There's a Paulson plan being vetted to offer mortgages at 4.5%. That would equate to a 10% drop in housing prices when compared to today's interest rates.
If you own start watching rates and refinance when you see that dip below 5%.
Pay attention to the news and start watching lender rates now. It may take a few weeks or months but your diligence will put more money in your pocket.
Thanks for the heads up MC. Got a house myself that I'm renting out and may be looking to refinance from 6%...would definately be worth it for a 1.5 drop.
Yeah, I got approved last week for a 5.5% rate. I'm not locked into the rate yet, but the mortgage banker said that within the next month the feds are going to try and push it down into the 4.5% range. That would be awesome for me as well as any other buyers or people just wanting to refinance. We are transferring to Greensboro, NC this spring and we were hoping to buy the house we want to live in for the rest of our lives, now we might be able to do that for mush less money. We're pretty excited.
Yes, watch the closing costs but don't let that keep you from refinancing. Do the numbers. Sometimes just living in a house 3-4 years and refinancing from 5.5% to 4.5% can save you far more than the 1 or 2 points you will pay when refinancing. Goes w/o saying that the extra cash on a monthly basis can help for other things. Last but not least, see if when refinancing you get a home equity loan lock at the same rate for your use in case of an emergency, consolidation, etc (having a home equity loan available is free not cover by the points). And if you use it or part of it, the interest is tax deductible since it becomes part of the home mortgage.
Originally posted by Tonys_hag: Only refinance if you are planning on staying in the home though. There are fees to refinancing aka closing costs.
True..I called about refinancing ..I have been paying ahead ..thinking that was the responsable practical..thing to do..now i don't owe enough to make refinancing worth it..screwed again..I say again remembering the tax rebate i got and then round up paying back.
Wheres my friggin gimme or bailout dang it. it. sc
Originally posted by Tonys_hag: Only refinance if you are planning on staying in the home though. There are fees to refinancing aka closing costs.
The standard is if you can recoup the cost in 3 years or less it is a good deal.
A few days back on Tuesday into Wednesday the rates went down to 4.75 and for a few hours 4.625 for a 30 year fixed, at my credit union. My sister saw where they did drop to 3.5 for a brief period. Guess what I started looking into refinancing and they are going back up.
LetsGoRedSox,
Keep careful track of what's going on 5.5 is not the best no points out there. My credit union has 5.375 no points to 4.875 at 1.75 points.
A Point equals one percent of the amount of the loan. It is like paying interest up front to get a lower rate. So for a 200,000 loan 1 point would cost $2000 dollars, 2 points would be $4000. You can roll points and fees into the loan, but then you are going to have a larger loan/payment. The thing is if you can recoup the cost of the points in 3 years or less it might be a good plan. You figure this by coparing the savings between a no point payment and the payment if you went with point. Then divide the monthly saving amount into the cost of the points. That will tell you how many months before you truely start saving money.
Today, just got approved on a refinance from a 30 years fixed rate at 5.25%, which I really didn't consider a bad deal, to a 15 year fixed at 4.25%!! Been paying for about 5 years, so looks like the house will be paid off in much, much less interest dollars in what will be 20 years total. Outstanding!
...and you can bet if the rates sink another full interest point, I'll refi the sucker again!
Wow.. that sounds like a good deal.. I have a 15 year 5.5% now with Washington Mutual.. Who did you find that had the 4.25%? Have to pay points?I may have to look into it...
Verity C/U in Seattle. Used to be called NW Federal when I joined them 25 years ago. Just did an online application and it gave me the 4.25 on a 15 year, fixed rate re-fi. No points shown or mentioned.
Google Verity Credit Union and you'll find their on-line home loan application.
I would give them a call. Mine looks like it's going to be around 5k... maybe 6k. But I'm not putting up a single cent. It's all rolled into the loan.
House got appraised yesterday. YIPPEE! Bought the house 5 years ago for 350k and thought with this down economy, it had probably gained then lost all the value and would appraise around the original buying price. NOT SO. Even with the economy it appraised at 500k!!
We just locked in our rate yesterday. Originally we got approved at 5.5%, but the mortgage lender explained the point thing and we bought 0.75 points and got it down to 4.75% and locked it in. That gives me some pretty good peace of mind.
Let'sGo, You said mortgage banker. Do you mean straight through a bank/credit union or a mortgage broker? Mortgage brokers are notorious for charging additional fees (not to say banks don't but brokers add an additional layer). You should always get a good faith estimate with ALL fees listed and compare with other banks. Those origination fees, delivery costs, etc. add up fast. Don't forget title fees, insurance, and other misc. fees. Then if you don't have 20% down, there's PMI, unless you use the VA loan and pay the 2%, or an 80/20 with a higher interest rate on the 20. Lots of ways to finance, but not all are economically feasible. Do the math first, places like dinkytown or bankrate have pretty good calculators. Not saying not to buy, just don't jump in without checking the numbers. You said that you are planning on staying there, so time is on your side when you look at the big picture.
I just noticed, you said that you locked in your rate and bought it down already. You normally can't lock in a rate until you have identified a property and many if not all banks want a signed contract. Plus you don't actually "buy it down" until you sign that big stack of papers, that's the bank's offer. So read the paperwork and make sure that the numbers on the contract match the offer. Ask for the contract to review before you sign. I've found mistakes that the escrow officer missed. Once you sign, it's tough to unring that bell.
Yes, we already have a contract on a house. We don't deal with broker, just a bank agent. We've seen all the paperwork and teh good faith estimate. My wife works for the same bank, so with that in addition to everything else, we're very comfortable with it.
sc
