Anybody refinancing since mortgage rates are going down? - Mothering Forums

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Old 12-05-2008, 04:15 AM - Thread Starter
 
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Just curious! We're thinking about it.
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Old 12-05-2008, 04:49 AM
 
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We are too! We just purchased our house a few months ago though. I don't know what restrictions might apply, but I think we are going to give it a shot.
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Old 12-05-2008, 12:08 PM
 
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There's a government program being proposed that would give everyone a chance at 4.5%, 30-year fixed mortgages with no points. I don't know if it'll happen, but something to consider.

We we did that, our mortgage would go down by $252/month!
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Old 12-05-2008, 12:17 PM
 
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Originally Posted by gurumama View Post
There's a government program being proposed that would give everyone a chance at 4.5%, 30-year fixed mortgages with no points. I don't know if it'll happen, but something to consider.

We we did that, our mortgage would go down by $252/month!
From what I read yesterday it sounded like this proposal would only be for "new" home purchases. It was proposed to help stimulate housing sales and would not be available to those that already own a home unless they sell and buy a "new" house.


http://www.marketwatch.com/news/stor...7D&dist=msr_27

Snips from above linked article:


Quote:
It's unclear whether the proposal would create refinancing opportunities, which analysts said would be even more positive for the beleagured housing industry and battered home buyers.
Quote:
"They hope making funds available to offer lower-cost mortgage financing will have a stimulating effect on the mortgage market by getting people to buy homes,"
Of course this is just a proposal at this time and of course it's unknown if it would even come into fruitian at all.
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Old 12-05-2008, 12:20 PM
 
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Right--so far, for new purchases, but there's a LOT of push frommthe housing financial sector to open it to refis.

If they allow refis, you'd still have to pay the refi fees (for us, it would be in the $1500-$2000 range), but then it's estimated that something like 25-30 million people could do it.

The money opened up would, in theory, then be spent by consumers on durable goods, paying down debt, savings, etc.

We'd do it in a heartbeat if they did refis, and we just bought our house in September!
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Old 12-05-2008, 12:28 PM
 
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I did recently, and I got a lower interest rate and got enough cash back to pay off my car, which had an astronomical interest rate. I'm in a much better position financially.
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Old 12-05-2008, 12:35 PM
 
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Originally Posted by gurumama View Post
Right--so far, for new purchases, but there's a LOT of push frommthe housing financial sector to open it to refis.

If they allow refis, you'd still have to pay the refi fees (for us, it would be in the $1500-$2000 range), but then it's estimated that something like 25-30 million people could do it.
There is not the capacity in the mortgage sector to process that many mortgages ... and shoddy rushed paperwork is part of what got us into this mess. But it would be a great option for the "consumer"
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Old 12-05-2008, 12:59 PM
 
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im curious though about refinancing. with house values going down is this going to hurt you if your refinance?
we bought our house a few yrs ago and have a 5/1. we would like to refinance before that 5 yr mark.
what is the refinance process if you go through the same bank that you already have a mort. though.
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Old 12-05-2008, 01:11 PM
 
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We live in a part of the country where the economy is still great and the home values are rising still. We were one of "those" people who took out an ARM with a crazy high interest rate 2 years ago when we bought our home. We just refinanced in October and got a rate 1/2 of what we were paying before. : There are some online calculators that will figure out how long it will take you to make up the difference in refi costs vs. the rate you are paying now. Ours was 9 months, so it was definitely a "go" for us. I think right now a lot of it depends on your local housing market...
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Old 12-05-2008, 01:46 PM
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Originally Posted by gurumama View Post
Right--so far, for new purchases, but there's a LOT of push frommthe housing financial sector to open it to refis.

If they allow refis, you'd still have to pay the refi fees (for us, it would be in the $1500-$2000 range), but then it's estimated that something like 25-30 million people could do it.

The money opened up would, in theory, then be spent by consumers on durable goods, paying down debt, savings, etc.

We'd do it in a heartbeat if they did refis, and we just bought our house in September!

