So here is the deal.

I bought a house a year ago. My 30 fixed is 6.24% no points, just a straight6.24%. This was my first home mortgage. I have made extra payments every month.

I just looked at local rates, and they are about 5.6-5.8% same deal. 30 year fixed, no points.

So is this the time to refinace, or should I wait it out a bit longer. I have noticed in the past few months, rates went down considerably.



Also, do you think I will have trouble finding lenders to lend to me because I have only had the mortgage for about a year (even though in good standing, and prepayments?)

thanks :cheers

I don't know if this is of any help or how accurate the information is, but my mortgage broker stated that I could refinance as long as my credit is in good standing and that my mortgage payments have not been late.

EDIT: refinance after a 1 year period. *sigh*

why a sigh after 1 year????

the rates dropped, why should I pay a higher rate when i don't have to?

Please explain :cheers

Are there any closing cost on the loan? Did you pay any closing cost a year ago? If the answer is yes that needs to be factored in to the savings.

JimmyJimmy,

I will now wag my finger at you for only taking part of my advise: you got the fixed, but for too long a term. You got a decent loan, though. Good onya'.

Are there any closing cost on the loan? Did you pay any closing cost a year ago? If the answer is yes that needs to be factored in to the savings.

Good point. Here's how you do that:

Right now, according to Bankrate.com, you can get a 15-year fixed at 5.08%. So take (6.24-5.08=1.16%) of your current mortgage balance to calculate your annual interest savings. For example:

$200,000 mortgage balance x 0.0116 = $2320 saved per year. You can then take that number and compare it to your closing costs to see how many years you'd have to stay in the house to break even. Not too long at all from the looks of my example, although I have no idea what your mortgage balance actually is.

what part of your advice did I not take?

Secondly, what do closing costs usually run?

I plan on staying in this house for quite some time. I bought a house that I can grow into. (3 spare bedrooms when I bought, 1 has been turned into my home office)

Also, if it matters, my house was apprasised for $12k more than what i paid for it :cheers

what part of your advice did I not take?

Secondly, what do closing costs usually run?


Just to take a 15 year vs. a 30 year mortgage. It guarantees you pay extra on the mortgage - which you've said you have been doing anyhow. May as well firm that up into a full-blown plan by taking a 15 when you re-fi.

I actually don't know the going rate for closing costs. You might be able to find it that ream of paperwork you signed during the closing last time. Make 2 pots of coffee and just tear into it. That was a joke. I'm funny.

Keep it up, Jimmy. Making you wealthy is a pet project of mine.

:cheers :cheers

If you have equity in your home (20%), which I'm assuming you don't (note is only 1 yr. old) you're probably not going to qualify. Also those prime rates, and they're called prime for a reason, are available to borrowers who have excellent credit scores e.g. 800-860, good debt to income ratios, and available credit. Is it straining your finances to make extra payments monthly? The reason I ask is that it is recommended that if you can afford it, one extra payment a year is optimum. I advise people in the sixes (fixed)to stay where they are. The closing costs will hurt. Brokers will make their money out the front, back or in a lot of cases both! Banks will charge around 4 1/2 points. My company will charge up to 6 1/2. There is a product called a Home Mortgage Accelerator. You might want to check that out.

Jimmy I have also been thinking of refinancing my home I bought mine back in sept $155,000 at 6.50% well the rates are still falling and are expected to fall even lower throughout the year closing costs can very from place to place. If they dont hit with points they are going to charge more for the closing. Right now there are a few things stopping me from refinancing 1. I am in Iraq 2. My closing costs run about $3700 I want it lower I just cant imagine adding another $3700 onto my principal. 3. The intrest rate is going to be cut again (so I am reluctent). I hope this helps you some how.

If you have equity in your home (20%), which I'm assuming you don't (note is only 1 yr. old) you're probably not going to qualify. Also those prime rates, and they're called prime for a reason, are available to borrowers who have excellent credit scores e.g. 800-860, good debt to income ratios, and available credit. Is it straining your finances to make extra payments monthly? The reason I ask is that it is recommended that if you can afford it, one extra payment a year is optimum. I advise people in the sixes (fixed)to stay where they are. The closing costs will hurt. Brokers will make their money out the front, back or in a lot of cases both! Banks will charge around 4 1/2 points. My company will charge up to 6 1/2. There is a product called a Home Mortgage Accelerator. You might want to check that out.

First let me state this credit scores (FICO) range from 300-850. Second you can be able to get a prime rate if you have a credit score of 700 and more. I dont know what company you work for but it is possible. as long as you have a good debt to income ratio.

Yes, a 700+ FICO may get you in the low 6 percent range but not the mid 5%. There are many variables factored into desktop underwriting. In short though, you have to be an almost perfect borrower to qualify for the prime rate. I made a mistake too by saying that we charge up to 6 1/2 points. We charge points AND closing costs. Banks that service their own loans can afford the luxury of not charging closing costs or points.

I'll have to disagree with some of the statements above. I was able to acquire a mortgage at 5.8% fixed 30 year and my credit score BLOWS, with no points and low closing costs.

