Going to be in my home for at least another 3-5 years and current mortgage is at 6.25% fixed. I have excellent credit and really good equity. I was wondering what the rule of thumb is for a refinance now that it appears interest rates will fall to historic lows.
How low can I expect to get in respect to interest rates with a 20 year fixed mortgage?
There are rules of thumb and then the actual cost and benefit that you would experience. What you have to examine is how much of a payment difference there is between your current loan and the new one and then figure up what your breakeven point is. For some, it takes less than 12 months to recoup the closing costs for the new loan. For others, it may take over 6 years. Every case is different.
I don't see the mortgage rates getting much lower than where they are at now. The reason why is because the yields on bonds are so low right now that there really isn't much room to work with in order to get a lower rate. If refinancing is something you've been considering then do it now. Not only are rates low, but the longer one waits to refi, the harder it is going to be for them to do it. Appraisals are based on sales in the area for the last 6 months. Those figures are going down every day and I have had a lot of appraisals come back far lower than expected. Add in the multitude of guideline restrictions that have been added this year makes waiting to refinance a bad move. Do it now if you are going to do it at all.
Originally posted by ErichG2: Going to be in my home for at least another 3-5 years and current mortgage is at 6.25% fixed. I have excellent credit and really good equity. I was wondering what the rule of thumb is for a refinance now that it appears interest rates will fall to historic lows.
How low can I expect to get in respect to interest rates with a 20 year fixed mortgage?
I just refinanced, 30 yr fixed, from 6% to 5.125%. The really interesting thing is they required no costs at all. Not even any costs "rolled into the loan". It was strictly a paper transaction with Wells Fargo. Had been in the house 2 years.
Another interesting thing is they did a very detailed appraisal and the value actually went up. 2 guys were here for over 1 hour to measure everything.
Anyway, i think you have to do the math on your specific offer but in my case there is no payback period at all.
