Timothy H asked:
Hello, here’s the situation:
I currently have a mortgage of left of $159,000 at 6%. This is a 30 year mortgage, but I have been paying extra each month; and I am at around year 23. I also have a home equity loan of $25,000 at 7.25%. I am planning on paying the $25000 loan off in the next 5-6 years.
I went today to possibly refinance, she told me “Fixed rate at 5.75%, 30 years.” I can either combine the two and pay that, or pay my $25,000 at what I am paying right now; and just refi the $159,000. She is charging me $2000 in closing costs. If I wait, and the rate drops after closing, I get charged $700 more to lower the rate.
Should I wait until the 30th when the Fed either cuts, keeps were they’re at, or raises rates? This way, I will not have to pay the $2700 to get to that lower rate.
What do you think, please help me out. Any advice is appreciated. What impact will the rate cut have on my situation? Thank you! Tim
Mortgage Finder
Hello, here’s the situation:
I currently have a mortgage of left of $159,000 at 6%. This is a 30 year mortgage, but I have been paying extra each month; and I am at around year 23. I also have a home equity loan of $25,000 at 7.25%. I am planning on paying the $25000 loan off in the next 5-6 years.
I went today to possibly refinance, she told me “Fixed rate at 5.75%, 30 years.” I can either combine the two and pay that, or pay my $25,000 at what I am paying right now; and just refi the $159,000. She is charging me $2000 in closing costs. If I wait, and the rate drops after closing, I get charged $700 more to lower the rate.
Should I wait until the 30th when the Fed either cuts, keeps were they’re at, or raises rates? This way, I will not have to pay the $2700 to get to that lower rate.
What do you think, please help me out. Any advice is appreciated. What impact will the rate cut have on my situation? Thank you! Tim
Mortgage Finder
Tags: 6 Years, Closing Costs, Fed Rate
3 responses to Fed rate and Mortgage interest rate, help please?
Mortgage Finder
First, How much is the home worth? That would really help determine what your best scenario is. Secondly, as the other poster wrote, you may be able to get a lower rate than 5.75%. That’s absolutley true, but at what costs? The closing costs will certainly go up substantially. Thirdly, The Fed lowering the prime rate has ZERO effect on morgtage rates. It effects car loans, credit card rates, and Home equity lines of credit.
Fed rate and Mortgage interest rate, help please?
Mortgage Finder
If it were me, I would only refi my first at around the 5% rate range. I would ask the home equity loan to “subordinate” to my new first. If you are at year 23 why go backwards by going to 30 year and adding in the equity amount. If you get a 20 year fixed loan ( they are there all you need do is ask) and you’ll pick up 3 years in time, I’m betting your rate will be below 5%, and your payment will either likely stay close to where it’s at or go down a little. Don’t need to pay to get a lower rate, lower rates are on the way, not by anything the Fed does, but the market will dictate that. Once you’re in your new 20 year loan, attack your home equity loan, the way you attacked your first before. Talk about gaining equity!!
Using the figures you provided if you take the 159,000 and 25,000 you have $184,000 at 5.75% for 30 years and your approximate payment P & I is $1074.00 per month.
Taking your $159,000 at 4.5% on a 20 year loan your P & I payment is approx $1006.00 per month. If your loan contact can’t get a 20 year for you, go to one that will.
Fed rate and Mortgage interest rate, help please?
Mortgage Finder
Get a few quotes from banks and mortgage brokers that are LOCAL TO YOU.
If I were considering financing/refinancing a home, I would…. Lock if my closing was taking place within 7 days… Lock if my closing was taking place between 8 and 20 days… Lock if my closing was taking place between 21 and 60 days… Float if my closing was taking place over 60 days from now… This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers.
A lot people giving advice are also looking to give you a loan (its not advice, its advertising), if they are not local to you and you can’t get to them within 1 hour don’t fall for it. They say they are licensed in all 50 states, what does that mean? Which state do you have to look in first if something goes wrong? KEEP IT LOCAL, STAY SAFE.
Remember Buddha’s advice:
“Believe nothing, no matter where you read it or who has said it, not even if I have said it, unless it agrees with your own reason and your own common sense.” You are the only “expert” you can trust: All brokers, and every other loan officer guru giving advice here with a .com or contact me at the end is “selling” you something (its not advice, its advertising). Don’t buy “it.”
Fed rate and Mortgage interest rate, help please?
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