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Financing in 94022 : Real Estate Advice

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Fri Feb 20, 2009
Robert Spinosa answered:
Jeepie,

Take a look at my blog titled "Rules of Refinancing." I think your first and best analysis would be to look at what changes could occur on the 5/1 if and when it converts. Presumably you have a cap for your first adjustment, etc. So, I'd assign some dollar values to any likely change in terms. If you're a "glass half empty" kind of person, use the max rate. If you're more analytical, work with some statistical averages. I can help you with this research if necessary.

Second, I would look closely at what you might expect to pay on any new loan, versus what you are currently paying now and for the next 12 months. This difference in dollars is your "risk premium." By taking a new loan at a higher rate, you forego any savings that would come by sitting tight. However, if the refinance terms give you more peace of mind than your conversion estimates in paragraph one, you look at refinancing now and you bite the bullet and lose the savings. If, on the other hand, you look at the savings and they are not substantial enough to permit you to take the risk incurred by waiting, you can build your refinance case.

Let me know if I can offer any additional insight and I am happy to help if you'd like to work with a lender here in the Bay Area.

Thank you,

Rob Spinosa
rspinosa@mortgagemasterinc.com
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