I know we have some pretty knowledgeable people around here so i figured i would throw this question out.
With the feds loaning money for next to nothing how low do you think 30yr home loan interest rates will go?
I have checked with my bank and i can get 5%. My current rate is 6.1%. So its a no brainer that right now would be a good time to refi. But do you think that they will go significantly lower than what they are currently?

Thanks in advance

 

Just keep in mind your loan will be reset back to payment #1 when you refinance. If you are 17 years into a 30 year loan that might not make the most sense.

I'd rather pay it off early.

Consider refinancing to a 20 year or 15 fixed rate to pay the loan off early. Or not refinancing at all.

We are addicted to debt in the US. The best thing to do is pay off that loan asap and keep your house mortgage free.

Choose wisely. Debt sucks.

 

I think it will go significantally lower. I have heard of 1.5 at some point on new home purchases. Refinancing will be close behind. There is going to be another big surge of forclosures and more frozen credit.
They will get more desperate in the next year or so.
Depending on the fees you end up paying you could do it now and in a year or so do it again if you can get them to waive most of the fees.
The fees are what will make it practal or not.

 

6.1% is not that bad at all. and besides your either going to come out of pocket for the re-fi or just add it on to the previous and start from zero all over again? not a smart move in these times of economic demise. .02

 

A 5% loan will cost you less in interest than a 6.1% loan.
If you continued to pay the same monthly payment at a lower rate, you will pay off sooner.
The question is will the loan costs for the new loan (points and closing costs) exceed the interest savings.
Real Estate Interest is fully tax deductible, points will be depreciated over the term of the loan (confirm with your tax advisor).
You need to consider both your loan costs and your tax situation before deciding if you will actually benefit from a Re-Fi.
If you pay customary closing costs and points, 1.5% to 2% interest savings is usually the minimum reduction that would justify the loan fees (on average, not always).
Some lenders will waive the loan fees in exchange for a little higher rate. I did this with Ditech (www.ditech.com) several years ago. They called it a 'Roll-Down'. I am not sure if this program is still available.
I agree with paying off your mortgage and all other debt. If you refinance at a lower rate, you should look for a shorter term. You can shorten the term even more by simply paying the higher payment amount that you were accustomed to. Yes, this takes some discipline on your part.
By taking advantage of the rate drops over the years, my house will be paid off 23 years after I purchased it. I started with a 30 year loan.
When shopping for a new mortgage, do not forget about your Credit Union. You may find they offer some really good rates and programs.
Finally, if you are less than 30 years from retirement, you should try really hard to arrange a loan that will pay-off long before your retirement date.
When you apply for a new loan, the lender is required to give you a form called a 'Good Faith Estimate of Closing Costs'. This is also called a 'HUD 1 Form'. Get this document and read it. If you do not understand the fees, ask someone to explain them to you. This is where you will find the real cost of the loan.
When you close your loan, you will get a final loan settlement showing what you actually paid. Compare the estimate to the final costs. If you see fees that were paid, but not listed on the estimate, you should fight for an explanation or a refund. The lender is required by law to include all known fees in the estimate.
Just my 2 cents...

 

Having 17 years left on a loan and not wanting to start back at Year 1 on your payments is no reason to not refinance. If interest rates lower approx 2% points and you plan on staying in your home at least a few more years, it pays off to refinance.

If you only have 17 years left... refinance at the lower rate for 15 years. You just need to do some math and look at the numbers. If rates hit 4.5 or less I'm refinancing.

 

What a friend of mine did was refinance, and continued paying the same amount of money per month as what he did before he refied... wound up saving lots of $$ in the end.

 

If anybody has any questions let me know.

I'm a mortgage officer in NC and can help you with questions.

 

On a Refi, what do most lenders require to drop PMI? I currently am not paying PMI and certainly would not want to decrease my interest rate only to find out PMI was added to the new loan.

How much does credit score factor in to finance rates currently? I've heard on the news lately that some folks have been able to get 4.5% with excellent credit scores... not sure if that's paying points or not. Thanks.

 

Well then... What is your educated guess on what the interest rates will do in the next 6 mo to a year? I understand noone knows for sure but you would have alot more knowledge than me.

 

PMI is usually required on conventional loans (Not FHA or VA) that exceed 80% Loan to Value. If you can keep the loan amount below 80%, you should not be required to carry the PMI.
FHA has their own fees that are similar to PMI. They used to call it MIP (Mortgage Insurance Premium). I am not sure if they still use that term.

To get the best rates, you need a good credit score. I believe most RE lenders consider anything over a FICO of 720 too be excellent. As your credit score drops, your points and rate will increase. This is where it pays too shop.

Everybody gets 3 free credit reports a year from www.annualcreditreport.com. This includes 1 each of Experian, TransUnion, and Equifax. You can get your score by paying a fee of less than $10. This is the website set-up by the Federal Trade Commission to satisfy the legal requirement that each CRA (Credit Reporting Agency) offer every consumer 1 report a year to verify accuracy and prevent fraud.

These are great questions.

 

I can say everyone should use a credit reporting agency to monitor their credit. I use one that updates me monthly on my activity. I can check my credit score everyday if I like. It's nice to go in and see everything all in one place.

 

1% drop on a big loan like a house can save you a pretty penny in the end. Just depends on how much they charge you to refinance.

Smart thing would be to shorten the terms if you can and/or continue paying more each month than you owe (as much as you can afford obviously). Just by tossing in a hundred or two extra each month over the course of a 30 year loan will save you quite a bit of money and get that thing paid off early.

There is no rule for you to have to pay exactly your agreed payment each month and no reason not to pay more if you can afford it. Too many people think paying the minimum required is in their best interest...

 

If there are no closing costs going to the new 5%, then it's almost a no-brainer. Get a 30yr. if you want to free up some cash monthly, or get a 15yr. I think it's been mentioned before, but getting a 30yr. doesn't mean you must pay it off in 30yrs. You can double up payments in the good years, and still have it paid in 15yrs. or less. Make sure there are no stipulations on early payoff or extra payments.

 

This is very true. You can make an extra principal payment anytime you like.
Many lenders would charge a fee to set-up a 'Bi-Weekly Payment Plan'. They would charge several hundred dollars so that you can pay 1/2 of your monthly payment every 2 weeks. They would tell you for a fee of $300 (just a guess), you can cut x years off your loan. The real truth was that the borrower was making 13 payments per year. One extra payment a year, especially in the early years of a 30 year loan, is a big deal. That is how the loan was reduced.
There was never a reason to pay the fee. Any borrower could pay half his payment every 2 weeks. As long as the payment was not late.
Most of the pre-payment penalties were on adjustable loans. The fixed rate loans were usually 'cleaner'.

A previous poster mentioned that he monitors his credit reports monthly and can get his credit score anytime he likes. This is a service that has a small fee attached. I think $29 per year is about the lowest price I have seen. This is cheap insurance. You can find most of your banks and credit card companies will offer it, as well as some online providers. If you want free, www.annualcreditreport.com is probably the safest. Again, this site was set-up at the direction of the Federal Trade Commission.