I don't get that part. If people are using the money to buy houses, then the money is going from one bank to another (or in some rare cases, to a seller who is likely to just put the money back into another house). I don't see how this makes the money "flow" except for a small percentage going to the agent/brokers and the bank for closing costs.
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Old 12-05-2008, 01:54 PM
 
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I don't get that part. If people are using the money to buy houses, then the money is going from one bank to another (or in some rare cases, to a seller who is likely to just put the money back into another house). I don't see how this makes the money "flow" except for a small percentage going to the agent/brokers and the bank for closing costs.
What I understood from her quote was that if people are allowed to refi to lower rates, homeowners will have lower mortgage payments. Economists would expect that the money saved on a lower mortgage payment would be spent, instead of saved, thereby stimulating the economy. Lower mortgage payment = more discretionary income.

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Old 12-05-2008, 03:12 PM - Thread Starter
 
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Well I called our lender and it looks like we're going to refi for a 1.125% lower rate, saving us almost $200 a mo.! :
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Old 12-05-2008, 03:36 PM
 
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I did recently, and I got a lower interest rate and got enough cash back to pay off my car, which had an astronomical interest rate. I'm in a much better position financially.
You might feel like you're in a better financial position today, but if you calculate how much interest you'll be paying on that car over 30 years instead of 5 or 6, you might feel differently.

You probably would have been a lot better off lowering your mortgage payment and not getting any cash back, then using the difference to pay off the car faster.

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Old 12-05-2008, 03:36 PM
 
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Things work a little differently in Canada, we have a HELOC but no mortgage. The rate is variable already so it's been dropping. When we first took it out in Aug 07 it was 6.5%, before everything crashed it'd already dropped to 5.8%. It is now 4.25%. The HELOC is almost maxed out but our payments are almost $200 less than they were when we first took it out & it had half the balance on it.
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Old 12-05-2008, 03:39 PM
 
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I'm cynical, so I agree that this new program is to encourage homebuyers (and re-financers, if they are allowed into the program) to pull home equity out, into cash or a line of credit, and spend it on consumer goods to bolster our economy of debt. : I think some consumers, like JenniferH, might feel like they are therefore "doing better financially" in the short-term, but they forget to calculate just how long they'll be owing that "freed-up" cash.

BTW, the supposed rule of thumb is that refinancing is not a good deal UNLESS you can get at least 1 percentage point lower in interest (as akwifeandmomma did) - otherwise your lowered intererest is more than made up for in refi fees. So your current mortgage rate would have to be at least 5.5% for the proposed new 4.5% plan to benefit you.

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Old 12-05-2008, 04:16 PM
 
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Yep. We just refinanced on Monday. :

 

 

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Old 12-05-2008, 05:40 PM
 
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Originally Posted by Garden~Lover View Post
im curious though about refinancing. with house values going down is this going to hurt you if your refinance?
we bought our house a few yrs ago and have a 5/1. we would like to refinance before that 5 yr mark.
what is the refinance process if you go through the same bank that you already have a mort. though.
I am in southern CA where house values are absolutely affecting refinances, as in many people can't refinance now as they are upside down on their mortgage. Whether or not it's going to affect you just depends on your situation.

Banks have different refinancing processes- you would have to contact your mortgage company to see what is required if you refinance with them.

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Old 12-05-2008, 06:00 PM
 
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What I understood from her quote was that if people are allowed to refi to lower rates, homeowners will have lower mortgage payments. Economists would expect that the money saved on a lower mortgage payment would be spent, instead of saved, thereby stimulating the economy. Lower mortgage payment = more discretionary income.

That's what I meant, and the theory I read. the idea being that a family like mine, which would save $3,000 in mortgage interest per year if we refi, would then have that $3,000 to spend on paying off other debt, buying a car, etc.

