Home Buying in 12561>Question Details

Hendrick Moy, Home Buyer in New Paltz, NY

should we re-lock our FHA mortgage loan from 5.5% to 5.375%?

Asked by Hendrick Moy, New Paltz, NY Mon Aug 3, 2009

granted it's only 1/8th of a drop, over our 30-year FHA, it would come out to about $5K-$5,500 in savings (after they take a fee. about $7K before). our lending officer, however, says it might not be worth it since
most people only stay with their original loans about 7 years, and then refinance. But with these historically low rates, I am not sure we would refinance...

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Voices Member’s answer
Talk to your lender and ask why they are charging you to relock your rate. Since they are the ones holding up your mortgage maybe you can negotiate with them. More than likely you are paying them points and on the date you locked in you would have had choices of what your interest rate would be based on what discount points you decided to pay.You should still have those options.

You're seated in the position of power to negotiate so talk to your lender's representative and do the math on a mortgage calculator, which you can find on my website: http://www.exittogreenrealty.com

0 votes Thank Flag Link Fri Aug 7, 2009
Hi Hendrick,
Obviously if you look at it over 30 years it makes sense, but unless you are planning on a) staying in the home for 30 years and b) planning on keeping that loan for 30 years - I would stick with the current rate. $19 per month would not really be worth the extra cost to me

There is a good chance you'd either move or refinance to drop PMI at some point in time. You'd feel pretty foolish if rates dropped in the future and you could get the lower rate without paying $1500. Of course hindsight is 20/20, but essentially it breaks down to this: if someone came up to you and said they would give you a check for $19 each month for the next 30 years provided you paid them $1500-2000 now AND kept your loan for the entire duration would you do it. I wouldn't, but that's just me

It sounds like your loan officer is doing the right thing by leaving the decision up to you though

Best of luck
0 votes Thank Flag Link Mon Aug 3, 2009
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