Yet another mortgate rate question...

Bimmerbill · 11-26-2008, 11:24 AM

Heard on the radio about the big drop in rates yesterday. So I checked. My credit union is offering 5.375 on a 30 year. Have not checked USAA yet (thanks to work filtering their website!).

This rate is pretty dang low. I'm at 6.25 now. Maybe I'll run some numbers.

Good time to refinance? I need to free up cash for other purposes, otherwise I'd work on shortening the term (15 was 6.125, as was 10 year)...

calmloki · 11-26-2008, 11:36 AM

Agree that the rate is low - what kind of fees are associated with the refinance? Might keep an eye on Pentagon Federal, most favoritist bank ever for me. They are at 5.5% for a 30 year fixed right now...
https://www.penfed.org/productsAndRa...gageCenter.asp

Bimmerbill · 11-26-2008, 11:51 AM

About $2K in fees. Doesn't look like I'd save that much on a $120K balance. May be good to roll my $37K HELOC into it and get a good fixed rate tho.

Gotadimple · 11-26-2008, 11:54 AM

Speaking of which! I was in WAMU yesterday doing some condominium association business, and they indicated they would be willing to drop .5% from your current rate (with lower closing costs) for existing customers.

I didn't pursue it, but food for thought for those with WAMU mortgages.

-- Rita

laurence · 11-26-2008, 11:55 AM

I'm holding out for a while yet. I think there will be a opening of floodgates and the rate will drop precipitously at some point. Of course I can't be sure, but you and I are both at rates where we're not leaving too much money on the table as it is, so there's much more upside potential to waiting than downside, IMHO.

Gotadimple · 11-26-2008, 12:02 PM

Absolutely agree. I was encouraged to get the paperwork going now (intimating -- before the flood). I also think there may be more leverage available to get to a lower rate than .5% when the competition heats up -- especially for those with a FICO score of 700 or so.

-- Rita

calmloki · 11-26-2008, 12:31 PM

Quote:

Originally Posted by Bimmerbill

About $2K in fees. Doesn't look like I'd save that much on a $120K balance. May be good to roll my $37K HELOC into it and get a good fixed rate tho.

So a .75% savings is worth about $900 first year if you did a Penfed no fee 5.5% loan. They are very easy loans to do, or mine was last year...
$900. easy. just sayin.

brewer12345 · 11-26-2008, 01:24 PM

If you dig around on the web, there is a guy called the mortgage professor who has quite sophisticated calculators that will help you figure out if it is worth it to refi. He is/was a Wharton finance professor, so I think the stuff is good.

jIMOh · 11-26-2008, 02:35 PM

If I can drop my P&I payment by 8% and keep same repayment period, then refinancing gets my attention.

8% drop means I save 1 mortgage payment per year.
Keeping same repayment date accounts for the principal I have already paid down.

I have a 5.75% mortgage (started in 2006), 30 yr fixed. Any refinance for me would have to have a 2036 repayment date and still save me 8% on the payment.

I think rates will stay low through May of 2009. There is a chance the economy will have started improving around then... so rates would head upward soon after that.

calmloki · 11-26-2008, 02:56 PM

Youse guys are higher rollers than i. If i have a chance to save a couple hundred bucks a year for very little effort i take it - it's enough to make me change or get new credit cards. $900 gets my attention. Shoot, it's way more than we've made in the market this year....(wry emoticon)

jIMOh · 11-26-2008, 03:02 PM

Quote:

Originally Posted by calmloki

Youse guys are higher rollers than i. If i have a chance to save a couple hundred bucks a year for very little effort i take it - it's enough to make me change or get new credit cards. $900 gets my attention. Shoot, it's way more than we've made in the market this year....(wry emoticon)

The cost to get the $900 and the impact it has on the budget are what I look at.

My last refi cost me around $2500 or $3000 (including points). The points dropped me from 6% to 5.75% in 2006.

If the refi saved me $900 that year, but cost me $3000, it would take 3 years to recoup just the closing costs. I prefer to break even sooner- so I want the refi to take my payment down lower before I consider pulling the trigger. For example my calculations show I need to see a 5.25% rate before a refi makes sense (on my current 30 yr fixed 5.75%). A 5.5% rate would lower my payment and save me around $1500/year, but it would cost me to close on the loan, and because of mortgage size, that cost is around 2k every place I look.

Nords · 11-26-2008, 04:11 PM

I'll be darned. NFCU has a 5.25% 30-year fixed loan for 1.875 points.

We've been tracking their mortgage rates for over four years and this is the first time a refinancing would have a decent payback. Considering the lost interest on the points & closing costs, we'd lower our payments by 4.5% and reset our 26 remaining years back to 30. But the effort would pay itself off in "just" nine years and give us a mortgage until I'm 78 years old.

Looks like USAA & PenFed are slightly higher.

NFCU's deal is more compelling if the points or the interest rate drop. We'll have to keep an eye on it. Happy Thanksgiving!

