I'm about to (hopefully) refinance my mortgage down about 5/8 of a point. Anyone else thinking about refis as the stock market decline has driven down mortgage rates?
I did it on a long term loan whan the prime was 7.25%. So the 75 point cut really bummed me out. Anyway, I hope you do well with it.
I actually looked into it today, but my savings would be nominal. Sachin...when you refinance, don't pay any closing costs except for the title fee, taxes.
Some mortgage brokers will eat the cost in exchange for your business. You can just ask them for the rates of a "no points, no fees" refi.
I was going to start a new thread on this, luckily for me the awesome BS community beat me to it . We are looking to re-fi as well, but the rates aren't as low as I thought they'd be. Some brokers have actually told us that they are higher lately, despite the fed cuts . I was hoping for some clarity on that, because that doesn't sound right to me. I'm kind of holding off until I get some more info and shop around some more.
I heard that the 30 year fixed mortgages are not dependent on the interest rate that the Fed just cut. I think they're dependent on some sort of T-bill index. I think it was something called the 10 year t-bill index.
Don't go to a broker...go directly to a lender. If you are above 6%, have a greater than 20% loan-to-value ratio and have good credit, you will get a lower rate. If you aren't, they obviously don't want your business.
VERY astute point. Mortgage rates are dependent on the 10-year Treasury bonds. Here's the logic behind that: A US government bond is essentially the safest investment available. No rational investor will accept a return lower than a US government bond. For example, if a US government bond pays 4%, all investments should have an expected return higher than 4%. A typical 30 year fixed rate mortgage pays out in 8 years on average because of home sales, etc. So the closest government bond benchmark rate is the 10 year bond. As bond prices go up, bond yields drop. Because of the recent downturn in the stock market, money has been entering the bond market, driving prices up and yields down. The 10 year treasury bond is no exception. Here are the yields over the past year or so: A lender knows that they need to earn above the 10 year treasury bond rate to make a profit. So the rates they offer move, more or less, in concert with the 10 year Treasury bond rates. There are some variations, including the demand for mortgages and the liquidity of the resale market, but generally speaking, this is the yield to keep an eye on. Hope this helps, Sachin
The last guy we talked to gave us 5.5 but I didn't lock. He never got back to us about recasting the mortgage after we sell our first house, so we're nowhere at the moment. PM me if you want to talk some more. Sachin
I hope you have significant equity in your home if you plan to refi nowadays since most lenders will not refi for more than the current appraised value. the only exceptions to this would be an above value loan (ex. 125%) which means significantly higher rates. That is the dilemma for most now who bought a few years ago with only 5% or so down payment. Lenders won't refinance a home for more than it is currently worth. Also, make sure your existing loan does not have a prepayment penalty which you will have to pay to close out the old loan and get a new (roughly $2-$10K depending on loan size). The only way around this is to get the refinance through the current lender who might find it in themselves to waive the penalty. Although they will probably bump your rate to compensate without explaining that to you!