Loan Interest Rates

[Rose Pink]

I heard on the news that some mortgage interest rates had already dropped. My credit union does not seem to have dropped them very far. I have a 5.25% and the best I could see on their internet site was 5% with a .5% origination fee. Not really worth it. I was hoping to roll a car loan in with the remaining balance on my mortgage at 3% or something without fees. Have not had to pay a fee to my CU before.

Am I just dreaming?

 

[jmzf1958]

Hi. My credit union has a 4.725% - Maybe yours will be coming down to that
soon. They have what they call an E-Z refinancing that costs much less
than a total refinancing. You may want to ask them if they have it. Also,
you have such a low rate now, it may not make sense to refinance unless
you can do an E-Z finance.

 

[judyjht]

I just locked in with Wells Fargo yesterday 4.875 - 30 year fixed! That was my exact same rate I had on a 7/1 year ARM and it will be resetting next year so I figured I better jump on it because by then it will probably he higher. I am a happy girl!! Personally, I don't think you will ever get to the 3's. IMHO.

 

[tlwmkw]

I was hoping for 4.5% and have the paperwork done and ready to lock in whenever the rates get that low. Our broker says Jan or Feb of 2009 we should see the lower rates. 3% would be wonderful but doesn't seem very likely.

 

[Rose Pink]

I thought I'd heard 3 something on the news but maybe I misheard.

 

[Icarus]

I've been keeping an eye on rates also. For those of you refinancing at rates below 5% now, how many points are you paying?

I've seen some low rates advertised out there, but they all seem to include 1 - 1.5 points.

The Fed has stated that they are trying to bring mortgage rates down to 4.5%. Expecting anything much lower than that is probably unrealistic.

The spread between the 10 year treasury note and mortgage rates is still very high. Hopefully, the spread will narrow a bit, and one way they can narrow that spread is by eliminating or reducing the points charge. Of course the other way is if the yields on the 10 year treasury go up, or maybe some combination of both.

Personally, I'm in an interesting position now. My IO ARM will make it's first adjustment in May 2009, and the current rate is 4.5%. If it adjusted today, the adjustment would be down. Still, when I can find a rate of around 4.5% with low or no points, I will refi. The index is 1 Year LIBOR. The margin is 2.25%.

BTW, these rates are for conforming mortgages for people with excellent credit and at least 20% equity at current valuations. The spread for jumbo mortgages is ridiculous right now. If you also have a HELOC, that will affect the amount of equity you need to get these rates.

-David

 

[JillC]

A credit union in NH today posted 4.875% 30 year fixed with 1.750 pts; 15 years 4.625 with .625 pts. I hope they keep dropping, I need a new kitchen.

 

[DeniseM]

Here's a dumb question. We are also very interested in refinancing, but we want a 10 yr. loan so it will be paid off before we retire. What is the attraction of a 30 year loan for those of you who will retire long before the loan is paid of? Of course we are in CA, so we need to pay off our house before we CAN retire!

 

[Rose Pink]

Here's a dumb question. We are also very interested in refinancing, but we want a 10 yr. loan so it will be paid off before we retire. What is the attraction of a 30 year loan for those of you who will retire long before the loan is paid of? Of course we are in CA, so we need to pay off our house before we CAN retire!

I think for some it is not being locked into paying the higher mortgage amount each month that comes with the shorter term. You can always pay extra principle each month if you have it but you aren't committed to paying it if money is tight because of extenuating circumstances.

I am looking to have our mortgage paid off in just over a year so long as our income remains steady and we don't have any serious emergencies. Being so close to payoff, I am not willing to pay points to refinance. However, we do have a new loan on a new truck (spontaneous purchase by DH--"guess what, honey, they made me an offer I couldn't refuse") and I am toying with the idea of refinancing that on a mortgage-type loan in order to get a lower interest rate and also so that the interest is tax deductible. However, being so close to mortgage payoff, I am getting all jazzed up and I really don't want to extend the payoff time even though it might make some dollar sense. Emotionally, I am really ready to be done with a mortgage!

 

[davidvel]

You have CDO with only a year on your mortgage and are thinking of refinancing? Not possible.

 

[BocaBum99]

Mortgage rates < 4.5% APR + 20-40% decrease in home prices of peak + stricter lending policies - credit default swap market = the end of the housing depression.