The proposals I've read so far do NOT allow "cash out refi", so Seasons, I share your concern that people would be cashing out, but so far, from what I've read, this wouldn't be allowed.
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Old 12-05-2008, 08:20 PM
 
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That's what I meant, and the theory I read. the idea being that a family like mine, which would save $3,000 in mortgage interest per year if we refi, would then have that $3,000 to spend on paying off other debt, buying a car, etc.

The proposals I've read so far do NOT allow "cash out refi", so Seasons, I share your concern that people would be cashing out, but so far, from what I've read, this wouldn't be allowed.
The proposals may not directly hand cash to the borrower at the re-fi, but my concern was more that borrowers would seek, and the proposals would allow, re-fi to take on a greater amount of debt but with smaller monthly payments. Say, a borrower with 20 years left on a $100K mortgage, paying $1200 per month, re-fis to a new 30-year $100K mortgage paying $1000/month (I'm just making up numbers, dunno if this would amortize right). Borrower thinks she's "saving" money by decreasing her monthly payment, but of course by lengthening her loan life she's increasing the total amount she pays in mortgage interest. And (in my cynical, conspiracy-theory view) the govt/lender advertises such a plan in the hope that borrower spends her $200/month "false savings" by spending on consumer goods.

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Old 12-06-2008, 01:32 AM
 
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I am in southern CA where house values are absolutely affecting refinances, as in many people can't refinance now as they are upside down on their mortgage. Whether or not it's going to affect you just depends on your situation.>>

so do they do a appraisel? how does that happen. I dont even remember one being done when we bought the house, I remember somebody coming and taking pictures of the outside of the house. I think we may try to refinance in Feb. we need pay down a bit of debt before we do.
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Old 12-06-2008, 04:10 AM
 
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I don't get that part. If people are using the money to buy houses, then the money is going from one bank to another (or in some rare cases, to a seller who is likely to just put the money back into another house). I don't see how this makes the money "flow" except for a small percentage going to the agent/brokers and the bank for closing costs.
I think a lot of it is in the building sector. Plus I heard on the radio that since the first problem was the drying up of the real estate market (homes are not moving at all), they think that if they can unstick that, it will get all sorts of credit flowing again. And they're prediciting they'll eventually get that low anyway, they just want to skip the in between bit.

Just imagine someone who's facing foreclosure if they can't sell. They're putting every cent they can into their mortgage, and my family is putting every cent into our deposit. Along come my family, who aren't planning on buying for another year, partly to wait until interest rates are lower before we lock it in for 30 years. But if they drop the interest rate to 4.5% we'll buy much more quickly to lock in that low rate. So the seller doesn't get foreclosed on, they move somewhere cheaper and start spending money on groceries and restaurants instead of their huge mortgage, we move in and get a deck built and some curtains, the deck builder takes his family out to the ball game and buys them hot dogs because he had a big job this week, the curtain shop pays the wages of the Saturday morning part-time employee etc, etc.
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Old 12-06-2008, 04:14 PM
 
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I wouldn't refinance unless my existing mortgage was less than 5 years into a 30 year mortgage (or less on a 15 yr) and the rate was quite a bit lower.
Otherwise, in the long term, you are going to lose out.

If someone is upside down on their mortgage, as so many are these day, it is not even an option.
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Old 12-06-2008, 04:50 PM
 
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I have a question. We bought our house using proceeds from a relative's heloc on their own home. We make the payments every month. Right now they are great because heloc is tied to prime and the rate is 3.X%. However, we want to get a mortgage for the house and pay off the relative sooner than later. Would we qualify for this? The house is owned "outright" by us, but not really because we owe 110k to the relative and have our own 50k heloc as well. How could we take advantage of this 4.5%, if it is even possible?
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Old 12-09-2008, 10:59 PM
 
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Those of you who just refinanced, what rates are you getting? And how's your credit?

Thanks!
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Old 12-10-2008, 12:07 AM
 
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Before doing anything with your mortgage... please really investigate what you are doing. I want to cry when I hear that people are paying off cars with their mortgage and refinancing when they plan on selling in a couple of years. It is NOT about how much you pay each month. It is about how much you pay when all is said and done. Think long-term.
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