Is now a good time to refinance my mortgage?

Asked by Paul Levine, Palo Alto, CA Thu Aug 11, 2011

I bought my house in Feb '11. 7/1 jumbo ARM with a rate of 4.25%. My lender quoted me a new rate of 3.55%.

I'd have to pay 1/2 point in pre-pay penalty on the whole mortgage, but would break even within 9 months based on reduced monthly payments.

Seems like a good deal, no? Any benefit to waiting longer in hopes that rates will drop further?

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Tina Lam’s answer
Tina Lam, Agent, San Jose, CA
Sat Aug 13, 2011
Paul,
If you need to pay a 1/2 point, I'd put off refinancing. It's good now and should only get better. Assuming your personal finances will remain stable over the next 6 months, I'd suggest waiting for mortgage rates to bottom out. With additional monetary easing, concern about sovereign defaults around the world, and a fading economic recovery, interest rates will continue to fall as investors pour into US Treasuries. I can't tell how much you'll save, as only you and your mortgage originator will know what a 0.50% saving will mean.
Web Reference:  http://www.archershomes.com
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, ,
Fri Aug 12, 2011
Thank you for the kind words Gregorio.

Happy funding, Rudi
Web Reference:  http://www.umboc.com
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Gregorio Den…, , San Diego, CA
Fri Aug 12, 2011
On your loan amount. (Yes I cheated and looked it up) I'd say go for it. The rate is excellent as well. Make sure you get it in writing and look at it closely to make sure there are no gotcha's. Don't get stuck with a PPP again.

Contact Rudi who responded to this thread, he's a CA jumbo loan expert and it does not hurt to get a second opinion.
0 votes
, ,
Thu Aug 11, 2011
Hi Paul. That would depend on how long you're planning to be in the home? How much you currently owe? How much you total closing cost would be? How long would it take you to break even? How much you would save per month thereafter? Typically, if you planning to be in a home no more than 5 years, not saving (given this is JUMBO) a minimum of 150-200.00 per month, will not recoup your total closing cost within 3 years it may not make sense to refi. However, if your planning not to move, I would be looking at a 30 yrs fix in opposed to an ARM. Given where rates are now, and depending on the amount of equity in your home, you may be able to get one at your current interest rate or just slightly higher.
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, ,
Thu Aug 11, 2011
I wouldn't wait. What is your FICO, LTV and loan amount? I have ARMs up to $10,000,000 with no prepay and no fee to convert to a fixed rate.

Happy funding, Rudi
Web Reference:  http://www.umboc.com
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