 

[Elan]

Here's a dumb question. We are also very interested in refinancing, but we want a 10 yr. loan so it will be paid off before we retire. What is the attraction of a 30 year loan for those of you who will retire long before the loan is paid of? Of course we are in CA, so we need to pay off our house before we CAN retire!

There's nothing written that one ever has to own their home. Housing is just an expense like your other bills. Not that there's anything wrong with paying off your house, but depending on the rate of return one can achieve with that money elsewhere, it may not make sense to pay off a mortgage early, or ever. Once you retire, it may be harder to tap into your home equity.
For me, I'm trying to keep my home equity around 20% of my total net worth. At some point, that will mean paying off my mortgage (I hope!), but I'm not in any great rush to do so. I pay a little extra on our mortgage each month, but relative to what I put into other investments monthly, it's a small percentage.

 

[Elan]

I am looking to have our mortgage paid off in just over a year so long as our income remains steady and we don't have any serious emergencies. Being so close to payoff, I am not willing to pay points to refinance. However, we do have a new loan on a new truck (spontaneous purchase by DH--"guess what, honey, they made me an offer I couldn't refuse") and I am toying with the idea of refinancing that on a mortgage-type loan in order to get a lower interest rate and also so that the interest is tax deductible. However, being so close to mortgage payoff, I am getting all jazzed up and I really don't want to extend the payoff time even though it might make some dollar sense. Emotionally, I am really ready to be done with a mortgage!

Why don't you pay off your mortgage and take out a HELOC? They are under 4% now with no (or minimal) upfront fees.

 

[Rose Pink]

Why don't you pay off your mortgage and take out a HELOC? They are under 4% now with no (or minimal) upfront fees.

Not at our credit union, at least not yet. They range from 5% to 9.25% depending on the product. Currently, we have 5.25%. I will watch to see if they drop further--I'm not sure why our credit union is not as competitive because they always have been in the past. Then, they are a sound institution that did not make any sub-prime mortgages, either.

 

[Rose Pink]

You have CDO with only a year on your mortgage and are thinking of refinancing? Not possible.

I do not understand your post. My tag is a joke referring to obsessive-compusive disease (OCD) with the joke being that some OCDs are compulsive about order--hence the "CDO" being alphabetical order. It's a joke. If you are playing off that joke, I don't get it. Sorry.

 

[Elan]

Not at our credit union, at least not yet. They range from 5% to 9.25% depending on the product. Currently, we have 5.25%. I will watch to see if they drop further--I'm not sure why our credit union is not as competitive because they always have been in the past. Then, they are a sound institution that did not make any sub-prime mortgages, either.

Check out:

http://www.schwab.com/public/schwab...265774&lvl1=banking_lending&lvl2=home_equity&

This HELOC is tied to the prime (no margin). If the terms remain the same, the rate will be 3.25% when they update it. Schwab was offering prime -1% for a long time. They changed the terms when the Fed cut rates to 1%, IIRC.

 

[judyjht]

Wells Fargo - 30 year fixed 4.875 - no points - $1900 closing cost.

 

[bigrick]

Not at our credit union, at least not yet. They range from 5% to 9.25% depending on the product. Currently, we have 5.25%. I will watch to see if they drop further--I'm not sure why our credit union is not as competitive because they always have been in the past. Then, they are a sound institution that did not make any sub-prime mortgages, either.

Nothing prevents you from staying with your credit union AND getting a HELOC somewhere else.

I belong to a credit union and currently have two HELOCs on my home. One is at prime - 0.5 (with no floor) and the other is prime - 1.01 (may have a floor). Neither HELOC is from my credit union.

As good as those rates are, I am not using either right now. Yes that means they both have a zero balance.

I transferred roughly half of my mortgage balance to a 0% credit card and the remainder to a 1.9% credit card. The first lasts until Dec 2009. The latter may expire this month but I think I can get it extended. If not, then I'll use the lower HELOC until I can find another 0% offer.

 

[DeniseM]

Rick - How do you transfer your Mtge. Bal. to a credit card? Are you earning points on the card?

 

[bigrick]

Sadly we are not earning points or cash on the balance transfers. :annoyed:

The HELOC banks issue us credit cards for easy access to our equity. I use these equity credit card numbers when I apply for the 0% balance transfer credit cards.

The balance transfers have sailed through without a question.

Every time (so far) I needed to specify the cards to transfer from on the new card application. If a balance transfer is done after the application time, then a balance transfer fee applies. I have never paid a balance transfer fee.

