SAVE SOME MONEY!!!

[Where's Bruce?]

I did a refi years ago...am at 2%. Been laughing ever since.

 

[Johnson27]

I remember in the 80's we were paying 16-18%. I kinda remember...lotta brain cells died off in the 70's

Our first mortgage was 12% in 1982 and that was a contract purchase. Currently at 3.48% and waiting.

 

[AK Troutbum]

I refinanced in '12 at 2.75 for 15 years. With only 7 years left on the note, it's definitely going to have to drop a fair amount more before I'll be thinking about a refi, although maybe a rental property might be something to start considering. Hmm.

 

[ahlgringo]

I did a refi years ago...am at 2%. Been laughing ever since.

With how many points?

To my knowledge- no 30,15,or custom has ever been even close to 2 apr


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[Werty]

At those rates, how do you not ask for money.

 

[Northernpiker]

My bank went up to 2.62 today but they locked me in at the 2.5, no points, don't need another appraisal but about $1700 closing costs.

 

[netman]

My current 15 year mortgage is @ 3.75. I’m four years in. Current house payment is $1236 Upon reading this I checked my bank and punched in my current loan amount and got the following.
At what point/interest rate would it be worth me going to the bank and doing a refi?
Or as others have mentioned would it be better to take the 3k and apply it directly to the loan.
I’m a tight wad and love keeping more money in my pocket vs the bank’s.
Thanks

 

[Ntuttle15]

This is important thought process and I will be thinking about this specifically when I get to that stage of my life!

 

[Where's Bruce?]

With how many points?

To my knowledge- no 30,15,or custom has ever been even close to 2 apr


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The only points I count are on elk. LOL
We refi'd like 15 years ago...my wife actually found the lender. She's smarter than I am. I just make the payments.

 

[kipper09]

My bank went up to 2.62 today but they locked me in at the 2.5, no points, don't need another appraisal but about $1700 closing costs.

Does your bank do mortgages nationwide? If you don’t mind sharing I would be very interested in talking to them if so. Thanks


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[Farmingdale's Finest]

The Fed is probably going to cut rates another 50 basis points, I’m going to wait a bit for them to get lower and probably refinance then.

I spoke to a mortgage broker client yesterday and banks are becoming reluctant to take that new business now. Don’t let greed get in the way of a once in a lifetime opportunity to refinance. Historically the average mortgage rate is 9.5%.


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[skywalkr]

I spoke to a mortgage broker client yesterday and banks are becoming reluctant to take that new business now. Don’t let greed get in the way of a once in a lifetime opportunity to refinance. Historically the average mortgage rate is 9.5%.


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Probability of a 75bps rate cut is now 80%. With the credit I have, I’ll have no issue getting a refi if I want one. Currently my rate is 4.625% and while I’m 3 years in, I can pay it off over the next 7 if I want. A refi to a 15 or 10 year would be nice but I’m in no rush and if it doesn’t happen I’m not too worried.

 

[Dos Perros]

Could you explain how to do those calculations or where I might go to learn about this?


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I'm an engineer and not a finance geek so I probably do this the hard way.

I use Excel and put in my payment schedule for principal + interest only on my current loan.

Then I load in the payment schedule delta for the refi. I'm comparing going from 23 years left on my current mortgage to a 15 year note, so at the end of the 15 year note schedule I can assume I can pay myself my current full mortgage amount until it would have been paid off. So it's a true comparison of the incremental difference between the two.

Then I use the NPV function for the payment schedule delta. I used an interest rate of 6% which is admittedly conservative. The NPV for me came up to be about $4600. As closing costs are usually rolled into the refi I know that I can only capture the entire $4600 in present value if I stay in the house and don't refi for the full 15 years. I assess the probability of that happening at less than 50% for me so it wasn't worth it to refi.

On to what you're asking. My collegue is a Ph D candidate statistician so he did the maximize PV calculation for me, he used Solver or some other thing, but you can brute force out your own solution pretty easily.

I would make multiple payment schedules in $50 or $100 per month increments and go up to whatever you think your current income could sustain. Plot those out until your loan is paid off. And then just do a series of NPV calculations on those deltas. You'll find that one of them is larger than all the others, meaning that is the way to maximize your PV. You could iterate to get a precise number if you'd like.

 

[Farmingdale's Finest]

Probability of a 75bps rate cut is now 80%. With the credit I have, I’ll have no issue getting a refi if I want one. Currently my rate is 4.625% and while I’m 3 years in, I can pay it off over the next 7 if I want. A refi to a 15 or 10 year would be nice but I’m in no rush and if it doesn’t happen I’m not too worried.

Mortgages are based upon the 10 year treasury and the Libor rate depending on if you go fixed or adjustable. The issue is not where the bond interest rate drops. The risk is becoming too great for the investor to lend money for a return of 3% which over 30 years will likely not get refinanced. The 3% mark is what historic inflation has been so less than that the investor is losing purchasing power over time.

 

[5MilesBack]

Anybody deal with or recommend a no bs lender that gives you the lowest rate and closing cost up front?

We've always used Navy Federal Credit Union, and actually just refinanced at 2.5% for 15 years. We started the process before the corona panic unfortunately. They actually closed too quickly........we did the Freedom Lock that locks it in but allows you to change one time if they go down. I figured they'd go down, but was also thinking it would take a month to close. It took two weeks, and then they dropped to 2.375%. Oh well, I can live with 2.5%......unless it drops to 1%.

Navy Federal has really lowered their membership criteria in recent years, so who knows they may allow anyone to become a member these days.

 

[Ratbeetle]

VA IRRL a couple months ago. Went from 4.25 to 2.78. Not the bottom but I can live with saving over 400 a month.

 

[cmahoney]

Has anyone recently done a 20 or 30 year VA loan?


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[MattB]

Fed over reacted with the half point cut . . . If they cut again in march in guessing it will be .25. either way the fed rate doesn't have a lot of impact on your mortgage rate. The rates were already low prior to their cut.

Now another big sell off in the stock market. . . That will push your rates lower! Mortgage rates follow bond rates much more closely than the fed rate.

This, reposting for emphasis. Don't think that mortgage rates will necessarily get much better if the Fed cuts again.

 

[Farmingdale's Finest]

Like I warned you guys last week don't get greedy. The 30 year mortgage last week dropped to 3.29% and today is at 3.36%.

 

[fmyth]

Mortgages are based upon the 10 year treasury and the Libor rate depending on if you go fixed or adjustable. The issue is not where the bond interest rate drops. The risk is becoming too great for the investor to lend money for a return of 3% which over 30 years will likely not get refinanced. The 3% mark is what historic inflation has been so less than that the investor is losing purchasing power over time.

90% of conforming mortgages are sold to Fannie Mae/Freddie Mac/Ginnie Mae shortly after they are funded. Fannie Mae/Freddie Mac/Ginnie then pay the lender to "service the loan". The lender has virtually no risk as long as the loan conforms to their guidelines. In other words, the lenders make their profit when they sell the loan to Fannie/Freddie/Ginnie and then each month they make a small servicing fee. They are only loaning their own money for a few days or weeks at most. No one defaults during the first few weeks so the lender has almost zero risk.