Mortgage rates falling

[sweeps]

Mortgage rates are falling quickly. For those who have been thinking about refinancing, you might want to check with your bank or mortgage broker.

[zetta]

Anyone remember what the best site for comparing rates is?

[kork13]

This doesn't impact me personally right now, but how good does a rate decrease have to be to justify the added costs of refinancing? So pretend I have a $300k mortgage at 6%. What would I need to be looking to refinance at in order make it worth it? <4.5%? <5%?

I've heard that bankrate.com is a good place to start for comparing rates of mortgages (along with many other products)

[sweeps]

It depends on your closing costs and fees, and how long you plan on sticking with that mortgage. For example, if you're only going to stay in your house for a year and closing costs on the refi will cost you $10,000, it's probably not worth it.

On the other hand, my broker does no-out-of-pocket refinancing, so even an 1/8th of a point reduction is immediately beneficial.

[disneysteve]

On the other hand, my broker does no-out-of-pocket refinancing, so even an 1/8th of a point reduction is immediately beneficial.

It isn't quite that simple. There is more to figure than just a rate reduction. You need to look at the total borrowing cost over the life of the loan.

Let's say you bought a house 5 years ago and took a 30-year loan. Now, you decide to refinance to a new 30-year loan because of the lower rates. Sure, you lower your monthly payment but you add 5 years to the repayment period. You need to factor that in to figure out how much you will save, if anything.

Also, the "no cost" refinancing has costs but they are rolled into the loan, so you do pay for it one way or another. Either the principal increases or the rate is higher.

[jIM_Ohio]

My guideline is an 8% per month reduction makes the refinance enough to consider.

8% per month means you save one mortgage payment per year relative to what you were paying before.

Example a $1000/month mortgage payment would need to drop to $920 to make refinancing worthwhile.

[jIM_Ohio]

Use this thread for a list of sites and history of interest rates:

http://www.savingadvice.com/forums/investing-banking/33768-anyone-know-website-2.html?highlight=anyone+know+a+website#post174299

[tripods68]

yes...definitely use bankrate.com

for a "refi" you should have to pay any type of $10K for closing cost but again it depends how much is the value of your house, points, and buy back rates. Our refi 4 years ago cost us $2500 (includes appraisal fee, 1/2 point, and title) on $295K original amount mortgage. We went through our credit union.

[sweeps]

It isn't quite that simple.

Yes, it is that simple.

I pay an extra 1/8% in exchange for absolutely no closing costs or fees. I don't pay them up front and they're not rolled into the loan.

Edited to add: And before anyone gets cheeky about that extra 1/8%, that is added to the lowest rate loan out of a long list of banks. So I still get just as good if not better rate than most.

[disneysteve]

Yes, it is that simple.

I pay an extra 1/8% in exchange for absolutely no closing costs or fees. I don't pay them up front and they're not rolled into the loan.

That's great. So they just lower your rate and keep the same principal balance? What happens to the term? Does it reset to 30 years (assuming it was a 30 to begin with)?

Do you get the same rate you would get if you refinanced elsewhere with some fees or do you pay more than the going rate to avoid fees?

[sweeps]

That's great. So they just lower your rate and keep the same principal balance? What happens to the term? Does it reset to 30 years (assuming it was a 30 to begin with)?

Do you get the same rate you would get if you refinanced elsewhere with some fees or do you pay more than the going rate to avoid fees?

It varies. I've mortgaged/refinanced with this broker 7 or 8 times over the years, and I've checked around each time. Sometimes it is slightly higher, sometimes it's the same, and sometimes it is slightly lower.

The nice thing is there is little risk to me. Normally if someone has to pay -- let's say $5,000 -- in closing costs, they take on a risk that they won't be refinancing again or moving in the near future.

[jIM_Ohio]

Yes, it is that simple.

I pay an extra 1/8% in exchange for absolutely no closing costs or fees. I don't pay them up front and they're not rolled into the loan.

Edited to add: And before anyone gets cheeky about that extra 1/8%, that is added to the lowest rate loan out of a long list of banks. So I still get just as good if not better rate than most.

Can you post a link to this broker?

[safari]

What happens to the term? Does it reset to 30 years (assuming it was a 30 to begin with)?

It doesn't really matter whether the term gets reset or not. If my original loan had 25 years left and I want to stick to those 25 years, I can calculate how much extra I need to pay every month to pay off the loan in 25 years instead of 30. My monthly payment would still be lower compared to the old loan because of the interest rate reduction that I got by refinancing.