we just bought 30yr fixed at 6.5. could we refi at lower rate?

Asked by Vera Lopes, Modesto, CA Thu Dec 11, 2008

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10
Enrique Del…, Agent, Modesto, CA
Thu Aug 26, 2010
Interest rates are lower now and it would pay to refinance now.
2 votes
Rob Weber, Mortgage Broker Or Lender, Plainfield, IL
Sun Dec 21, 2008
Despite just closing, it may make sense for you to refinance. Ultimately it will depend on how long you're planning to stay in the home (assuming you live there) and if you have an itchy trigger finger to refinance everytime rates drop 0.25%. To determine that, lets look at a couple scenarios that you could put your situation into.

I'll put mortgage amounts here with your current payment (assuming no PMI) and what it would be next to it (since I don't know your credit, I'm going to be somewhat conservative here and say 5.25%). I'll estimate closing costs to be $2000 (with no points to buy it down for this example, break-even may vary depending on loan size and typical costs for an area)

$125,000 mortgage - $810/mo --- $690/mo -- 16.7 months break-even
$200,000 mortgage - $1297/mo -- $1104/mo -- 10.4 months break-even
$300,000 mortgage - $1945/mo -- $1656/mo -- 6.9 months break-even
$400,000 mortgage - $2594/mo -- $2208/mo -- 5 months break-even

If you're looking to sell or flip this home in less than the period corresponding with your loan amount, it's probably best not to do anything. If you're planning on staying there longer than the break-even, it probably makes sense to do something.

If you're the type of person who will want to refinance everytime rates drop 0.25%, it may be better to to take a slightly higher rate in exchange for a portion of your costs to be covered by the lender (to decrease your break-even period). This scenario works best with larger loan amounts.

Lastly, you'll need to think about where the money will come to close your new loan. Even though you just bought a home, you will probably have a month of trailing interest (that month you skipped) and your escrow account will now probably need to be "re-funded". The cost between closing and your pre-paids could prevent you from refinancing if you don't have funds of your own to bring to closing. Some lenders will "net-fund' your escrow account in your loan payoff (your payoff will decrease by the amount of your escrow balance) while others will create a new escrow account which could be quite a lot of money if you're nearing tax time. Ask these important questions. If the person you're working with can't answer them, look for someone else; There's nothing worse than the blind leading the blind.

Disclaimer: This scenario doesn't apply to everyone, please be mindful of where you are in your amortization schedule. For you, this may make sense but others it may or may not be depending on what your long term goals are. Individuals much further into their repayment will want to review their payment schedule and decide if they want to restart their mortgage again or if they'd like to structure the loan to pay it off in the same amount of time paying less interest or to simply lower their monthly obligation without regard to long-term interest accrual. This piece is too difficult to cover here with just one post, contact me directly for a personalized analysis if interested.

Rob Weber
Wells Fargo
847.404.7006
rob.weber@wellsfargo.com
Web Reference:  http://robweber.com
1 vote
Jesse Madison, Agent, Rancho Santa Margarita, CA
Thu Aug 26, 2010
Rates are very good now and as long as you have good credit and equity you should be able to take advantage of the current situation. Its worth a call. Let me know if you need me to refer a good lender!
0 votes
Jack Ferris, Agent, San Ramon, CA
Tue Jan 6, 2009
We specialize in financing programs specifically for the purchase or refinance of homes. We have access to more lenders than most other companies. Regarding your question, we can analyze your present loan to see if it makes good business sense to refinance your loan at this time. It may or may not make sense because it all depends on the savings and how long you plan on living in the home. Due to the costs involved in doing a loan there must be a pay back for you.

At Ferris Financial Group, Inc. we have 99 lenders available including most of the banks. We are a Loan broker company. The way we are set up, in some cases we can compete with the banks to place your loan and can probably do it for less than a bank can do it. As a loan broker we are licensed by the Department of Corporations with a Finance Lenders / Brokers license. We also are licenced by the Department of Real Estate. If you are interested in hearing more, please call Ferris Financial Group, Inc., Jack Ferris at 925-858-2879 so we can discuss with you what we can or cannot do.


Licenses and Certificates Held:

California Real Estate Brokers License

California Real Estate Officers License

Department of Corporations Lenders and Broker License

State of California Occupational License

Salesperson License for Manufactured Homes

Manufactured Home Dealers License

CAL VET Loan Certification

Here is our contact information if I can answer any more questions:

Jack Ferris
Ferris Financial Group, Inc.
925-858-2879
email: ferrisfg@aol.com
0 votes
Erica Muller, Agent, Winter Garden, FL
Sun Dec 21, 2008
Vera,

If you just purchased you probably don't have any equity in the property yet. 6.5% is not a bad rate. It's actually a pretty favorable rate right now. Refinancing could cost you more in closing costs or just be added into your loan making your loan balance increase. If there is a pre-payment penalty this would also be just one more reason why refinancing is a bad idea right now. At least wait a year or two and then go for it if you are convinced you could get a better rate. It's also not always about rate. Often, when you add up the closing costs you pay vs. what you are really going to save it doesn't always add up. I would suggest weighing your option a bit longer.

Good luck!
0 votes
Bill Eckler, Agent, Venice, FL
Sun Dec 21, 2008
Vera,

This is probable, as long as your loan agreement does not include a pre-payment stipulation. Our recommendation is to refer to your loan document and e in touch with a loan specialist.

Good luck
0 votes
Dominique Re…, , 93704
Sun Dec 21, 2008
It would be a good idea to take advantage these rates as this is a 35 year low. I would be happy to assist you or you are welcome to veiw our website for more informationl. My contact information is on the website.

Thank You,

Dominique Ressurreicao
Co-Branch Manager
American Pacific Mortgage
0 votes
Chris Covalle…, , Chicago, IL
Tue Dec 16, 2008
yes, as long as there is no prepay penalty, this is not a problem. We are currently refinancing clients who closed as recently as just prior to Thanksgiving. Please advise if any questions.
0 votes
Shel-lee Dav…, Agent, Rolling Hills Estates, CA
Thu Dec 11, 2008
Vera:

I have a direct lender who is doing rate and term refi's without seasoning. In plain English this means he might be able to refinance you at a lower rate. Of course he will need more information from you to determine if you are eligible.

Contact me through my profile and I will provide you with his direct contact information. That way you can discuss the possibility of refinancing directly with the lender. Dare to Dream.

Shel-lee Davis
Real Estate Consultant
RE/MAX Palos Verdes Realty
0 votes
Tyler Flaher…, , Turlock, CA
Thu Dec 11, 2008
Depends Vera,
The main thing is that your home cannot be worth less than what you paid for it. Get in touch with a good lender and they can better assess your situation.
Best of luck.
0 votes
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