mortgage rates

[Matt Schell]

Anybody thinking of taking advantage of the low interest rates and refinancing their mortgage. Me and the wife are considering using the low rates to lower our monthly mortgage payment and take care of some credit card bills at the same time.

We've been watching the rates pretty closely and they seem to be creeping back up just a bit so the time might be ripe.

[Rich Engelhardt]

Hello Matt,
We bought our house new in 1986.
The rate was 5 1/4% the first year, 6 1/2 the 2nd and 7 3/4% for years 3 through 30.
In 1992, we refinanced at ~ 6% - give or take - for another 30 year note.

We also stripped out the monthly insurance and tax - and saved that money to a seperate account.

We continued paying the same monthly payment as we had before the refinance - including the tax & insurance.

Bottom line - we were paying roughly $250.00 or more a month against the principal.

By doing that, we paid the house off in 2000 - saving about 10 years of interest.

Beware though of things like prepayment penalties and points and closing costs if you do refinance.
Those are the only downsides.

[David G Baker]

Anybody thinking of taking advantage of the low interest rates and refinancing their mortgage. Me and the wife are considering using the low rates to lower our monthly mortgage payment and take care of some credit card bills at the same time.

We've been watching the rates pretty closely and they seem to be creeping back up just a bit so the time might be ripe.
Matt,
Several friends of mine did it in California several years ago and it worked out great for them. The thing you "MUST" do is do the research and know all of the facts about the loan before committing to it. Some deals can work out great if there are not several hidden fees/charges etc. If you are over your head when it comes to financing there are agencies that can advise you. I have a trust attorney that I use for things that I do not understand. He is not very expensive and offers great advise.

[Ron Dunn]

Refinancing at a lower interest rate is often a good thing, but be careful of a few traps:

* Exit cost from your current loan
* Finance / approval cost for your new loan
* Duties, taxes, etc. associated with the new mortgage
* Hidden fees and charges in the loan cost, not shown in the interest rate

One thing you should definitely NOT do is refinance other debt, such as cars, cards, holidays, etc., into your home loan. Although the interest rate is lower, it is actually the most expensive form of finance you'll find. Don't believe me? Try calculating the total repayments on $5,000 over 3 years at 15% compared with the same 5,000 over 25 years at 5%.

[Joe McCormick]

If one has a VA mortgage loan they might want to look into what is called a VA Streamline loan or IRRRL (Interest Rate Reduction Refinance Loan) You can read about it here: http://www.homeloans.va.gov/IRRRL.htm

One thing to consider about the refinance is how long is the payback before you are actually saving money long term.

We just bought a house back in August at 6.5% using a VA with a disability loan. We can do the VA Streamline loan and reduce the interest to 5.5% with no money out of pocket except for a $15.00 fee for a credit check. All closing cost and other fees like escrow reserves will be rolled in the the new loan. The broker figured the pay back will be about 18 months. This will save us about $130.00 a month over our existing payment, plus will also get to skip one months house payment and will get back about $650.00 from the old escrow reserve account.

[Jim Becker]

Ron brings up a serious point...it's not just about a lower rate. You have to determine what your cost to refinance might be because that invariably will be rolled into the loan in most refinance situations. Your current lender often should be your first stop as sometimes there is a lower cost structure to refinancing than with a new lender. But not always...

When we refinanced to partially fund our addition, we did end up with our existing lender. (Chase) Not only were they more generous on the rate, but they waived a lot of fees that would normally apply because we were an existing customer.

[jeremy levine]

We just did it, consolidated the mortgage and a home equity loan ( saved about $150 a month ) . We are in NY and used Quicken Loan ( this is not to say don't do your research ) and it worked out very nicely. The only out of pocket was the appraisal.

[Matt Meiser]

We don't need to because we still have a great rate, but its probably not even an option around here for most young homeowners. Housing prices way down. I fear they'd tell us we owe more than the house is worth in the current market.

[Tom Godley]

Just make sure you look over EVERYTHING before you sign.

Be careful when the broker/ banker starts talking about what you will get back from the refinance. Because all the escrow will just be rolled in or come due.... and, all the additional fees for the bank/broker/ +services are also rolled in ........and normally the payment months are pushed out.