Darryl · 11-26-2008, 05:07 PM

Nords I picked up Penfed last February at 4.625 15 year with no points you must have walked away from your computer during the six hours the rate was that low.

calmloki · 11-26-2008, 05:21 PM

Quote:

Originally Posted by jIMOh

The cost to get the $900 and the impact it has on the budget are what I look at.

My last refi cost me around $2500 or $3000 (including points). The points dropped me from 6% to 5.75% in 2006.

If the refi saved me $900 that year, but cost me $3000, it would take 3 years to recoup just the closing costs. I prefer to break even sooner- so I want the refi to take my payment down lower before I consider pulling the trigger. For example my calculations show I need to see a 5.25% rate before a refi makes sense (on my current 30 yr fixed 5.75%). A 5.5% rate would lower my payment and save me around $1500/year, but it would cost me to close on the loan, and because of mortgage size, that cost is around 2k every place I look.

fer sure fees make a big difference. That's why i liked the Penfed loan - no fees. right now this is what i see at their site - different than my earlier post, worth watching them.
30 Yr Fixed RateAPR

Points 5.750%

Looks like Bimmerbill would only save $600 at this time, rather than the $900 i thought i saw this morning.
5.750%

0.000

jazz4cash · 11-26-2008, 05:27 PM

Quote:

Originally Posted by brewer12345

If you dig around on the web, there is a guy called the mortgage professor who has quite sophisticated calculators that will help you figure out if it is worth it to refi. He is/was a Wharton finance professor, so I think the stuff is good.

Jack Guttentag................
http://finance.yahoo.com/expert/article/mortgage/124665

Mortgage Professor Website.......
http://www.mtgprofessor.com/

Nords · 11-26-2008, 07:20 PM

Quote:

Originally Posted by Darryl

Nords I picked up Penfed last February at 4.625 15 year with no points you must have walked away from your computer during the six hours the rate was that low.

No way, that would actually raise my monthly payments. We're four years into a 30-year fixed at 5.375%. Besides it's a bit chancy to arb the investment of a 15-year mortgage, especially when the market is high. Doing it now might actually pay off.

The objective here is to get the lowest payments stretched out over the longest time. 40-year mortgages are still too new to offer much competition and they don't significantly lower the payment either.

Darryl · 11-26-2008, 07:23 PM

Nords, a millisecond before I hit the enter key I knew what your response to 15 yr would be but I had too much momentum to stop my finger.

SteveL · 11-27-2008, 11:11 AM

Getting an appraisal might be the big problem in any refi today. I have a neighbor who bought a couple of years ago via an ARM, and now it looks like his house won't appraise for enough to cover his original first. Our neighborhood has 170 houses, mostly different, but only five for sale. No house has sold for more than a year. Hard to get a good est. under these conditions.

**ziggy29** · 11-27-2008, 12:25 PM

Quote:

Originally Posted by Bimmerbill

Heard on the radio about the big drop in rates yesterday. So I checked. My credit union is offering 5.375 on a 30 year. Have not checked USAA yet (thanks to work filtering their website!).

Why on earth would an employer place a filter on USAA?

Anyway, my CU recently dropped their no-points 30-year FRM from 6.25% to 5.375%.

Hopefully mortgage rates this low will convince some people on the sidelines waiting for a housing bottom to get in now while rates are very low...

nickel · 11-28-2008, 08:04 PM

Quote:

Originally Posted by Darryl

Nords I picked up Penfed last February at 4.625 15 year with no points you must have walked away from your computer during the six hours the rate was that low.

Darryl,

We locked the day before rates hit 4.625, and wound up with 4.875. Oh well, can't complain too much.

--nickel

11-26-2008, 11:24 AM	#1
Bimmerbill Full time employment: Posting here. Join Date: Jan 2006 Posts: 612	Yet another mortgate rate question... Heard on the radio about the big drop in rates yesterday. So I checked. My credit union is offering 5.375 on a 30 year. Have not checked USAA yet (thanks to work filtering their website!). This rate is pretty dang low. I'm at 6.25 now. Maybe I'll run some numbers. Good time to refinance? I need to free up cash for other purposes, otherwise I'd work on shortening the term (15 was 6.125, as was 10 year)...

11-26-2008, 11:54 AM	#4
Gotadimple Recycles dryer sheets Join Date: Feb 2007 Posts: 388	Speaking of which! I was in WAMU yesterday doing some condominium association business, and they indicated they would be willing to drop .5% from your current rate (with lower closing costs) for existing customers. I didn't pursue it, but food for thought for those with WAMU mortgages. -- Rita __________________ Only got A dimple, would have preferred 2!

11-26-2008, 12:02 PM	#6
Gotadimple Recycles dryer sheets Join Date: Feb 2007 Posts: 388	Absolutely agree. I was encouraged to get the paperwork going now (intimating -- before the flood). I also think there may be more leverage available to get to a lower rate than .5% when the competition heats up -- especially for those with a FICO score of 700 or so. -- Rita __________________ Only got A dimple, would have preferred 2!

