Freed Roger wrote:
popeye was quicker on the draw. It makes sense to pay the point and buy a lower rate when you plan on keeping the property for at least a few years, and if you don't expect rates to go down much during that period.
years ago I made the mistake of paying a point for a lower rate - a year later the rates dropped and I was able to refinance to a much lower rate. I didn't need to pay that point to get a lower rate.
I could be making that mistake now. Though I don't anticipate mortgage rates ever getting much lower than 4.75%. They always could, but I was able to shave $300 a month off of my monthly payment today. Even if that ends up being a mistake in the long run, that's still a very positive mistake over my existing payment.
cardinalkarp wrote:Thank you! I knew it had something to do w/ buying your rate down but I wasn't sure of the specifics.
I may have to look into refinancing. How much did it end up costing you in total (after all the closing costs) Popeye?
I ended up rolling my closing costs into the loan, which may not be the best plan, but for me it basically re-starts my original loan amount now (I've had my house for 2.5 years), just with a much lower rate.
A closing should cost ~$2000, plus whatever points you pay. The payoff on your existing loan balance is usually a tick higher (~$1000) than your current remaining balance as well to cover fees. If you refinance with your existing lender, they may be able to shave some costs here and there.
Don't fish for a lower rate using Lending Tree or websites like that. Another mistake I made years ago. They try to lure you in with a low rate, but then hit you with higher fees. Yeah, they are required by law to disclose fees, but generally this disclosure comes when your already in the midst of the lending process. Closing on our first house, we had a lender slide about $800 in extra fees not customary to our loan nor disclosed previously. ( attorney, extra doc fees). I had to close with the fees paid, and then fought and won back about 2/3 of these scam fees back.
anyhow, stick with someone local that you trust -like your bank or credit union.
Freed Roger wrote:
popeye was quicker on the draw. It makes sense to pay the point and buy a lower rate when you plan on keeping the property for at least a few years, and if you don't expect rates to go down much during that period.
years ago I made the mistake of paying a point for a lower rate - a year later the rates dropped and I was able to refinance to a much lower rate. I didn't need to pay that point to get a lower rate.
I could be making that mistake now. Though I don't anticipate mortgage rates ever getting much lower than 4.75%. They always could, but I was able to shave $300 a month off of my monthly payment today. Even if that ends up being a mistake in the long run, that's still a very positive mistake over my existing payment.
In my defense, it was the best option for me at the time. I took a slightly higher rate (normal rates were around 6.75% when I bought my house) in order to have lender-paid PMI, with the expectation that I could likely re-finance in a few years and get a lower rate without PMI. It hasn't been bad because I've been able to see huge tax returns with my status (single home-owner) and being able to write off all that interest. But now I'm at least at a payment amount that even if I have to move for some reason (work-related), I wouldn't be in a bad situation because I could likely rent my house at the mortgage payment and break even there.
cardinalkarp wrote:I'm currently at 6.25% so I'm sure I'd still see a pretty substancial savings.
Yeah, if you can shave 1.5%, that's still pretty good. Depending on how long you want to stay in your current house, etc.
Rates have fluctuated a bit over the last couple of weeks. It was around 5% early last week, then jumped up to 5.75% by the end of the week, and now back down to 4.75%. When I first talked with a loan rep, I was quoted a 5.75%, and I told them to hold on to see where the rates would go this week. I'm glad I did. Keep an eye on those 20 year and 15 year rates too, in case they drop way down. If they're about the same or only a little less, it doesn't help much because you can still get a 30 and just pay more per month to make it act like a 15, or pay your normal payments in a month where you may need/want the extra cash. That 4.5% on a 15-year today though looks really good.
cardinalkarp wrote:I'm currently at 6.25% so I'm sure I'd still see a pretty substancial savings.
I have a 80/15 at 6.25/8.25 with no PMI...I get to write the interest off of both, and the payments aren't bad.
I guess I can always refinance, but like Popeye, I've only had my house for ~2 years...and I plan on moving in 3-5 years. So I think I'm going to stick to what I have now and claim the interest on my taxes.
TimeForGuinness wrote:I plan on moving in 3-5 years.
This was my conundrum, because I honestly don't know how long I will be in my house. Could be a year. Could be 10+ years. But I think I'm coming out way ahead no matter what here. I like my house. I'd like to stay. But who knows where life takes you (work, marriage, etc.).
Well, my mortgage company is about to get strike one against them. I was hoping I could discuss this a bit on my break but I've been sitting on hold for the past 11 minutes.
edit : Of course they decide to pick up the phone after exactly 15 min when my break was over. Sounds like I may have been better off though, the person that answered my call didn't sound like the most intelligent person to talk with about refinancing my home.
Last edited by cardinalkarp on January 8 09, 3:11 pm, edited 1 time in total.
TimeForGuinness wrote:I plan on moving in 3-5 years.
This was my conundrum, because I honestly don't know how long I will be in my house. Could be a year. Could be 10+ years. But I think I'm coming out way ahead no matter what here. I like my house. I'd like to stay. But who knows where life takes you (work, marriage, etc.).
Yep...I could see myself going either way. But I really don't see housing rates jumping anytime soon. I think I have a good year to really feel it out.
