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We have a mortgage ~ $315k that is amortized over 30 years, but has a balloon after 10 years. This was a no fee/no cost loan and has a 4.25% APR. House is valued down to ~ $335k now. We thought we would sell prior to needing to refi, estimating we would do it 8 years into the loan. However we absolutely love everything about where we live so we are figuring on staying put much longer.
Now we are concerned on what the future will hold with what is going on in Washington and around the world. Many experts say several years out will have super high interest rates and inflation. Should we refi now at these historic rates into a full term (15, 20, 25 or 30yr), having to pay the closing costs in the process and maybe even getting a slightly higher rate or should we ride what we have until such point we have to refi or decide to sell?
This is such a tough decision for us. We hate to refi for no reason just to sell if we change our minds, yet don't want to have to refi at 10%+ if we stay and the rates go up. We just can't predict the future, but best guess says to lock it down this week.
Since your value is around $335K and you owe around $315K, there's a couple of different ways to approach this.
I would contact a mortgage broker in your area. I happen to be one but I'm in Florida. I'm not soliciting. Just giving you that info.
The rates are at such historic levels. I just locked someone 2 days ago at 4.375% - 30 year fixed (no points) - good credit score.
Your home's loan to value is not at 80% so you may have to come to closing with funds or you may qualify for DU Refi Plus or Freddie Mae Relief Refi. Any broker can explain those to you.
I personally think it is a good time to do it and it (someday) will provide a hedge against the coming inflation. It may not be here for a while but it will be here down the road.
Last edited by Bette; 06-26-2010 at 02:23 PM..
Reason: Added word
Rates are amazingly low. If you have a balloon coming up, why not?
Everything I read and hear at work is about rates starting to creep up by year's end.
Please go to a reputable lender who knows what underwriters will demand from you and who can think of it as if they were in your shoes. I hear loan ads on the radio that sound too good to be true.
When you originally bought the home, what were the reasons you thought you would leave in 8 years. Other than you love it more than you thought you would, what has changed?
When you originally bought the home, what were the reasons you thought you would leave in 8 years. Other than you love it more than you thought you would, what has changed?
The longest we have ever lived in one place was 9 years. We like discovering new areas, so we move a lot. Now that real estate is not profit at will and now that the economy looks like rough times for a long time, we are looking at things differently. That and the fact that when the music stopped, we ended up in a dream situation.
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My answer is yes, but see below
