Is 6.25% a good refinance rate?

KandiB47 · #1 (**permalink**) 03-09-2007, 07:36 PM

I'm about to send in the signed papers to refinance my house. The rate is 6.25% on a 30 year fixed, no points, and $1100 for closing costs. Does this sound reasonable or should I be able to get a lower rate? It is Countrywide.

I currently have an 80/20 loan. My current rate is 5.25% on a 5 year ARM and 11.75% on the second loan.

jIM_Ohio · #2 (**permalink**) 03-09-2007, 08:06 PM

you can do better if you own 80% of house.

I am refinancing this week with a 5.875%. Second is 7.3%. Both 30 yr fixed.

Countrywide is sub prime mortgages... maybe you are not eligible for something better?

creditcardfree · #3 (**permalink**) 03-09-2007, 08:41 PM

I have to disagree that Countrywide is a subprime lender. My husband and I received a 6% rate in October on a 80% loan from Countrywide and we have credit scores over 800.

6.25% isn't a terrible rate, but I can't really say I'm up on latest numbers.

I believe Countrywide one of the largest mortgage lenders around. Anyone else have an opinion?

I say good job getting out of the ARM!!

tinapbeana · #4 (**permalink**) 03-09-2007, 08:51 PM

i agree: countrywide might deal with subprime but i don't think that's all they do.

my parents sold their first house and bought their second about 2 years ago, and the mortgages on both houses was with countrywide. their credit was anything but subprime: the only negative that showed up in 95 when they bought the first house was a late payment from 1986 on a credit card account. they were asked to explain it (ack!), and it turns out it was the month my uncle died. countrywide decided that was acceptable and mortgaged them anyways...

i'm just guessing, but any place that asks (and expects) someone to expalin a late credit card payment from 9 yeras ago is likely not dealing with just sub-primes.

jIM_Ohio · #5 (**permalink**) 03-10-2007, 06:44 AM

For the 6.25% rate, something is funny. Rates dropped this week and are below 6% for first time all year.

This might be a jumbo (more than 80% loan to value), this could be a consolidated loan for first+second... the OP needs to clarify with specifics.

Countrywide does do "sub prime", and I now realize they also do other products, my apologies on the mis-comment.

creditcardfree · #6 (**permalink**) 03-10-2007, 08:06 AM

Quote:

Originally Posted by jIM_Ohio

For the 6.25% rate, something is funny. Rates dropped this week and are below 6% for first time all year.

This might be a jumbo (more than 80% loan to value), this could be a consolidated loan for first+second... the OP needs to clarify with specifics.

Countrywide does do "sub prime", and I now realize they also do other products, my apologies on the mis-comment.

Apology accepted. We don't know the OP credit score, but it does make a difference on your rate, right? Other factors, include the amount you are borrowing compared to your current debt.

To OP, I don't think we really can comment on the rate without the other factors. If you had posted that you were getting a 7 or 8% rate I would be worried. You are in a fair range in my opinion, but there may be better rates. Have you checked with a local credit union or bank? It wouldn't hurt to call and ask...if they could offer something better. Don't have them run your credit report unless you are confident you can get a better deal. According to my lender, that drops your score 5 points each time they run the report. This could be an issue if you have a borderline credit report.

Ima saver · #7 (**permalink**) 03-10-2007, 08:51 AM

It is hard to believe but when I started working for a savings and loan place in 1977, we were charging 9%. I guess anything under 7% sounds good to me.

KandiB47 · #8 (**permalink**) 03-10-2007, 09:18 AM

The loan is for 89% of the houses value. Even by paying PMI, payments are only $12 extra a month. I really want to get out of this ARM which is up in 2 1/2 years. My credit score was about 700 last time I checked so I don't have excellent credit. My husband's credit score is >720.

KandiB47 · #9 (**permalink**) 03-10-2007, 09:21 AM

Quote:

Originally Posted by tinapbeana

i'm just guessing, but any place that asks (and expects) someone to expalin a late credit card payment from 9 yeras ago is likely not dealing with just sub-primes.

That isn't something that should even be on their credit report anyway. They should have it taken off.

Ima saver · #10 (**permalink**) 03-10-2007, 11:01 AM

Kandi, I don't blame you for wanting to get rid of your arm. those things scare me to death!!

jIM_Ohio · #11 (**permalink**) 03-10-2007, 11:17 AM

do an 80-9 refinance... you'll save money (tax returns)

80% 30 yr fixed first
9% 30 yr fixed second

pay more on second to pay off early..., this looks even better. I agree get rid of ARM. No PMI is good PMI in my book.

the interest rate on the first would be "much less" that 6.25%. You might be able to do 5.75% without any points.

Programs like lending tree should get you a more competitive rate.

KandiB47 · #12 (**permalink**) 03-10-2007, 01:54 PM

Quote:

Originally Posted by jIM_Ohio

do an 80-9 refinance... you'll save money (tax returns)

PMI is tax deductible for the 2007 tax year

jIM_Ohio · #13 (**permalink**) 03-10-2007, 03:37 PM

Be careful. A mortgage broker told me this... and I find conflicting reports of whether it's truly tax deductable.

tinapbeana · #14 (**permalink**) 03-10-2007, 04:45 PM

Quote:

Originally Posted by KandiB47

That isn't something that should even be on their credit report anyway. They should have it taken off.

well, this was in 1995 before the FCRA was amended in '96. i'm not sure what the credit reporting requirements were in '95, but at this point it is moot as the 'late payment' was 20 years ago and the FCRA of '96 won't allow that on a report anymore.

MonkeyMama · #15 (**permalink**) 03-11-2007, 04:46 AM

I think it sounds great to get out of an arm and lock in 6.25% with no points.

KandiB47 · #16 (**permalink**) 03-11-2007, 04:44 PM

Quote:

Originally Posted by jIM_Ohio

Be careful. A mortgage broker told me this... and I find conflicting reports of whether it's truly tax deductable.

I would appreciate some links that speak of PMI not being tax deductible. Here are some I found:

Homeowners earning under $110,000 adjusted gross income can deduct, for the 2007 tax year, some or all of the LMI/PMI premium on mortgages closed only in 2007. With this new change, homebuyers may want to weigh both options. Congress would need to renew this deduction to be valid for any tax years beyond 2007. Lenders mortgage insurance - Wikipedia, the free encyclopedia

In 2007, mortgage insurance will be tax-deductible

Deducting Private Mortgage Insurance from your Taxes- Quicken Loans

jIM_Ohio · #17 (**permalink**) 03-11-2007, 05:56 PM

OK, I saw a few "ifs" on the link posted:

AGI of <110k
mortgage must close in 2007.
congress may not renew this deduction

I would suggest 80-15-5 over PMI until the deductions come permanent.