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If anything, rates will increase. They aren't going any lower than they are right now.
The reason your 'rate' went from 5 to 5.5 is the PMI. That half point is the PMI premium. Because you have so little equity in your property, you will most likely have to pay at least another half point because of little or no equity plus the PMI over the 4.38% quoted above, so it appears you are not in a position to reduce your rate sufficiently, if at all, to make it worthwhile to refinance.
Call around, check it out, but little or no equity reduces your options considerably. And, hopefully, the property is still worth today what you paid for it a year ago. If the property has lost value from when you bought it, then doing a refinance will not be possible unless you come up with more money.
Last edited by Ariadne22; 10-14-2010 at 09:01 PM..
If anything, rates will increase. They aren't going any lower than they are right now.
The reason your 'rate' went from 5 to 5.5 is the PMI. That half point is the PMI premium. Because you have so little equity in your property, you will most likely have to pay at least another half point because of little or no equity plus the PMI over the 4.38% quoted above, so it appears you are not in a position to reduce your rate sufficiently, if at all, to make it worthwhile to refinance.
Call around, check it out, but little or no equity reduces your options considerably. And, hopefully, the property is still worth today what you paid for it a year ago. If the property has lost value from when you bought it, then doing a refinance will not be possible unless you come up with more money.
I respect your opinions, but I also heard that "rates won't go lower than they are today" a year ago, and that obviously wasn't the case. The Fed's moves in the next few months will naturally drive down rates further.
Also, your assumption about me having no equity in my home is not true. I don't live in an area where there was great speculation and then a huge downtown in housing prices. Was there a dip from the top? Of course. But nothing like what's been seen in Miami and Southern California. I purchased my home as a foreclosure for $171,000 sale price and in total with repair costs the total price was about $191,000, which was built into my mortgage as I took part in the FHA 203k Streamline program which allowed me to bundle the necessary fix-ups (new roof, gutted basement, etc) all into my mortgage and not have to pay them out of pocket. Recently, the home was assessed at $255,000. So, I do have decent amount of equity, although I've only been paying on it for 16 months.
OK, you didn't say that earlier. You said you put 3.5% down. No mention of improvements, fixup, property increase in value. Totally changes your position. If you now have an equity of at least 20%, you are in a much better position. Of course, look into a refinance. You should be able to drop the PMI and get a better rate.
On interest rates, Fed wants to see a moderate increase in interest rates and is not at all happy with the effectively zero rates we have - at least for the banks that borrow from them.
rates at zero have nothing to do with mortgages. fixed rate mortgages dont follow short term rates but are set by investor sentiment and fed manipulation in the mortgage backed securities market... typically mortgages follow mbs and tend to track somewhere between the 10 year and the long bond rates but that trend has been broken since the fed has been manipulating in the mbs markets.
while mortgages are at record lows the bond markets are not.
there is still more room for meddling if the fed wants to in the mbs market as its rather thinnly traded. in one session last year i remember investors were trying to bid mbs up and the fed wanted them lower so in one trading session the fed bought 1 trillion in mbs to wrestle the market back from investors...
Last edited by mathjak107; 10-15-2010 at 02:49 AM..
i am refin my ivestment property from 8%to5% with closing cost 1800.00 on 28000.00 loan is worth it i wiil save 150.00 per month with refin pls what do you think 13 yres left.i have to start again for 30 yrs.
i am refin my ivestment property from 8%to5% with closing cost 1800.00 on 28000.00 loan is worth it i wiil save 150.00 per month with refin pls what do you think 13 yres left.i have to start again for 30 yrs.
I think you need to look at 10 year and 15 year options.
But the numbers don't add up - something isn't right. What was the original loan amount? 3% difference should warrant more in monthly savings. Also, 5% is pretty high, even for an investment refi. I just locked in a high balance investment in the low 4's.
I bought my house in mid 2009 with a 5.5% mortgage rate. I'm getting a ton of offers through the mail saying I could refi to under 4%. Is that something to pursue? Or is it not enough of a decrease in interest rates to make it worthwhile?
LOL... you are still paying 5.5% interest!? (assuming 30 year fixed)
I have clients that have 4% interest that are getting refis
...ugh someone brought this from the dead....
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