Often the payback can be much longer than it looks. The old standard of --if you can get 1% ----still works surprisingly well.

As Jim pointed out you can sometimes get a better rate working with your current lender -- You need to be in a position where the lender knows you can and will jump ship unless they do something. Many are not in this strong position

The market is very strange currently -- But going forward the FED is going to have to continue to cut. Long term rates are not tied to this like many think it is -- that is why rates can go up after a cut. But the next year should be positive for those looking for good rates. I do not see how they can maintain the current level they must move lower -- also the temporary increase in the loan limit rate will really help those who now pay jumbo rates in $$$ markets

Falling house values can put you in a position where you may have to make any move you can before you fall below the value level to refinance.

Just be careful -- there are so many types of loans -- it is easy to be tripped up.

In 1990 I bought a house with a 20 year note from a local S&L (remember them) They had good rates, did not sell the notes, and would not escrow for good customers - and the same people had been there for years! Now long gone:(

[Kyle Kraft]

Matt,

I hear ya. My loan is at a pretty low rate. My home value is increasing though 'cuz my taxable value and my SEV have increased according to the township. My payment just went up $100/month because of property tax increases. And I thought my home was increasing in value because of the precious metals contained therein. You know, copper, steel, and aluminum.

I/we must be one of the few remaining employed individuals left in Michigan, so I have to participate at a higher level to keep the place (Michigan) open.

[Christopher Pine]

We cashed in some investments and payed our mortgage down quite a bit. I have the goal o pay off my mortgage this year. If I was looking to refinance I would take a serious look at the new at least to me concept of mortgage.
http://www.troubleshooter.com/ConsumerInformation/ColumnDetails.cfm?ColumnID=733
I have no affiliation whatsoever just a really interesting concept and I think it would be neat for the proper person. (One who would be responsible and use it to pay down there mortgage)

Just a thought take it for what its worth. Best of luck !

[Matt Meiser]

My home value is increasing though 'cuz my taxable value and my SEV have increased according to the township. My payment just went up $100/month because of property tax increases. And I thought my home was increasing in value because of the precious metals contained therein. You know, copper, steel, and aluminum.

Ha!, try to get the back to agree to that. Ours keeps going up to. But that's because our township messed up and missed the 1 year window where they could re-equalize or whatever its called when we bought our house. So its still increasing at the same capped rate that the previous owners had from when they built the house in 91.

My parents' house 10 miles away had a decrease on their last tax bill.

[David G Baker]

Kyle,
With all of the people leaving Michigan due to the lack of jobs the rest of us have to pay more taxes and fees to make up for all of the revenue that the governments are not receiving from all of the people and businesses that have left. Did you read the book Catch 22? Won't be too long before the rest of us have to file for bankruptcy, mortgage foreclosure and repossession of our personal property. Soon the only folks left in the state will be the politicians and they will find ways around paying any taxes.

[Chris Padilla]

You know, copper, steel, and aluminum.

Gold and platinum is what you should be looking into now. The Big R is upon us (recession), the Fed can only lower interest rates but that will drive the dollar even weaker...interesting times ahead of us. The next Presidency will have thier hands QUITE full me thinks....

[Jim Becker]

Chris (Pine), that forum of mortgage "could" be beneficial to some, but it can also be extremely scary for the way that too many folks manage their money. You're in effect, combining a variable interest rate (that does float with the short term prime rate) with a variable principle. It could get really easy to get in big trouble if you are not good at managing your spending with that one... ;)

Oh, and I've had HELOC for many years now and even with sub-prime rates due to good credit, it's never had a rate lower than my fixed rate mortgages. One would have to be really careful about what the average balance is, but even then it's complicated as they don't average when calculating interest for many of these loans.

[Matt Schell]

thanks everybody we are in pretty good shape because we bought our house dirt cheap and even with the slow market it is worth way more than when we bought. We took advantage of low rates once already to take our 30 year down to a 15 without affecting our monthly payments. This time we are looking to consolidate our 15 and a 20 year home equity into one 15 and lower our payments by a good 200 bucks in the process.

I hear what your saying about rolling in extra debt that is something we are looking really carefully at. We have some small credit cards that we have been bouncing around between 0% cards but you can only get away with that for so long.