Question by Keith G: Would it be a good time to refinance a 6.5% fixed rate mortgage due to recent rate cuts?
I’ve only been paying the mortgage for 4 months. should I wait longer or take advantage of the lower rates?
Best answer:
Answer by chemicalimbalance001
Now would be a good time.
You should probably (depending on your situation) be able to get a lower rate than that.
Will rates go down more in the future? Maybe, maybe not. Rates are low now, and you should probably jump on it.
What do you think? Answer below!
From what i have seen rates havent dropped a whole lot lower than 6% yet, when you refinance there’s a few things you wanna keep in mind.
Closing cost, make sure the lender calculates for you if it even makes sense for you to refi based on the years you’re planning on staying in the home, basically how long will it take for you to recuperate that money that you spent on closing costs.
a lot of people say you shouldnt refi if you cant get a rate lower by 2% than what you have and generally that makes since. rates arent that great just yet, if you’re at a 6.5% i’d wait for another drastic drop, and make sure the drop you’re looking for is for the long term financing and not short term- prime (lines of credits and credit cards)
That depends on your current rate & time left. If you are thinking of selling over the next few years, often it is best to keep your current rate, but if you plan on staying longer than 5 years+/-, and can save a bundle on your monthly payment, then it can be worth it. Remember there are fees and “Points” lenders charge including hidden fees, always have someone review your re-finance mortgage papers if you really plan to do it. Shop around for the best rate, get a HUD Pre-statement for ALL settlement costs, that will give you the bottom line…
You have to think about more than just the current fixed rate. You need to consider your current mortgage type, was it a fixed rate or did you pay points? Does the bank your mortgage is currently through, offer you any grace period to refinance if rates go down and how much would it cost you? Don’t forget, you will also pay fee’s if you are going to another bank. What amount is being financed and what would the difference be from your current rate at the end of your loan period? Try going to Microsoft and getting a mortgage calculation from downloads and play with it a bit to see what you come up with.
At this time, look for a no cost loan with rates under 5.875%. No Fees of any kind which would include lender and or title fees. Nothing added to your current loan balance. If your going to pay 1 point, rates are currently under 5.5%. If your looking to sell this property in less than 5 years, go with the no cost loan. How long you plan on keeping this property is really the most important question, assuming you have good credit. If you plan on only keeping this property only a few years, you may be better off with an adjustable rate mortgage. Some of these programs are fixed for the first 5, 7, or 10 years. Check with a good mortgage broker and compare the terms of the loans. You may then realize a savings that you would not have known, otherwise. Jeff
Its a calculation problem. If the cost to do the loan is higher than your estimated savings, then your loan is fine. If your savings is higher that the cost, then refi
General rule of thumb is that if you plan to stay where you are for over 2 years and can shave 2 points off your rate (in your case you would be looking for a 4.5% rate – not likely right now) it’s a no-brainer to refinance.
If your looking to just lower your monthly payment, then any mortgage broker can give you a free mortgage analysis to see what you qualify for and what your estimated payment would be after taking into account the closing costs.
Feel free to call me for one – Jen 702-991-8020