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 jasongross
Joined: 16 Dec 2008
Posts: 1
1.50 Dollars($)
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 Posted: Tue Dec 16, 2008 2:57 pm Post subject: Refinance to higher rate? |
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Our family currently has a 7-year arm that we are four years into. We are locked in at 4.875% but it will adjust in three years. The financial decision on whether we should refinance to a 30-year loan is very complicated and I was hoping you guys could help.
We don't know how long we will stay there but we have no plans to move. I'm not an expert on this but here is my pros/cons breakdown as far as I understand, any advice would be appreciated:
Pros:
- Lock in at a low rate now for the life of the loan
- No risk of a huge increase in house payments after three more years
Cons:
- Pay closing costs of $2500 (or whatever)
- Pay a point ($2000) to lower the rate to 5.00%
- Restart the amortization schedule over so will be paying down less principal than we are now'
- Pay a higher rate for the next three years than we would have
What are your guys' thoughts? Thanks! |
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parmoney
Joined: 05 Dec 2008
Posts: 37
11.32 Dollars($)
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| Posted: Tue Dec 16, 2008 3:03 pm Post subject: |
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| I would move on a 30 year today. Prices awfully low, probably won't stay around for that long. |
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JohnatAFC
Guest
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| Posted: Tue Dec 16, 2008 3:46 pm Post subject: Refinance |
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Start mortgage process now. Do not lock yet.
Rates are at 5% and no points and probably a little better.
Find a lender who charges no points. When loan is porcessed and ready to close, a 15 day lock is a better rate than a 30 or 45 or 60 day lock. If rates drop, get better rate with zero points. If rates rise a little, pay up to 1 point to be at 4.875% or better. Once you have 30 fixed you have ease of mind forever. Never wonder for next 4 years if you could have refinanced or should have refinanced. |
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smithsussane
Joined: 18 Sep 2008
Posts: 3738
Location: Alaska
561.45 Dollars($)
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| Posted: Tue Dec 16, 2008 9:00 pm Post subject: |
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Hi jasongross!
Welcome to forums!
As rates have lowered in the recent times, it would not be a bad option to refinance to a 30-year loan. But yes, you will have to bear with the pros and cons that you have mentioned in your post. JohnatAFC has given you sound information and I think you should follow it. Though you will have to pay a higher rate for the next three years, you will know the amount that you will have to keep aside for you mortgage payments every month. This will help you in maintaining your budget as well.
Feel free to ask if you have further queries.
Sussane |
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BrianDelaCruz
Marketing Dept
Joined: 17 Apr 2006
Posts: 237
Location: CALIFORNIA
30.15 Dollars($)
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| Posted: Wed Dec 17, 2008 3:32 am Post subject: Welcome to our Community |
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Hi JohnatAFC,
I have gone through your post and found it to be informative. You seem to be an experienced person in the field of mortgages. A lot of experienced lenders and mortgage experts are a part of this community. Why don't you join the community and be a part of it? You will have a great time participating here and interacting with the community professionals.
Hope to see you soon as a community member.
Thanks,
Brian Dela Cruz
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Last edited by Brian Dela Cruz on Wed Dec 31, 2008 3:28 am |
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gmakerley
Community Mentor
Joined: 09 Nov 2007
Posts: 7448
Location: bloomfield, ct
70.12 Dollars($)
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| Posted: Wed Dec 17, 2008 8:33 am Post subject: |
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jason, with recent developments (see this morning's news), it would seem that refinancing now is going to afford you a favorable interest rate.
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George M. Akerley
Loan Consultant
860-221-5044 |
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