calculator:
absolutely yes. you’d probably save ~$350/month assuming you get a rate of ~5.5%. You could wait for them to go lower (and risk that they rise), but if they went all the way down to 5%, you could always re-fi again. The one thing that you’ll need to evaluate is if you want the mortgage agent to pay closing costs, or if you want to, that’s a bit more complicated
With a total loan of $450K, you may have to get a “jumbo” mortgage. And that comes with higher rates (I think about 1% higher than a standard mortgage) so you aren’t likely to get the 5.5% rate the other poster indicated. I think the jumbo rates come into play at around $420K. So you may be able to refi $420K into a standard 30yr mge (at 5.5%) and keep the other $30K in a home equity loan (or if you have the $30K sitting around, just pay it off and just have the one mge).
Also, what will your house appraise at? To avoid private mortgage insurance the first mortgage needs to be 80% or less of the home’s value.
What IAmike said. One thing they are discussing right now is raising the conforming/jumbo threshold in certain areas where the prices are higher, so if they raise those in your area, you may be able to wrap the whole thing into a conforming. If that doesn’t happen (or if your area won’t be likely affected) or you don’t want to wait, I’d go with the conforming first and maybe consider locking in your interest rate on the second instead of having an open ended line of credit that the rate floats on.
Mike
will you be in your house for a while? look at the total cost to re-fi (points, fees etc) and how many months to recapture the costs.
Wait until the conforming loan rate hike kicks in. You’ll have a $450K mortgage and you should be able to get a much better rate than 6.25% if your credit is good. Get in touch with a broker right now and be ready to pull the trigger as soon as Freddie Mac and Fannie Mae get the green light to guarantee jumbos because there will be a rush as soon as that happens and there ain’t a lot of cash out there.
I would think they would be ready to go when the joint bill is signed, so they should be able to process pretty quickly. Listen to Matt and have all your paperwork done with your broker so that when they change, he can lock in and get it done. If you wait until they change, the brokers are going to be going nuts trying to get people with jumbos refinanced.
Mike
my approximate numbers - 15 yr $158K loan at 6.62% - - payments at about $1450/mo
currently refinancing at 5.00% – payments will go down 161.00 per month - and I am keeping the same number of months remaining (less than full 15 year loan)
my closing costs are $620 so in 3-4 months it will be gravy
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HC - I think AmyCO started a thread a week or so ago about this, and it had pretty good information in it.
edit: link
when you refinance, you will most likely need to get a new appraisal, just make sure that the value of your house to your loan (incl closing costs and fees if you plan on rolling into your new loan) gets you a comfortable loan to value. in today’s market, banks are really cautious and are looking for 80% or lower LTV, even with good credit.
Check your current loan docs and make sure there is no penalty for refi’ing early. Some will ding you for upwards of $15k.
Brett
So, did you pull the trigger? I held off thinking the 5.6% would get even better but I just checked and rates for conforming are up to 6.12 in the time between today and the day you posted this.
Dave
The dang banks are not lowering their rates at the same pace as the FED had expected. They are borrowing money cheaply and then trying to make up for their losses on our (good credit customers) backs. Maybe we’ll have substaintailly lowered rates soon but I’m not holding my breath.
The dang banks are not lowering their rates at the same pace as the FED had expected.
Financing for housing doesn’t always follow other market trends. Sometimes interest rates will fall in other areas but remain relatively high in housing. It’s not a simple and direct relationship to prime rates.
A few working theories are that the bigger the rate cut put in place, the longer it takes for that cut to actually take hold.
So since we had a few substantive cuts over a short period of time, it will take upwards of 2 months for those cuts to really make it to us the lowly borrower. This isn’t considered economic reality and fact, but I’ve seen a lot of good analysis that supports it.
One fact is that the rates always go up right after a cut.
But for the long-term perspective? I read a lot of different things. I’m hoping to refi myself, but it seems like it won’t be worth it for a while. I’m happy at 6.25% and it is a more than manageable payment for me. But I had 5.4% in my head for a while, and having that difference to invest sure would be nice these days.
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do nothing and pay extra principal every month to save interest over the long haul. This would do nothing for yourmonthly stroke but will help the overall amount you pay in interest.
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Take your new first up to the maximum and come out of pocket with the rest, if possible.
I’m leaning with Tim on this one. I do have one question, though. Are you planning on staying in the house for a significant period (7-10 years)?
If you are, I’d refinance the loans into a first up to the conforming limit, and if you still need the 2nd, roll the rest into that. Depending on whether you are expecting to need additional funds in the future, you could either go with a fixed home equity loan (if you aren’t expecting to need to take out additional money) or a variable line of credit (if you are expecting to need additional funds). I’d then work on paying down the remaining balance on the second (assuming the interest rate is higher than the first) with any additional principal payments you wanted to make.
If you have enough equity, and your credit is good, the next several months should be pretty good for getting a nice rate on a refinance.
Mike