refinance to non-jumbo rate

Guest 0.10 Dollars($)

I have a 500k jumbo loan at 6.125%. Somebody offer me to change to two loans, one for 417K at 5.25%, the other will be 87k at 6.875%? Is this a good offer? I can pay off the 2nd loan quickly, but how about 5.25% for 417K, is it good enough based on current market condition?

what's rate's trend, seems it will go down again at end of this month after Fed's meeting.

Thanks

gmakerley · Posted: Tue Jan 08, 2008 11:03 am Post subject:

5.25% is, was and always will be a good rate. the rate you have been quoted undoubtedly also comes with points.
what you have to factor in is the time you have had the existing mortgage vis a vis the time you will take to repay the new 1st and 2d; along with the costs of your refinance. if you can recoup the costs and slash the overall interest within the first few years, then this sounds like a good proposition; particularly since you indicate you can pay off the 2d quickly.

as for trends; frankly, rates go up and rates come down, and this is a daily occurrence. as i said, 5.25% is good. rates seem to be on the downward slope overall at this time, but we are in a very hazy economic period, so any predictions would be worth about as much as the lint in my pocket (unless it can be found to be an energy source we can use).

banker0679 · Posted: Tue Jan 08, 2008 1:41 pm Post subject:

it also matters if your 5.25% is an ARM or 30yr fixed.
5.25% on a 5/1 ARM sounds right around PAR.

5.5% might be par for 30yr fixed

evolovik26 · Posted: Wed Jan 09, 2008 7:18 am Post subject:

500k loan @ 6.125 = $3038/mon
417k @ 5.25 = 2,303/mon
87k @ 6.875 = 572/mon
Net savings $163/mon
However I trully dont see how you can get 4k closing costs total on a loan this size.
And as far as interest rate is concerned its also seems a strech.
I would get a Good Faith Estimate and take to a local lender ofr second oppinion to review for hidden costs.

lisascherzer · Joined: 04 Jan 2008 Posts: 749 94.10 Dollars($)

It depends on how long your going to be in this home. If you are pretty sure it will be over 5 years, then I would say that it's worth it. Be careful of the closing costs. Get a rate lock in writing and don't pay the broker or lender upfront. This does seem like a low ball offer that you are getting if they are telling you no points. If you are paying points, it might not be worth adding over 10K or more to your mortgage balance.

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