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  • Refinance mortgage

    About to refinance my mortgage from 4.125 30yr to 3.125 15yr with costs about 1.5% with Ally Bank. Is this reasonable? My thoughts is with it this low I could conservatively beat this post-tax rate (still itemized due to charity) in the market so I could just let my mortgage ride. Kicking myself for not seeking lower rate 15yr 3 years ago when I bought.

  • #2
    Chase offered 3.125 on Thursday before the three day bond yield collapse. I'm hoping to get under 3% after tonight's repricings.

    Comment


    • #3
      Markets are expecting a 50 basis points cut in the Fed funds rate by the end of the year, with the next expected cut in September. If you have the luxury of some time, rates may go lower.

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      • #4
        on a 4% 30yr;  never thought would get back lower again.   Holding out for another basis cut too and play into a 15yr for dirt cheap.

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        • #5
          I am also watching and going to refi loans soon depending on trajectory.

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          • #6
            2.66% is the lowest average 15 year rate over the past 15 years and 6.05% is the high.

            http://www.freddiemac.com/pmms/pmms15.html

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            • #7




              Markets are expecting a 50 basis points cut in the Fed funds rate by the end of the year, with the next expected cut in September. If you have the luxury of some time, rates may go lower.
              Click to expand...


              Thanks for the interesting information. Is there an easy way to look up market expectations for Fed funds rate cuts? How closely does the (overnight) Fed funds rate and 10 year treasury rate (on which mortgage rates are based) usually move?

              Comment


              • #8







                Markets are expecting a 50 basis points cut in the Fed funds rate by the end of the year, with the next expected cut in September. If you have the luxury of some time, rates may go lower.
                Click to expand…


                Thanks for the interesting information. Is there an easy way to look up market expectations for Fed funds rate cuts? How closely does the (overnight) Fed funds rate and 10 year treasury rate (on which mortgage rates are based) usually move?
                Click to expand...


                Not sure how fast bank rates follow the adjustments by the feds. It's a little more complicated than just the 10 year treasury, as banks have investors that demand certain margins for the loans. I have found working with Federal credit unions 1- gets you around this investor middle man, 2- they're smaller and more willing to negotiate for a physician's business, 3- they have advantaged closing costs to banks by Federal law.

                Even if they don't drop their rates too quickly after the Fed cuts, you can at least use the cut as ammunition in your negotiation. I had nearly a dozen lenders competing on a recent commercial loan and I requested they accept lower than their best offers, and the two I asked immediately said yes. Lenders really, really want physician business - remember that and these big ticket items are negotiable, not a fixed price tag:

                https://www.bloomberg.com/news/articles/2019-08-05/fed-prediction-markets-move-up-deadlines-for-more-rate-cuts

                Just a disclaimer, the Fed's all over the place right now so the odds and magnitude of a rate cut are fleeting. Although I think the global weakness and trade war will continue, forcing the Fed's hand. If we go into recession, refi opportunities will abound.

                If you can afford it or will prepay the loans, 15 year loans will provide better rates and you'll pay down principal faster over a 30 year loan. I got a fixed 10 year loan on a multimillion dollar office project for this reason. I also never buy on anything I can't pay off within 5 years including home, real estate, cars, etc. If you stay one step ahead of the conventionally thinking herd, you will retire like a king.

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                • #9


                  Is there an easy way to look up market expectations for Fed funds rate cuts?
                  Click to expand...


                  Google, I hear it’s pretty reliable. ?

                  With much respect (I am certainly not trying to humiliate you, just to make a point), people far beyond my pay and intelligence grade have been predicting an interest rate catastrophe/rise/hike/fill-in-the-blank for years. Doesn’t mean it’s not going to happen - IT WILL. But Mr./Ms Market keeps the agenda close to the proverbial vest. Even for Warren B (impo).
                  Financial planning, investment management and CPA services for medical professionals | 270-247-6087

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                  • #10





                    Is there an easy way to look up market expectations for Fed funds rate cuts? 
                    Click to expand…


                    Google, I hear it’s pretty reliable. ?

                    With much respect (I am certainly not trying to humiliate you, just to make a point), people far beyond my pay and intelligence grade have been predicting an interest rate catastrophe/rise/hike/fill-in-the-blank for years. Doesn’t mean it’s not going to happen – IT WILL. But Mr./Ms Market keeps the agenda close to the proverbial vest. Even for Warren B (impo).
                    Click to expand...


                    Thanks. I guess I meant people betting money on rates rather than just trying to predict them. When there's money involved, I feel that expectations are a bit more accurate...

                    Comment


                    • #11


                      Thanks. I guess I meant people betting money on rates rather than just trying to predict them. When there’s money involved, I feel that expectations are a bit more accurate…
                      Click to expand...


                      Money being involved doesn't make the predictions any more accurate.

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                      • #12
                        Quick search saved me from making my own thread - it looks like there is a chance there are further cuts come September, so I'm going to hold off on refi just yet. I see 15y 3.125%, but will try to get a lower rate still, otherwise it's not worth all the hassle.

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                        • #13
                          I just locked in 3.25% 30 year fixed Silverton Mortgage with $300 lender credit yesterday for conventional loan, so I am guessing there should be better 15 year fixed rates now than 3.125

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                          • #14
                            We just moved into a new house in May. Locked in at 3.75%, 15 mortgage. Rates with same lender now at 2.75%. The cost to refinance are an origination fee of 12k and new title insurance ~4.5K, plus a few smaller sundry fees. Wasn’t expecting it to be so expensive, nevertheless, break even would be 25-30 months, and we’d still be having the loan.

                            So I’m debating waiting for another cut versus moving forward...

                            Comment


                            • #15




                              We just moved into a new house in May. Locked in at 3.75%, 15 mortgage. Rates with same lender now at 2.75%. The cost to refinance are an origination fee of 12k and new title insurance ~4.5K, plus a few smaller sundry fees. Wasn’t expecting it to be so expensive, nevertheless, break even would be 25-30 months, and we’d still be having the loan.

                              So I’m debating waiting for another cut versus moving forward…
                              Click to expand...


                              Find a lender with no origination fees. Unless it is a physician loan then I'm not sure how easy that would be...

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