also, if you are getting cash-out, that will contribute to your final rate. 6% is a really low rate and you may end up paying for it. There are some really crooked lenders and Brokerage companies. You have to be rally careful. I have heard people be slammed into an option arm mortgage and end up owing more than the original loan amount. Anyway, I am a processor at a mortgage brokerage company and I would need more information than what you have put down to answer your question. |
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nudellbushgranny
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If you are thinking of waiting until the first of the year to refinance then I guess you are not in the "because we must" state yet. No one knows for sure what rates are going to do. Some economists say that rates are expected to decrease next year, but there can be a lot of factors involved which may cause this not to happen. If you can wait, then that's fine. But if you are in need now, and prolonging the refinance may cause your credit rating to deteriorate because you can't make your payments, then it is better to go ahead and refinance now. If you don't want to lock into a fixed rate term, then go for a variable rate mortgage that will allow you to lock in to a fixed term rate if interest rates should go lower. Interest rates really aren't that bad, so go with your gut feeling. Good Luck. |
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quietgiant
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stay at 6% as mentioned previously the rate would have to go to low 5s or beyond to even make it worthwhile,also every time you re fi you in essence take out a new loan,so it will be 30 years from thetime you refi so you start paying intrest from scratch, you can never pay down principal effectivly by constantly doing a refi. |
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Synchronic_2006
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The odds of it dropping lower than 6% to an extent that would warrant waiting for something that may or may not happen to possibly happen....are so slim I'd personally go for it now.
Also I wouldnt expect some astronomical drop that will save you both enough money to roll around in on your living room floor. in other words 6% isnt bad and the drop youre expecting may not be of the magnitude youre expecting |
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Lucy
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If you must refinance, better to do it now when you can lock in a rate, lower your payments and give you peace of mind. Discuss with reputable mortgage brokers too as it is their business to keep on top of the best rates,deals and best times to refinance. Our mortgage broker did wonders for us and came highly recommended. Good luck! |
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the real deal
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Good ?. Well I work for Lasalle Bank in our Consumer Loans Dept (Equity Loan), I can suggested a few things, so what i would say is that 6% is pretty good and don't think because u get a fixed rate that if the rate was to drop that u couldn't get a lower rate, because u can. At any time the rate gets lower u can refi for a lower rate but how our company is to get a lower rate is to increase the funds, so is your choice u might want to verify before doing it because all institutes are different, but most definitely u can get it lowered, also another thing u might have to watch out for that our company does is if u refi this month by January might still be to soon to refi again, so double check and speak with a banker from that company and get verification on how they operate and what would be the best thing to do. Good luck, and if possible let me know what u decided. Also i wanted to know is why do u HAVE to refi? Also I depending on what your refi for u might want to look into a Line of Credit (LOC) because it's revolving and as long as u pay it back u can continue to use it and have it sit in case of emergencies and other issues that could occur throughout the year(s). It really depends on what your looking to do as well as what your day to day life activities hold because LOC is good when u have children and such, so like i said it depends are u looking to do major home improvements or just want to have money put aside for other purpose and just wanted them to be there in case something comes about. But all in all 6% is a good rate but also have to look at how much u are borrowing. |
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frugernity
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Personally I think interest rates will go up before they go down. |
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Snagelfritz
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Rates are going up. They trying to curb inflation. We had something like 7 rate hikes in a row every month .25% each time. They not hike rates the last two months. But, they talk like they want too. |
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You are loved
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It depends, it really is a matter of reading on what the fed is up to and monitor the market, they've been saying months ago the rates were going down around November, but there are a few articles out there, Forbes magazine informed that inflation is higher again, and the rates actually have been fluctuating, the market is still volatile.
Some days they go down and they are back up a bit and so on, there's been a few rate adjustments in the last few weeks. It's a 50/50 chance, so I strongly suggest you monitor the market, and read some of the major newspapers such as The Wall Street Journal, and other periodicals on this. Nobody really knows what the rates will be like around Jan., keep in mind during and around elections rates go down just a bit.
Current events in the middle east and conflict (wars) is another factor for rates to go down, it seems like. You should probably refinance now and be safe, better safe than sorry, (take the money and run) what if they actually went up, because of the inflation factor, then what? Only you know if you really need to do it or not, if you are getting cash-out, the housing market is coming to a halt, and though it is likely rates may continue to go down, who knows? 6% is actually very low, today's rate was at 6.375& provided that you are an A borrower, with a high fico score, so you do the math. And go from there, listen to expert advice, for the answerer who said that the closing costs will eat you up, don't listen to that, as it is not true, everyone even the folks that are in the business get them, everyone has to pay, there is no way around it, it is a matter of negotiating the best possible deal for yourself. And if you have a high fico score, you'll get the best rate, go with a few lenders/brokers, have them compete for your business.
