Should I delay my mortgage refi?
February 4, 2009 9:38 AM Subscribe
The Obama stimulus plan and mortgages for the financially stable.. Anything there for me?
Currently in a 15-year fixed mortgage with about 50% equity in the home. Have about 30K in Home Equity Loan balance that i'd like to clear AND I'd like to cut my monthly payment, so I'd like to get back to a 30-year fixed loan.
Can anyone read the tea leaves and see any reason to delay a refi with the anticipation that the stimulus plan might have something there for a 800+ FICO score, 50% equity holding homeowner? Or will all stimulus be geared towards first-time home purchaser or towards helping those heading to foreclosure to stay in their homes.
Currently in a 15-year fixed mortgage with about 50% equity in the home. Have about 30K in Home Equity Loan balance that i'd like to clear AND I'd like to cut my monthly payment, so I'd like to get back to a 30-year fixed loan.
Can anyone read the tea leaves and see any reason to delay a refi with the anticipation that the stimulus plan might have something there for a 800+ FICO score, 50% equity holding homeowner? Or will all stimulus be geared towards first-time home purchaser or towards helping those heading to foreclosure to stay in their homes.
Well, there is no definitive answer, so you are just looking for advice and guesses.
I'm in the same boat as you as a safe bet, and I can say this: I just refi-ed last week at 4.7% down from something in the high 6s. The rates went down for something like 5 consecutive weeks, and then drifted back up last week. But remember, the rate isn't the only question. Need to look at closing costs too and whether it makes sense to absorb the closing costs based on the difference in your rates.
There is so much uncertainty in our economy that it cannot be predicted, and the mortgage problem is multifactorial. That is, throwing money at it may not necessarily fix the housing market. Some speculate it may make it worse.
From all that I could figure out was that there was a better chance they would go down a little bit more. So then I looked at the numbers. I looked at the difference of what I would pay per month at the old rate and then the new rate. It was a significant decrease. Then I looked at the difference between what I got 4.7% and some dream rate of 4.4%. That difference was marginal.
It did not strike me as worth waiting to get that potential better rate. I'd rather start saving now. In other words, if I told you that you could start saving $500 a month right now or possibly save $550 a year from now, which would you choose? I decided to take the bird in the hand.
posted by dios at 10:00 AM on February 4, 2009 [1 favorite]
I'm in the same boat as you as a safe bet, and I can say this: I just refi-ed last week at 4.7% down from something in the high 6s. The rates went down for something like 5 consecutive weeks, and then drifted back up last week. But remember, the rate isn't the only question. Need to look at closing costs too and whether it makes sense to absorb the closing costs based on the difference in your rates.
There is so much uncertainty in our economy that it cannot be predicted, and the mortgage problem is multifactorial. That is, throwing money at it may not necessarily fix the housing market. Some speculate it may make it worse.
From all that I could figure out was that there was a better chance they would go down a little bit more. So then I looked at the numbers. I looked at the difference of what I would pay per month at the old rate and then the new rate. It was a significant decrease. Then I looked at the difference between what I got 4.7% and some dream rate of 4.4%. That difference was marginal.
It did not strike me as worth waiting to get that potential better rate. I'd rather start saving now. In other words, if I told you that you could start saving $500 a month right now or possibly save $550 a year from now, which would you choose? I decided to take the bird in the hand.
posted by dios at 10:00 AM on February 4, 2009 [1 favorite]
No.
I have skin in the game; on my desk right now is an app to refinance to 4.625 (from 6.375). I actually locked at 4.875 and was allowed to float down once (they no longer offer the option in this rate environment).
Personally, I'd rather take a 100% chance for a rate near historical lows than a less than 100% chance of getting a slightly lower rate. In other words, I don't care if I don't get the exact bottom, and I know I'm *near* the bottom, so that's just peachy.
From what I understand a lot of the low-rate stimulus stuff being thrown around is for either A) home purchasers and not people refinancing, or B) people at risk of losing their home.
In my recent experience the percentage discount for getting a 15 year mortgage over a 30 year has been less than the historical difference. In fact, the 20 and 30 year rates were identical. So, going to that 30 year now isn't such a bad idea in my opinion since you can generally accelerate payments to your convenience.
posted by RikiTikiTavi at 1:40 PM on February 4, 2009
I have skin in the game; on my desk right now is an app to refinance to 4.625 (from 6.375). I actually locked at 4.875 and was allowed to float down once (they no longer offer the option in this rate environment).
Personally, I'd rather take a 100% chance for a rate near historical lows than a less than 100% chance of getting a slightly lower rate. In other words, I don't care if I don't get the exact bottom, and I know I'm *near* the bottom, so that's just peachy.
From what I understand a lot of the low-rate stimulus stuff being thrown around is for either A) home purchasers and not people refinancing, or B) people at risk of losing their home.
In my recent experience the percentage discount for getting a 15 year mortgage over a 30 year has been less than the historical difference. In fact, the 20 and 30 year rates were identical. So, going to that 30 year now isn't such a bad idea in my opinion since you can generally accelerate payments to your convenience.
posted by RikiTikiTavi at 1:40 PM on February 4, 2009
Response by poster: Thanks all. Currently, I have a 15-year (@ 4 7/8) and am 4 years in. The HELOC was there for overflow expenses. It's been paid down to as low as 5K and has been as high as 60K Unfortunately, the 200K line was axed a couple of months back, otherwise I'd stay as-is. Funny thing is that I have a lower rate on my HELOC right now!
posted by teg4rvn at 2:38 PM on February 4, 2009
posted by teg4rvn at 2:38 PM on February 4, 2009
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posted by alms at 9:46 AM on February 4, 2009