Also, say you have a HELOC from Bank ABC. You cannot get a 0% balance transfer credit card from Bank ABC to pay off your HELOC from Bank ABC. But you can get a 0% balance transfer credit card from Bank XYZ to payoff your Bank ABC HELOC.

That's one reason I keep two HELOCs. One of them will offer me some kind of a 0% balance transfer card. Then I shuttle debt between them so I can payoff the other with the new card.

 

[Big Matt]

I'm in the same boat as you.

I actually have 8 years left on a 15 year note at 5.875 and I would love to get a 10 year. Here's the catch. Most lenders don't give you a discount off of the 15 year rate. You'd be better off getting a 15 year note and just prepaying it to make it into a 10 year. That way you always have the option to pay the lower payment without the prepayment.

Here's a dumb question. We are also very interested in refinancing, but we want a 10 yr. loan so it will be paid off before we retire. What is the attraction of a 30 year loan for those of you who will retire long before the loan is paid of? Of course we are in CA, so we need to pay off our house before we CAN retire!

 

[Big Matt]

Another idea

For any of you out there that have a lot of equity, there is a situation in the market that doesn't happen very often that is here right now.

Go see how low you can get down to with a HELOC. Mine is Prime minus a half which means 2.75%.

I'm seriously considering paying off my first lien with the HELOC and then just paying as much as I can every month to get the principal down alot. If rates start to creep back up, I'll just get another fixed rate 15 year note and pay it off. In the mean time, I'll be paying down my mortgage very quickly.

 

[Teresa]

You can pay off a 30 year loan in 10 years if you wish.

If the loan costs are the same the the interest is similar on both loans then it won't hurt you to get a 30 year loan but you can personally amortize it over 10 years and pay it at that amount every month. Since you are not legally obligated to pay a larger payment that the 30 year loan requires, you can choose to pay a lower amount (down to the 30 year amount) at any time. Who knows when you'll need to do that?

However, the interest rates may be lower on the shorter term. A plus there. And you'd have to make sure there is not a pre-payment penalty (unusual today - but sometimes those sneak in).

The attraction of a longer term loan is lower monthly payments and some people like to use the 'extra' cash differently than putting all of it into their own homes. And some don't want to (or can't) afford the larger payment of a shorter term loan.

The payment on a 30 year loan at 5% for $250,000 is 1821/month (PITI)
The payment on a 10 year loan at 5% for $250,000 is 3130/month (PITI)

Here's a dumb question. We are also very interested in refinancing, but we want a 10 yr. loan so it will be paid off before we retire. What is the attraction of a 30 year loan for those of you who will retire long before the loan is paid of? Of course we are in CA, so we need to pay off our house before we CAN retire!

 

[Phill12]

First to refinancing to a ten year loan,why go to all that trouble when you can just make the extra payment each month and payoff early? Unless you have a much higher interest rate then it would make sense but staying with a 30 year you still have options during hard times. Good times and you can add more to your loan to still pay it off early. It would just be nice if you didn't have to do it each month unless you could afford to!

My question about all these low interest numbers is what good does this do for many owners in California and Nevada and other states who are now upside down.

Many families are losing their homes or will within next couple years that now have arms loans that will come due!

Think about how many families that have played it straight and made payments on time and now no fault of their own find they owe much more than house worth and may never be again!

This was to be the first thing that had help and now seems to be last behind any company wanting money.

We have many homes in our town that last year was worth $600,000 and now per Zillow value down to high $200s. I would think these owners have larger loans than these and getting no help!

PHIL

 

[DeniseM]

However, the interest rates may be lower on the shorter term. A plus there.

Our mortgage company does offer the lowest rate on a 10 year Mtge. Our current Mtge. is a 15 year loan with 10 years left on it. We are paying extra every month and it will be paid off in 6 more years. However, if we can get a 10 year Mtge. at our mortgage company's lowest advertised rate, it will reduce our monthly payment by more than $300 a month and we will still pay it off in 6 years. In this economy, paying off the mortgage before retirement just sounds good to us.

In our area, the newspapers say that many of the people who can't pay their mortgages now, 1) did not really understand the terms of the mortgage they agreed to, and 2) purchased the very most expensive home they could qualify for. If they had gotten a fixed rate loan for a more modest home, they would be OK now. Of course, the mortgage company probably made more money by selling them a ARM for a more expensive house. It's a very sad situation.