Waiting to refinance below 5 percent. Have I waited too long????

Asked by Carl Riggs, bremerton wa 98311-3112 Thu Feb 5, 2009

Status married credit scores 784 and 797, no credit card debt, owe 283k on house value is appox 355k dropping daily. Gross income is 92k willing to pay closing cost up to 7k

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Lara McHenry, Agent, Spokane, WA
Thu Feb 5, 2009

I received some interesting news via our President of Coldwell Banker this morning and thought this excerpt might be interesting to you;
As I am sure you are aware, the Senate will be voting on the Economic Stimulus Plan very shortly. Our Government Affairs staff in Washington D.C. has just informed us that a Senate vote on the Economic Stimulus Plan could occur as early as tomorrow, February 6. We have also been advised that special Amendment #353 to the Plan, a provision for the Federal Government to buy-down mortgage rates to 4.5% or less for a 30-year fixed rate loan for the purchase of a primary residence, will be voted on as early as TODAY.
So if this rings true...you should have opportunity. I'd pay close attention to the news amd all the details of these stimulus programs so you get the full scenario the next couple of days! The rates are tremendous regardless and you really should get rolling on an application real soon as who knows what kind of restraints will be put on these buy down provisions. In essence will it cover Refinancing or is this just for new purchases? Always a good idea to search out all the facts and take the most calculated move that works for you and your scenario.
Good Luck
1 vote
Rhonda Porter, , Seattle, WA
Thu Feb 5, 2009
Carl, I highly recommend selecting a local Mortgage Professional who will watch rates for you. What I'm offering my clients in Washington State who are waiting for "under 5%" is to begin the application process so that we have everything we need in order to lock when the rate is available.

When the rates dip into the 'below 5' range, many LO's become inundated and are not able to handle all the request from potential borrowers. They have to tend to those who are committed to them first (often with a forward lock agreement) and will contact "rate shoppers" next.

Another factor is that the actual banks/lenders will become too busy to handle the rates and they will either shut down their lock desk or "artifically" increase rates in order to slow down new locks.

The industry has fewer people to handle all the request...last week, I heard a stat from the Washington Association of Mortgage Professionals that we have gone from 14,000 licensed loan originators in Washington State to 4,000 in two years!

Be sure to consider what your current rate is, what rate you need to break even on closing costs and how long you plan to retain your current home.

Good luck!
1 vote
Whitney Hall, Mortgage Broker Or Lender, Fort Myers, FL
Wed Jul 3, 2013
Our rates are extremely low. I can get you at 4% or less.. Please call me 239-471-9829
0 votes
Rhonda Porter, , Seattle, WA
Mon May 30, 2011
I need to update my answer below...if you have not refinanced yet and if your home's value has depreciated, you may qualify for the home affordable refinance program if your mortgage is securitized by Fannie Mae or Freddie Mac. This program has been extended until summer of 2012.
0 votes
Justin Ruzic…, Agent, Greenville, SC
Mon May 30, 2011
this question was posted on February 2009, it is Now May of 2011 and interest rates hit a record low of 4.61%...Isn't it funny how every year it seems you see "Mortgage Rates at Lowest Level in Years."
Web Reference:  http://blog.house-guy.com
0 votes
Marty S, , Irvine, CA
Thu Feb 5, 2009
If you're willing to pay buydown points, then no, not at all. Sit down with a trusted Mortgage Broker

I am a mortgage broker. If I can be of service, please let me know!

Martin Smith

Precision Funding
877-238-6324 Ext 704
877-238-6324 FAX
0 votes
Rhonda Porter, , Seattle, WA
Thu Feb 5, 2009
Plus waiting while your home depreciates means that you'll have mortgage insurance. :( Sorry...I'm feeling like a real bummer.
0 votes
Keith Sorem, Agent, Glendale, CA
Thu Feb 5, 2009
The borrowing required to fund the economic stimulus appears to be driving up rates. I do not recommend waiting for lower rates.
0 votes
Rhonda Porter, , Seattle, WA
Thu Feb 5, 2009
There are issues with waiting for the gov. to lower rates. To begin with the Fed is doing this buy purchasing mortgage backed securities (bonds) at specific rates. Mortgage rates (at this time) are not directly controlled by the gov. Year to date, I believe the Fed has all ready purchased $92B in mortgage backed securities, yet we're hanging around 5% (depending on credit score, ltv, etc). Other factors are influencing current rates. I've written more about it in the link below. I also invite you see what rates I'm quoting "live" to real consumers at http://www.twitter.com/mortgageporter (please disregard the rates posted in the link below as they are from January 23).
0 votes
Tony Grech, Mortgage Broker Or Lender, Southfield, MI
Thu Feb 5, 2009
Hi Carl
Rates have certainly ticked up the last couple weeks and those who were hesitant to pull the trigger missed the boat somewhat. You can still get below 5%, but not without paying points. If 5% is your psychological threshold, then paying points does have some value. Pretty soon my prediction is that 0 point loans will be a thing of the past.

The thing is, no lender "wants" to lend out money at below 5%, especially to people who are paying 6% and who would never default on the loan. This decrease in interest rates are a benefit to lenders when they can use the rates to help someone keep from defaulting or to help someone buy one of their foreclosures to take a problem off of their hands. As a result, refinances are priced higher, and whenever rates get too low and the market is flooded with applications that acts to drive up rates, regardless of what the govt does to try and force them down.

Work with a trusted lender to set up a game plan. Like Seattle Lady said, get a file in process with someone with the idea of locking in a rate if and when they drop back down. Otherwise, you're just another person on a long list of people most lenders are hoping to call if that happens, and you may miss the boat again
0 votes
Robert Spino…, Mortgage Broker Or Lender, Mill Valley, CA
Thu Feb 5, 2009

Hurry up and tell me, off of the top of your head, how much more you save by waiting for the magic 4's instead of locking the rates available today? How much per month? Over the life of the loan?

If you're like most, you may not know. If you do know, and you've determined that you must wait for something below 5%, well, you're probably not too worried about waiting longer. You figured out early on that your refinance would only make sense at x%, and you know that if we don't arrive at that destination it is more financially beneficial to stay where you are.

My point is this: If you are market timing, you will likely lose more opportunities than you realize. If, on the other hand, you and your loan consultant have defined an "opportunity zone" or range of rates and payments that make your refi financially viable, you need to carefully weigh what's available right now and consider taking action. You touched on the key issue --- house value. In this market, 4.5%, if it ever materializes, does you no good unless your appraisal supports it.

Teddy Roosevelt once said, "In any time of decision, the best thing you can do is the right thing. The next best thing is the wrong thing. And the worst thing is nothing." If you're indeed at a time of decision, seek out some good advice and make it happen.

Let me know if I can help.
0 votes
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