Refinance now or Later?

Guest 0.10 Dollars($)

Hello, Looking to refi from 8.2, 30 yr fixed to lower rate 30 yr fixed. Owe 74k on 150k house. Tenured university faculty for 20+ years.
Credit Scores: 730/677/692. Scores will probably all be over 700 within the next 2 months.
Looking for additional 5k cash out to pay off truck and pay off appx $2500.00 left on second mortgage. No other loans, no charge card debt. Can I expect a good rate and service with the current scores or should I wait for higher scores and lower interest rate this summer? Thanks for your feedback.

banker0679 · Posted: Fri Jan 18, 2008 8:56 pm Post subject:

The problem will be finding a lender that will give you a good rate.
It wont be because of your credit score or loan to value.
It will be because of your loan amount.
Most lenders give hits for loans less than 120k...and less than 100k...and less than 80k.

Your score being at 680 should be sufficient as you should get the same rate if you had 680 or 850

lisascherzer · Joined: 04 Jan 2008 Posts: 755 1.03 Dollars($)

You should refinance now. With a fixed rate mortgage at 5.50% fixed with no points, it's unlikely that they will go much lower. There is a good chance in the future that they will be higher. Again, take advantage of the opportunity when it's there.

ezmortgageloanz · Posted: Sat Jan 19, 2008 9:30 pm Post subject:

You'll certainly get a better rate then you have now...

Regards,

Scott Miller

Guest 0.10 Dollars($)

I really appreciate your input. Banker, we live in a rural area where sub 100k mortgages are pretty common so hopefully, we won't be penalized for that. Our reason for refi is to reduce our payment with the hope we can have the house paid for and be living "debt-free" by retirement 15 years from now--we are taking a 30 yr fixed/no prepay penalty, and will be adding to the principal as frequently as possible. There are surely all kinds of things we could do with a cash out, but...that would just put us deeper in debt while we are in our mid 50s. My brother's death from cancer at age 51 and his wife's fatal heart attack three years later was a huge reality check for us. That big addition to the house we had in mind suddenly sounded like a really bad idea!

Jessica

Hi Abbey,

It's good that you don't have any credit card debt or other loans. At least you can spend a part of your paycheck towards the mortgage only and not after the cards etc. Also, your scores are good. So, you have a fair chance of getting a good offer and a rate that you afford.

Since a fixed rate loan is what you are looking for, so go for the refinance now itself because national average fixed rates have dropped down since last week. And, a no-penalty option is a good one but you have to check if lenders are willing to offer it.

Making extra payments to the principal is good way to get out of debt faster than the usual repayment period. But when the lender finds that you would like to make extra payments, perhaps he may not be willing to offer loan without prepayment penalty. This is so because once you finish up earlier, he loses the interest payments for the time gap between the loan period (30 years) and the number of years you take to repay the loan through extra payments.

Hope this will help you. If you need further clarifications, please don't hesitate to ask.

Regards,

Jessica

Guest 0.10 Dollars($)

Thanks Jessica, I do think we will move forward with the refi right away. I am now drafting a list of possible lenders to research further. I hope we can get a NPP mortgage. Fortunately, we do have one now. Can you tell me how a prepayment penalty is calculated or how much the penalty typically is? Is it a percentage of the outstanding balance? Thanks again!

Guest 0.10 Dollars($)

Abbey,

Have you considered looking into a USDA Rural Development Mortgage? They will get you the same rate (in the 5's) without making you take a hit on the rate for the loan amount. Plus, they do not have a prepay penalty.

Marty.....Soliciting is not allowed on this forum....you can't ask the posters to contact you.......you may however put your contact info in your sig line.....
Marty

shane · Posted: Mon Jan 21, 2008 9:09 am Post subject:

Further, USDA Rural mortgages aren't typical for having LTV's less than 80%... they are more common when there is less than 20% down. There are plenty of lenders who do not have hits to the interest rate for low loan amounts, it's a lender specific adjustment, there are also lenders who do have loan amount adjustments for low loan amounts on USDA Rural mortgages as well. Abbey, take everything into consideration when applying for the refinance.

Guest 0.10 Dollars($)

WOW--You all and this forum have been a tremendous help! Shane, We will proceed cautiously. It seems the greatest challenge will be to make sure we are comparing apples to apples with different lenders (and that we can tell the difference). I have read that with refi's, the buyer has 3 days to thoroughly review the contract, or is this lender-specific as well? BTW, we are in PA.

shane · Posted: Mon Jan 21, 2008 9:47 am Post subject:

Welcome. When refinancing owner occupied properties (in any state) you have a 3 day "right to cancel" after the final paperwork is signed, so in case there was a "bait & switch" done at the closing, you'd have time to cancel the refinance if it was not what you expected.

lisascherzer · Joined: 04 Jan 2008 Posts: 755 1.03 Dollars($)

Hi Abbey,

Your welcome, I'm sure you will get into a great loan with all of the research you have done.

Samantha

Hi Abbey,

It's great that the community could help you.

The greatest challenge when you refinance or take out a mortgage is indeed comparing apples to apples. A lot of people make this mistake when they compare rates without considering the points that come along with them. So, it's important to compare in the correct way.

livinginnky · Posted: Tue Jan 22, 2008 12:20 pm Post subject:

How long have you had your current loan? What is the payment?

If you are planning on staying for 15 years, then a prepayment penalty won't matter if you get a lower rate.

What are the rates on your current second and car payment?

Sorry to just jump in at the end here but I am curious because it doesn't always save money just by getting a lower rate.

and Welcome to the forums!

gmakerley · Posted: Tue Jan 22, 2008 12:36 pm Post subject:

boy am i late to chime in!

banker, i know there are hits for loan amounts, but i think most of those are for far lesser amounts - in our case here, for example, it is $49999 and less. anything greater gets no pricing hit.

i would submit that now would be a perfect time. a score of 692 should bring optimum rates, and those rates are all excellent right now, as lisa pointed out above.

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