Refinancing Home Mortgage
I bought my house about 2.5 years ago and am wondering if I should refinance now to lock in today’s low rates or just wait it out. The house is worth about 850K. My first mortgage is a 600K 7 year ARM at 5.85% (4.5 years left). My second mortgage is about 70K at 7.8% which I plan on paying off before the ARM resets. Now that I have 20% equity in my house my lender can wrap both loans into a 6.25% 30 year loan with about 3-4K closing costs. I have no idea of how long we will be in the house but have no plans of moving any time soon. I am just worried that in 4.5 years when the ARM adjusts refinancing rates are going to be much higher. Do you think rates will get better towards the end of the year if the economy starts to get better? Your thoughts would be great.
Thanks for all your help guys. Just had the appraisal and it fell just at 850K (100K more than I bought it for 2.5 years ago after kitchen and bathroom remodels). I realize that the conforming loan limits have been modifed but loans above 417K are still considered higher risk and have about 0.5-0.75% higher rate than conforming loans. Better but not quite equal.
This is about mortgage information questions.
5 Responses to Should I refinance now or wait?
PoohBearPenguin
May 28th, 2010 at 4:02 am
Your primary mortgage is still at a really good rate, and you have a few years left on it. I don’t see a benefit to you getting a single mortgage since your rate will be higher than 5.85% you have now.
If you could just refi the 2nd mortgage, that would be a good thing. 7.8% is pretty high right now, and since you definitely plan on paying it off in the next few years, it’d make sense to just get a lower rate on that.
The other problem with refi’ing right now is that the housing market is really chaotic right now. Your house may be worth 850k now, but if that changes, there go your plans for getting a single mortgage. We had problems with this when we did our refi. We ended up going through 3 different banks before finally finding someone who didn’t change their rules mid-way through the application process. Unfortunately, due to a house in our neighborhood that suddenly dropped its price by 10%, our house’s value suddenly plummeted $50k, which threw off all our calculations. We still managed to get the loan, but it wasn’t for as much as we had hoped (we were going to do some debt consolidation as well.)
Jennifer R
May 28th, 2010 at 4:30 am
Buy a point and see if your lender can get you to 5.875 or lower then go ahead and refi. Your closing costs sound low make sure they are not building a portion into the rate. See if the 3-4 includes title and escrow, 6 months taxes etc… Your 2nd right now is really high; I would get out of that asap
bianca
May 28th, 2010 at 5:18 am
your “blended rate” for your 2 mortgages is almost the same then what lender offer you right now- you have to ask yourself if you going to move to the new property in the next 4-5 years or not, because your payments will stay about the same if you will refinance now. if you plan to live in this house – you will be better off with fixed rate and not to worry about reseting arm time.
GodBlessAmerica
May 28th, 2010 at 5:46 am
I would refinance now and consolidate the 2 mortgages into one. My friend could actually match the rate you have on the 1st mortgage right now and put you into a 30 year fix. I doubt that you will be able to do that when your note turns into an adjustable. That is a problem many people are experiencing and why so many face foreclosure. Also, now you would only be paying interest on one loan instead of 2 and your payments should go down. If you wanted you could apply the savings to your home mortgage and pay it off sooner then expected. With the new stimulus package that came out your loan will not be looked at as a jumbo loan until Dec 31st.
You should shoot my friend an email, he’s the best out there and licensed in our states.
mike@afbankloans.com
Good Luck!
Ohio State Hopeful
May 28th, 2010 at 6:26 am
Try using http://Refinance-Today.info to get refinance quotes from the top lenders. It only took me a few minutes.