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Re-Fi SOS

Posted on June 17th, 2009 9:57am by Candy Evans
Filed under investment Real Estate, mortgage/refinancing

A reader writes:

“If we missed out on the 4.5% refi rates, have we basically missed the boat? What would make it worth it now to still refi?”

Good question, we’ll find an expert and try to get you some answers!

6 Comments to “Re-Fi SOS”

Ryan Craig @ June 17th, 2009 at 11:25 am

When looking at a refi it is all about your goals for the property and breakeven point on the closing costs. The general rule is a 1% drop in rate is where it starts to make sense. However, higher loan amounts move the 1% lower and other items factor in like someone having an ARM. Hope that helps!

By the way, rates have been making a move toward 5% again after being over 5.5% two weeks ago.

Ryan
214-929-2878
J @ June 17th, 2009 at 12:44 pm

I would echo what Ryan said and add that if you are in an ARM that is expiring in the next few years, this may well be the best window you would have to get into a fixed rate term under the most favorable conditions. Currently you can still get in the 4’s with a 15 year term. (assuming great credit and ratios)

Jumbos rates are in the mid 6% area and have been a bit more stable.

The main variable to consider is how long you plan on being in the home. If you have a good idea on that, the numbers either make sense or they don’t.
kl @ June 17th, 2009 at 5:58 pm

I’m 11 years into a 30 fixed. Owe under $100,000. May or may not live here another 15 years. Assuming the smartest thing is to keep payments similar but save tens of thousands total less interest by the end. Lowering my monthly payment would cost tens of thousands more at the end. Help!
J @ June 17th, 2009 at 10:32 pm

KL,

If you lower your payment by extending the term to 30 years, you are correct in that it will cost you way more over the life of the loan.

What is your current rate?
kl @ June 18th, 2009 at 7:33 am

7% in high rise.
J @ June 18th, 2009 at 10:28 am

Kl,

My inclination is that you should still look into refinancing. With a high-rise, it will open up your options if the property itself is warrantable; meaning the loans on these units are eligible to be sold to Fannie Mae or Freddie Mac.

In short, it is probably worth 45minutes of your time to put in an application somewhere and get some solid numbers to look at. You have nothing to lose but a little time and you have plenty of room to improve your rate enough. I would be happy to take a look at it. You can email Candy if you want my contact info. Good Luck. J