mortgage question

[NEO]

I've got a 30 yr fixed at 5.75%, I am about 5 years into it.

I've seen rates have been creeping down into the low 5's.

At what point should I consider a refi?(any mortgage broker suggestions?)

I plan on staying in this home for the forseeable future.

Our property taxes seem to going up, up year over year, hence mortgage payment up up year over year.

If it matters, my only other debt is a car note for 12 more months.

Any recommendations/advice are appreciated.

[FZ]

I'd only do a zero cost refi. For the same term, if the rate drops lower than my current rate, I will do it. I did this every year from 2000 to 2003, the rate dropped from 6, 5.675, 5.5 and 5.25. I paid nothing. Only minus was I'd have to pay 4 more years. But I don't plan to stay the same house that long anyway.

[TTfromBlaine]

FZ who you been gettin your zero cost refi's from?? I gotta get this t-home loan down to a manageable rate.

Tom..

[NEO]

Quote:

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I'd only do a zero cost refi.

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can you recommend someone for the 0 refi?

[fisherdog19]

I own my own mortgage company, if any of you have any questions or would like a rate quote, shoot me an email. I'd be more than happy to help any of you out and give you the FishingMN discount!!

[MuskieJunkie]

I doubt you are going to find a loan better than 5.75 for 30 years. If I were you I would stick with that and love it. Those low 5 advertisments you see are variable rates.

[Eckie]

Agree with MuskieJunkie...current 30 year rates this morning are hovering at 6% with no points. If you have 5.75%, I wouldn't recommend refinancing until rates are at a MINIMUM of .25% - .375% below what you're at. Stay away from products such as Pay Option Arms, variable rates products and minimum payment type programs...you know, the tv commercials that advertise a "$450,000 mortgage for $500 a month"...these are negative amortization loans, and can be very misleading. They allow you to make payments below the standard interest payment and the remaining interest is applied to the principal balance, causing your mortgage to "grow". They also often have hefty prepayment penalties attached to them, which makes it almost impossible to get out of them.

Good luck!

[FZ]

Any mortgage company should be able to quote you a 0$ refinancing rate which is normally 0.25%-0.375% higher than the regular rate. This extra 0.25% is added to your payment so you have to compare the future payment with your existing payment. If your current rate is 5.75%, you’d have to wait for average 30 Years rate dips to 5.25% or so. My first refi was done with E-Loan, and rest were found by signing up LandingTree.

[HOGEYE]

So what are the current refinance rates when one plans on paying closing costs assuming perfect credit?

[Fish Tales]

You could also look into lowering the amount of years left on your mortgage. The rate will also be lower than a 30 year loan for fixed rate percentage. I.E. 30 year fixed at 5.75%and 20 year fixed might be 5.5% drop years off instead of dollars up front. I dont know the exact rates right now but they would be lower than 30 year fixed. Your dollar amount might actually go up a little per month but that much closer to end of loan.

[Eckie]

Current 20 year rates aren't much better than 30 year rates(maybe .125%). You will however, see a significant drop in the 15 year rates (.375-.5%).

There are a couple of ways to do a $0 cost refi. One is as FZ mentioned, to increase the quoted interest rate by a margin of approximately .25% to "absorb" the closing fees. The other is to roll the fees into the mortgage (assuming enough equity is available to do this), thus not affecting the interest rate. Obviously, the last option is to simply pay closing fees out of pocket at closing.

[Heidi]

30 year rates are 5.75% today and 15 at 5.375%. No savings for you I am afraid. Your rate is very good. My darn taxes have gone up alot too.

[fisherdog19]

Just going to answer a few questions here.

First is the 0 closing cost option. If you are purchasing a home, you can get seller paid closing costs or increase your rate to cover them. The latter method happens by increasing your interest rate to make enough yield spread points/premium to cover the associated cost while still making a little money. This is entirely dependent on the amount of the loan; it is easier to generate enough revenue on a $400,000 than an $80,000. In some cases you may need to increase your rate by upwards of 1.5% for the lender to generate enough to cover the fees in which it is not then practical (low loan amounts). If you can get a rate that decreases your payments enough (compared to the higher 0 fee loan) to recoup closing costs within 24 months and you plan on staying in the home for even 1 month more, it is better to pay the closing costs out of pocket. The same holds true for a refinance, except you just increase the loan amount by a large enough margin over the existing balance to cover them for you and in essence finance them, or you can pay them out of pocket. If you can recoup them in less than 24 months, you're in business.

Next, the spreads between 30 to 20 or 15 to 10 year terms is sometimes non existent. The ARM to 30 fixed spread has recently touched 6 year lows, at one point it was 27 basis points (.27%). If you are unsure how long you are going to be in a home and are thinking of an ARM, just go with the fixed rate.

DO NOT buy into the 1% loan mumbojumbo unless you are financially savy, know you are going to be in a home for a short term, or are in the ivestment property business and know what you are doing. Like one person posted, these loans a can negatively amortize, which means that your original principal balance can increase. If your balance reaches 110% of its original amount or has increased after 60 months, whichever comes first, your loan will recast and your new payments will be based on the new loan amount at that time. People that get caught up in this in order to purchase a home they otherwise couldn't afford, can lose a home quickly .

