Mortgage Refinancing Question (PMI, loan, interest rate, 30 year fixed)

[fester600]

So I bought a new house (8/31/2007) and I secured a 30 year fixed mortgage at 6.375%. With the rates going below 6%, should I
start looking into refinancing? How many points difference should there be to make it 'worth it'?

Thanks,
Matt

[TimtheGuy]

Originally Posted by fester600

So I bought a new house (8/31/2007) and I secured a 30 year fixed mortgage at 6.375%. With the rates going below 6%, should I
start looking into refinancing? How many points difference should there be to make it 'worth it'?

Thanks,
Matt

Depends on your loan amount. The higher the loan amount the less decrease in rate it will take to make sense. The other major consideration is how long you plan on being in the home.

A general rule of thumb today would be a 1% decrease, but that is very general.

[renriq02]

yep the rates are 5.5%.....but will it be worth paying?

the questions the lender will ask are.

what is your score? has it dropped?
do you have equity in the home? (they will use the purchase price not an appraisal, but will still require an appraisal if the value has dropped)
closing costs are 2-3% of the loan amount...maybe more depending on state.

6.375% is pretty good....are you paying PMI?

There should be other reasons to refinance other than the rate.

[fester600]

Ok, so I can do a "free" refinance that can take me down from 6.375% to 6.00%. Of course this is a no brainer, but I would not be able to refinance for another 120 days. Do we expect the interest rate to go down anymore?

Thanks!
Matt

[fester600]

Looks like this answers my question:

Bernanke: Fed to cut interest rates again - Stocks & economy - MSNBC.com

Will this translate into lower mortgage rates?

[renriq02]

nope...that will make the mortgage rates go higher

Originally Posted by fester600

Looks like this answers my question:

Bernanke: Fed to cut interest rates again - Stocks & economy - MSNBC.com

Will this translate into lower mortgage rates?

[alexei27]

Originally Posted by banker0679

nope...that will make the mortgage rates go higher

Banker...

I have heard this as well. I have also been told that mortgage rates tend to drop right up until the feds cut the rate...THEN then rise afterward. Any truth to that? Thanks!

[renriq02]

FED lowers the rate to stimulate the market. When the market is going up the rates go up. When the market goes down...then the rates go down.

If BofA buys Countrywide...and the FED lowers the rate....we will be going back to 6% par.

Originally Posted by alexei27

Banker...

I have heard this as well. I have also been told that mortgage rates tend to drop right up until the feds cut the rate...THEN then rise afterward. Any truth to that? Thanks!

[Salima]

For me I found this website useful: Mortgage Refinancing

[Donn2390]

Originally Posted by fester600

Ok, so I can do a "free" refinance that can take me down from 6.375% to 6.00%. Thanks!
Matt

Just remember that "Free" loan isn't free...! The interest is actually lower that 6%, perhaps 5.5%. The bank doesn't charge for the refi, but they are charging you 6%, so you are paying 1/2 % for the loan...
could be cheaper to pay points and get the lower amount... something only you and your pencil know for sure...
There ain't no free lunch....