I think my score was around 660, and it's definitely not any higher than that. :dunno

Are you guys going through your banks or external lenders?

Tyg, I would say you're fortunate to get those rates. A 660 FICO is just above subprime. How long ago did you take out the note? How much of a down payment did you have, 20% or more? Did you acquire your loan through your local bank? If it was through your local bank, I'd bet they service their loans instead of selling them on Wall Street. The banks that service their products make their money off the interest so they can afford to charge little or no closing costs or points.

Tyg, I would say you're fortunate to get those rates. A 660 FICO is just above subprime. How long ago did you take out the note? How much of a down payment did you have, 20% or more? Did you acquire your loan through your local bank? If it was through your local bank, I'd bet they service their loans instead of selling them on Wall Street. The banks that service their products make their money off the interest so they can afford to charge little or no closing costs or points.

I was told it was going to be difficult because I have no credit here in the US - living in MN for 3 years and having no regular payments didn't help (outside of a credit card and a cell phone). My saving grace was my down payment which is approximately 37% based on the agreed purchase of my home and the monthly rent that I pay (the bank applied that to my credit score). The loan was taken out about 2-3 weeks ago through my local bank which does service their own loans (so I'm told).

I'm new to this whole thing, learning quite a bit about how freaking complicated it can get. I didn't even know about points until a friend of my girlfriend's explained it to me in detail. Mortgage is a racketeering business :)

Mortgage is a racketeering business :)

Dude, it's also depressing. I've been in sales so I think I've developed thick enough skin. But, damn, when I get borrowers who are facing foreclosure or the little old lady who cant refi her double wide because there aren't any comps for miles, or the dude who cries and then THANKS me for all I've done after I tell him there's nothing I can do for him, it wears me out emotionally. I can't say I've never done a loan that someone didn't need, cause this is sales after all. You just can't believe the trust people put in your hands. I'm desperate to get out of this job. If I had started 5 or 6 years ago, I don't know. I might have been just like everyone else in the business. The money was flowing. It was the wild wild west and brokers were making mad cash. I just don't have the temperament for this anymore.

I'll have to disagree with some of the statements above. I was able to acquire a mortgage at 5.8% fixed 30 year and my credit score BLOWS, with no points and low closing costs.

I think my score was around 660, and it's definitely not any higher than that. :dunno

Are you guys going through your banks or external lenders?

5.8% APR or APY (Here's a cut and paste on the subject)

As a borrower, you are always searching for the lowest possible rate. When looking at the difference between APR and APY, you need to be worried about how a loan might be "disguised" as a lower rate than it really is.

For example, when looking for a mortgage you are likely to choose a lender that offers the lowest rate. Although the quoted rates appear low, you could end up paying more for a loan than you originally anticipated. Banks will often quote you the Annual Percentage Rate (APR).

As we learned earlier, this figure does not take into account any intra-year compounding either semi-annual (every six months), quarterly (every three months), or monthly (12 times per year) compounding of the loan. The APR is simply the periodic rate of interest multiplied by the number of periods in the year. This may be a little confusing, you could actually pay a much higher rate. In the case of a bank quoting an APR of 9%, this does not consider the effects of compounding. However, if you were to consider the effects of monthly compounding, as APY does, you will pay 0.38% more on your loan each year - a significant amount when you are amortizing your loan over a 25- or 30-year period.
This example should illustrate the importance of asking your potential lender what rate he/she is quoting when seeking a loan. It is also important when comparing borrowing prospects to compare "apples to apples" so to speak (comparing the same figures), so that you can make the most informed decision.

I have been making extra payments every month towards principle. My score before I bought the house was in the 820 range (i know it drops when you buy a house) So credit is not a problem. Also, when I bought, I underpayed, and had it apraised for about $10k more than what I paid for it. That with the down payment I put down should be right around the the 20%

I have not worked on anything yet, as I have been reading that rates will be cut again by summer, so I think I am going to wait it out a bit more.

Closing costs are a big thing man. You may save on a monthly basis, but you will get rammed in the a$$ with a bunch of fees. Even with zero points.

so how do I know when a good time to refinace is?

the reason I really want to, is becauee Chase Mortgage paid my f'n property taxes late (i have escrow) And they told me the only way to get rid of escrow is to re-finance

You gain more money from home ownership due to appreciation, than you do from the amount you pay on the loan. In other words:

Lets say you have a home worth $100k and it's paid for, and you gain 5% appreciation on it. Within the first year, you made $5k from your $100k of money. Now as a second example, lets imagine that you have that $100k split up into 10 properties, each valued at $100k. Sure, you owe $90k on each, but you're also still gaining 5% on each, even though you don't have $100k tied up in each. Therefore, your $100k gains $50%, rather than 5%.

Yes, I know that you have interest on the loans, and it may be in excess of the appreciation...but if it's rental properties, you're not likely to rent it out for less than the mortgage payment. In most cases in my area, rental is about $125-145% of the mortgage payment, leaving another opportunity for profit.