Refinancing: You must make sure that your refi will have a tangible benefit. If it's a rate/term refi, you would need to at least lower your payment enough to where your fees are recouped no longer than 24 months out. That is not the rule, just someting I recommend. A cash out has tangible benefit just by recieving cash at close. If it is just because you need cash, ok; if you are consolidating debt, again, you should decrease your monthly outflow by enough to cover your fees in at least 36 months. You can go out a little longer to recoup your fees in this scenario since we all know how long it can take to pay off credit cards if we make minimum payments.

Another misconception people have is that they consider total settlement charges to be the same a closing costs. There are two types of fees associated with a loan: closing costs, and prepaid items/reserves. Closing costs are fees associated with the loan itself, prepaid items/reserves are fees you will have no matter what lender you use, and can include prepaid interest, hazard insurance, and escrow reserves. Some, not so honest lenders, will fail to include some or all of these fees in order to make their bottom line costs look less than the competitors, in order to get the business. You then get the real story closer to closing. So be sure to compare apples to apples when shopping rates and closing costs!

Of course you all know that rates are dependent upon credit score, loan amount, loan to value, property type, documentation type, and even what state you live in. Some states have higher default rates so lenders charge higher interest rates or have lower pricing in those states.

There are a lot of variables in all of these equations, and that is why it is good to work with a lender that will explain and go over with you, the many scenario's available to help find what's best for you.

If any of you have other questions, I'm just an email away. I am licensed in all 50 states, and will be a FishingMN sponsor sometime next week.

Thanks for Reading and good fishing,

[HOGEYE]

How are the rates today? Dug this post up from a month ago.

Specifically for a 150k 30 year fixed. Assuming 16k net on the sale of current home put into a down payment for new home with tax and insurance escrowed. What would monthly payments be?

Thinking about trying Lending Tree, but am skeptical. Any thoughts?

[fisherdog19]

HOGEYE, give me a call toll free at 877 828-5823 and ask for Peter, or shoot me the details through email so I can get you a more accurate quote. Rates depend on many things, how much down on the purchase price of a home is one of them. I am working on a deal for another FM member curently, and he looked online as well and found the closing costs were VERY high, and the rates he told me he got quoted were about .75-1% higher than what I can get him. Lending tree will send your application to a bunch of mortgage brokers/banks and they will be using the same lenders/investors I can use, they will just need to make more money to cover thier overhead. I'm sure I can help you out. I may even come up to Bemidji and make a fishing trip out of it since I'm located in Detroit Lakes .

[Valv]

Be veeeery careful out there, I am in same shoes as you right now, used ELoan and others and I'm not very happy, I am now with Peter (Fisherdog19) the reply above this one and I have more hope we can do something.

I've been messing with this for few weeks now and I am still debating what to do.

[Sandmannd]

Congrats on being a gramps Valv.

[Note from admin: Edited. Please read forum policy before posting again. Thank you.]

[fisherdog19]

Valv, it's been great working with you. I've got everything with me here, we made it safely to Minneapolis tonight with a little bump in the road. My daughter came down with a bad ear infection so we had to take her to an urgent care clinic (all is well now). I'll call you in the morning some time so we can meet up somewhere south of Prior Lake.

HOGEYE, it was nice chatting with you, hope we can do some fishing, and business together.

[Valv]

Ok, today I had the closing for my refi with Valesco Mortgage.

I cannot be any happier, Peter has been one of the most knowledgeable person in this field, even his staff and the Title Company were on top of things.

Thank you Peter for all your work.

PS this is not free extra advertisement for a sponsor of this forum, I actually really refinanced my home, I went through the offers online, and the difference between local and internet is unbelievable, the versatility of a broker like Peter will save you THOUSANDS of dollars and place you on a better rate. I gained 1.75% points with Valesco instead of E-Loan.

[fisherdog19]

Thank you for the kind works Valv. It is true, the internet deals with the rediculous low cost mortgages, are just that, rediculous. They are meant to get you in, and then you find out that the programs they are advertising are ones that will negatively amortize, or create a larger loan balance than when you started. The larger internet companies pay a lot for advertising, so they must charge higher closing costs, and rates to make enough money to cover their costs. Like Valv said, he got quoted over 8% with Eloan, and I was able to get him a rate in the mid 6's. The closing costs were also over $2,500 higher with them.

As a national lender (we fund our own loans so I am considered a banker, but I can broker), we fund enough loans per month to be able to offer terrific rates, and use many different investors to find the best deal around. Give us a shot, and you will be happy, I'll make sure of it.

Valv, it was a pleasure, I'll make it a point to get together fishing with you next time I'm in your area.

[randallt]

People refinance to lower monthly payments. My advice is to look at the total interest paid per month on the new vs old loan. Most loans are very heavy on the interest portion of the loan in the beginning years. Slowly the principle amount increases. SO basicly every time you refi you increase interest and decrease principle payments. Something else to consider when are thinking of refinancing. It is not a fluke that so many poeple are in the business. There is a lot of money to be made off of mortgages.