11-26-2008, 01:24 PM	#8
brewer12345 Give me a museum and I'll fill it. (Picasso) Give me a forum ... Join Date: Mar 2003 Posts: 9,360	If you dig around on the web, there is a guy called the mortgage professor who has quite sophisticated calculators that will help you figure out if it is worth it to refi. He is/was a Wharton finance professor, so I think the stuff is good. __________________ “When you realize that you are one of the rare few who observe moral principles in their relationships with others, there is a temptation to sink into amorality, not out of conviction or pleasure but simply to avoid further pain, because there is no greater suffering than being an angel in hell, whereas a devil feels at home wherever he goes.” – Martin Page, How I Became Stupid

11-26-2008, 02:35 PM	#9
jIMOh Thinks s/he gets paid by the post Join Date: Apr 2007 Location: Milford, OH Posts: 1,276	If I can drop my P&I payment by 8% and keep same repayment period, then refinancing gets my attention. 8% drop means I save 1 mortgage payment per year. Keeping same repayment date accounts for the principal I have already paid down. I have a 5.75% mortgage (started in 2006), 30 yr fixed. Any refinance for me would have to have a 2036 repayment date and still save me 8% on the payment. I think rates will stay low through May of 2009. There is a chance the economy will have started improving around then... so rates would head upward soon after that. __________________ Light travels faster than sound. That is why some people appear bright until you hear them speak. One person's stupidity is another person's job security.

11-26-2008, 11:36 AM	#2
calmloki Thinks s/he gets paid by the post Join Date: Jan 2007 Location: Independence Posts: 1,518	Agree that the rate is low - what kind of fees are associated with the refinance? Might keep an eye on Pentagon Federal, most favoritist bank ever for me. They are at 5.5% for a 30 year fixed right now... https://www.penfed.org/productsAndRa...gageCenter.asp

11-26-2008, 11:51 AM	#3
Bimmerbill Full time employment: Posting here. Join Date: Jan 2006 Posts: 612	About $2K in fees. Doesn't look like I'd save that much on a $120K balance. May be good to roll my $37K HELOC into it and get a good fixed rate tho.

11-26-2008, 11:55 AM	#5
laurence Moderator Emeritus Join Date: Feb 2005 Location: San Diego Posts: 4,822	I'm holding out for a while yet. I think there will be a opening of floodgates and the rate will drop precipitously at some point. Of course I can't be sure, but you and I are both at rates where we're not leaving too much money on the table as it is, so there's much more upside potential to waiting than downside, IMHO.

11-26-2008, 02:56 PM	#10
calmloki Thinks s/he gets paid by the post Join Date: Jan 2007 Location: Independence Posts: 1,518	Youse guys are higher rollers than i. If i have a chance to save a couple hundred bucks a year for very little effort i take it - it's enough to make me change or get new credit cards. $900 gets my attention. Shoot, it's way more than we've made in the market this year....(wry emoticon)

11-26-2008, 04:11 PM	#12
Nords Moderator Emeritus Join Date: Feb 2004 Location: Oahu Posts: 15,988	I'll be darned. NFCU has a 5.25% 30-year fixed loan for 1.875 points. We've been tracking their mortgage rates for over four years and this is the first time a refinancing would have a decent payback. Considering the lost interest on the points & closing costs, we'd lower our payments by 4.5% and reset our 26 remaining years back to 30. But the effort would pay itself off in "just" nine years and give us a mortgage until I'm 78 years old. Looks like USAA & PenFed are slightly higher. NFCU's deal is more compelling if the points or the interest rate drop. We'll have to keep an eye on it. Happy Thanksgiving! __________________ * * For more info see "About Me" in my profile.

11-26-2008, 05:07 PM	#13
Darryl Recycles dryer sheets Join Date: Mar 2007 Posts: 346	Nords I picked up Penfed last February at 4.625 15 year with no points you must have walked away from your computer during the six hours the rate was that low. __________________ Your focus determines your reality - Qui-Gon

11-26-2008, 07:23 PM	#17
Darryl Recycles dryer sheets Join Date: Mar 2007 Posts: 346	Nords, a millisecond before I hit the enter key I knew what your response to 15 yr would be but I had too much momentum to stop my finger. __________________ Your focus determines your reality - Qui-Gon

11-27-2008, 11:11 AM	#18
SteveL Recycles dryer sheets Join Date: Aug 2005 Posts: 185	Getting an appraisal might be the big problem in any refi today. I have a neighbor who bought a couple of years ago via an ARM, and now it looks like his house won't appraise for enough to cover his original first. Our neighborhood has 170 houses, mostly different, but only five for sale. No house has sold for more than a year. Hard to get a good est. under these conditions.