Should I cancel my mortgage today and wait for a lower drop in rates?

[HDL]

Well VP , if you'd been following the Wisteria saga, you'd know that she will more than likely only be keeping the loan for, at most a couple more years and possibly even selling her home next spring, i.e. the advice that I gave !!!

(boy, catz sure are s-l-o-w !!!)

p.s.
Is it me or are catz darn persnickety when backed in a corner???

Originally Posted by vpcats

I know I'm late and I was really just reading but, would it be dumb to think that even a minor difference can really add up over the 30 years?

[vpcats]

Originally Posted by HDL

Well VP , if you'd been following the Wisteria saga, you'd know that she will more than likely only be keeping the loan for, at most a couple more years and possibly even selling her home next spring, i.e. the advice that I gave !!!

(boy, catz sure are s-l-o-w !!!)

I'll have to think about this "friends" edit HDL

Good thing I started with my disclaimer about being late. Thought I covered by b u t t.

[vpcats]

Originally Posted by Briolat21

No, a minor difference (6.1 vs. 6.25) will in fact add up to a significant amount of change in 30 years.. But, most of us who were advocating not making themselves crazy and just going with it (it was a good rate) are saying so because with rates changing constantly (constantly) you'd have to be more obsessive than a day trader to lock in exactly the lowest rate ever. Its more "luck". You notice in the morning that rates have dropped, you call your lender and say "lock" and by the time they push the button - the rates have risen 0.15%. You can't make yourself crazy about it. So its more imporant to worry about - does the rate that you can get put you in a range that you can comfortably afford. (For me, under 7%, preferably under 6.5).

Additionally, most people won't be in these homes for 30 years (everyone says/thinks they will, but most people move every 8 years or so).. so, most people never see the full 30 years worth of ramifications..

But it is a valid point, small rate differences when accrued for 30 years make a huge difference.

Ok I understand what you're saying, but since interest is mostly paid up front (during the early years), if Wisteria does get rid of the house in a couple of years (as per my "friend" HDL ), she'll be paying the difference early on, or she might not be able to refinance again in a few years, or she might get stuck for longer than anticipated...

Anyway, when I got this house (will be 5 yrs in December) I locked in at 5.625 (30 yr fixed, traditional). Played it for a while but got scared because it was beginning to go up, and locked in at that. Not two weeks later, I could have done 5.4. It went back down. I didn't pay points, I am escrowed, but I don't remember about origination fees.

I guess I only have 3 yrs left here I should have been out in 96!

(I have another question about escrow which I'll add to another thread on this topic).

[UseJeff]

To do a simple comparison of rates in the short term you can look at an interest only payment on the difference (completely ignore any principle paid). So for example, the difference in interest between a 6.5% and a 6.25% for a $250,000 loan amount. Here's the formula:

$250,000 X (6.5% - 6.25% = .25%) / 12 = $52.08 $52.08 X 12 = $625 per year

Obviously it's semi flawed in that you do pay some principal, which means your interest charged drops a smidge every month. However, it's so minimal in the first 5 years the above formula is a simple and quick way to check it out.

One other side note, if I remember correctly from the last time I saw it... the average American refinances within 3 years or less. (Of course there's plenty who last way longer, and the super low rates tweaked this...but... I assume that number will change with the tightening of guidelines across the Sub Prime board... )

[HDL]

Thanks Jeff for your example above! I have to say, from reading several of your posts, we are fortunate to have you as a member :-) I can't REP you now because I'm on a system 'time out', but wanted you to know I appreciate your posts!

Regards,

~HDL~

[Wisteria]

Hey, guys! Thanks for all the feedback! HDL DID give me good advice! (On the sly, of course. )

I am okay with what I have for now. Like HDL said, I will probably sell within no later than 5 years, possibly much, much earlier (hopefully!). I have learned a lot! THANK YOU!!!

[HDL]

Isn't it great to have this place to come and get advice Wisteria? Great folks and wonderful advice !!! Got to love it!!!

Originally Posted by Wisteria

Hey, guys! Thanks for all the feedback! HDL DID give me good advice! (On the sly, of course. )

I am okay with what I have for now. Like HDL said, I will probably sell within no later than 5 years, possibly much, much earlier (hopefully!). I have learned a lot! THANK YOU!!!

[Wisteria]

Now you know I'd love to give you another gold star.....but I gotta spread it around again before you get another from me!!

Gotta love City-Data!!

[sierraAZ]

Originally Posted by Wisteria

Now you know I'd love to give you another gold star.....but I gotta spread it around again before you get another from me!!

Gotta love City-Data!!

That policy is absolutely great, isn't it?! Do they seriously think they'll force me to give it to somebody I don't want to... They must not know this girl!