I know no one knows what the interest rate will be when mine expires, but I’m nervous that it could be high. I remember the rates when they were in the teens, (God forbid). I have been quoted a 6% mortgage with $5000 closing costs. My mortgage is for $300,000.
Your opinion would be appreciated, Patrick
Asked by:Patrick R
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the closing costs on the refi sound high. You still have time to shop around for a better deal.
The key to answer your question, is how long do you think you will stay in your home. If you think you will be there for less than 7 years, then probably a refinance at this time is not a good idea. When interest rates hit the high teens back in the 80′s, it was truly a unique economic situation. The Fed policy of those days has been pretty much debunked. If you anticipate that you will remain in your home for a long time, then you should lock at the 6% fixed. The closing costs on a 300K mortgage are reasonable. By the way, before you commit, apply with E-Loan online. It takes only a few minutes, and then you can compare rates. You may save a little on either closing costs, or the rate.
Is the 6% and $5K costs with your existing mortgage holder?
If so, the $5K seems pretty steep. Nobody knows what rates are going to be next month, much less 28 months from now.
In order to provide a better answer, I need to ask a question. How long do you plan on staying in your home? If you’re planning on being there for the long haul then converting to a fixed rate now while rates are still low based on the past 25 years makes sense. If you think you’re going to be moving on or may be transferred or need a bigger or smaller home in the next few years, sticking with the ARM may be preferrable. What are the rate caps and terms? 3 years and 2%? More info will get you a better answer.
I agree that $5k is high for closing costs. Re mortgages, I always like to lock. Rates should be peaking w one or two more fed moves, and then maybe heading back down IF the economy ever slows and inflation tames itself.
I say lock at whatever you can…then ALWAYs be on the lookout for lower rates. You can always refi if rates drop…but you will kick yourself if you wait and rates drift higher. Also, I agree that the Fed policy that caused the probs in the 70s/80s are thru, but as unlikely as it is…it would be damn shame to “let a profit turn into a loss”, ie, let a 6% or so mortgage get away and watch rates drift to 9. The online loan places are pretty good. It is a relatively efficient market and you’ll probably get some pretty competitive rates back.
Coming from someone who works in the industry, you should re-fi now. If this current trend continues, rates are only going back up (As they have been for several years now). As for your closing costs, $5000 is NOT high at all. Mortgage companies can charge up to 3% (for prime and up to 7.9% for sub-prime and this varies a little from state to state)for your closing costs which would be $9000 for a $300k home. If your current rate is 5% and you were quoted 6% (make sure that is fixed), that is actually a great rate. I have been seeing prime rates starting at 6.5% – 6.75% right now.
i am a loan officer, the question you need to ask yourself is, is this going to be the last time i plan refi, because if you do plan to refi in the furure you might as well have an arm in fact it would be wasting money to have a fixed rate
but if you never refi again then a fixed rate would be the way to go you might even want to look into buying the rate down to save you money in the long run
if you have anymore questions or you want me to look over your situation further email me a or on aim my sn is nanu596 i dont like giving my work info out over yahoo so when i get your email i will send you my contact info
6% fixed rate sounds great to me.
The $5,000 in closing costs doesn’t sound that high for a $300,000 home. If the closing costs are bothering you, ask the person who made you that offer if there is any way that the fees can be lowered. They don’t want to lose your business and if they can get you a better deal, I’m sure they will.
Don’t kill your credit score shopping around for the best rate. Find a mortgage professional you trust and stick with them.