Good luck in your decision. |
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ZenWoman
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There are some things you can predict, others are always volatile such as rate changes. Have someone figure out for you exactly what the difference in rates would cost, say if it went down to 5.5%, which would be quite a drop in the rate, vs 6%. If you can live with it, say its only a few dollars, then go ahead with 6%. Has anyone told you that with only one extra payment a year you can pay off your mortgage in 15 years instead of 30?, now there is a money saver. It can save 1/3 of the interest over the long term.
I have been in real estate for over 15 years, that is the source of my information, and my agency was owned by a bank. |
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rockyfan_2000
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If you are 'absolutely' sure that the rates will be lower in Jan, I would wait until then. John |
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GRASSY
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Wait until the 1st quarter of next year Fed will cut rates by mid January 2007 |
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May I help You?
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It depends.
1. How much and make them put it in writing, will the closing costs be?
2. What is the real APR, not just the 6% rate, after considering all closing costs?
3. Can you afford to wait?
4. Why are you in such a rush....to refinance?
5. Do you really need the money? Again, you have a rush to get the money that you are not explaining......???
6. Talk to your bank, and where you have your credit cards and ask them all for their rates, and try to get it in writing....and again ask for all closing costs in writing.
Good luck but talk it over with your spouse...as to the rush to refi. |
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deepak57
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Best answer is you should not wait for the reason of interest rates, market price of other items depend on it. Lower the interest rate; prices will be more because of many purchasers. |
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Max Dong
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If you currently have a 6% fixed rate--then you should NOT touch it. Unless, you need to pull out extra cash, there really isnt a benefit to refin'ing your loan. And lets say that rates go down at best 0.25%...are you willing to pay closing cost again? I say nay. |
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JAREAD
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The answers that I have read so far I deem to have been written by short sighted people who omit some of the most important details of REFI.
When you Refi you are working into a stacked deck.
Only the banks win where Mortgages are the issue.
First of all, when you Refi, you are going to have closing costs that will raise your principle.
It takes an average of three years to get the principle back down where it was when you performed the Refi. You wil pay an average of 600 dollars for Title Insurance, which is one of the biggest rackets there ever was, but you will pay it everytime you Refi.
The closing costs will eat you up. Never Never go for an adjustable rate mortgage. You are talking about a 30 year span and the fluctuations are forever causing the rates to go up and down.
Itis a game the bankers play. When the economy dips and people are not buying houses, they drop the rates so people will Refi. That is how banks stay in business.
Suckering people into their little trap by offering rediculouly low ARM Mortages is another way they prime the pump.
Be careful to read all the fine print and detmine closing costs before you do anything.
Example: I bought this house in 1989, with a 10.25 percent fixed 30 year, The financing amount was 102 thousand Dollars. After 6 years the Interest
rates dropped Down to 8.33 percent so I did a Refi.
the Refi was for 98 thousand. After closing costs, my Principle went up to 101 thousand. After that the market fell and my house was worth less thatn What I owed on it. It went form 135 thousand down to 89 thousand. After another five years the rates droppoed again so I did another Refi. My rates dropped to 7.3 prcent. I did the last Refi three years ago When rates bottomed out and I now have a fixed rate of 5.35 percent. My priciple is 89 thousand at present. That is the way the Financiers play the game and homeowners don't stand a chance.
I hope that you will not repeat my experience. 6 percent fixid is a good loan and I don't think you are going to do much better than that. |
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eg_303
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Yeah you should wait I think it's too high right now i believe the rate is at 6.7% and if you dont have good credit high 600's then your looking higher tha this. |
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pelancha
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Why don't you consult to specialized people, they should know what to do and they can give a better advice |
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Dwight D J
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Far too complex for this forum. A refi now means you think the economy won't have the Fed increasing rates soon, which means inflation and employment will be what they consider "favorable". Given that we have a new Federal Reserve chairman who seems a bit blunt, I'd refinance soon. You might be wrong, but only a PhD in Economics who's also psychic could give you a great answer. |
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Mark D
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If there is no prepayment penalty involve-then go for it. |
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Alterfemego
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That is a tough question. So if you wait and you get to January and the rate remains the same or goes up, then what?
Today is a known, if 6% works for you, go ahead and do it. Rates are like gas prices, up and down, up and down... |
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Tones
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Just buy it now. You never know if rates will suddenly sky rocket. Besides, you can always refinance.
Just make sure that the loan you have does not have prepayment penalties. That way, if the interest rates drop, you can still refinance to a lower rate without being penalized for it. |
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Doc. justasinner111
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Better go now,because Republicans will raise it. |
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radar
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Here's a couple of things to consider:
How much lower will the rate be compared to your current rate? (A rule of thumb is it's not worth it unless the refinance rate is at least 2 points below your current rate).
You'll probably have costs associated with the refinance, ( app fee, title search, survey and appraisal fees as well as legal fees). You can pay these upfront or roll them into the new mortgage (but then you'll be paying interest on the fees).
Crunch some numbers and make sure your cash-out is worth it. |
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