For a brief time today, 30-year fixed rates on a conforming $600,000 loan hit 3.875% with zero points and $1500. credited back to closing costs.
Yeah I couldn't believe it either. Needless to say I locked it. It was through Amerisave.
Time to refinance (again)
By iwog Follow Wed, 10 Aug 2011, 3:02pm 6,602 views 53 comments
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Quick question for the rookie house guy here. If I refinance at a lower rate, am I obligated to stay in the house for a certain amount of time (ie. 2yr, 3yr). I ask this because I am using the VA loan and you can transfer the interest rate and the loan on the house when selling to another VA eligable person. However, it has to be primary residence for the person taking over the VA loan.
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FYI: if you pay origination fees in this mortgage market you are being screwed. There are lenders out there who survive on the secondary market. Those are the lenders you should use.
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Truthplease says
Nope. Not obligated. However lender may push you to stay in the loan else they lose their earnings on the transaction, but you are not required to stay in the loan. What gave you the impression you were obligated?
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Harry J says
A 3.75 note rate on a 15yr is a solid deal for July. You sure that's APR? Do you have an FHA loan?
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SF ace says
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thedrew says
I didn't know if there were other obligations like that 3 year obligation for the government tax credit. Just making sure there wasn't something that was normal practice that I didn't know about. Thanks for the reply.
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For what its worth we had problems financing with Amerisave a few months back. Their appraiser dug up a 25 year old plumbing inspection that never happened, and the county didn't even know about it (nor did the county have any intent of following up on it since the plans were long gone and the walls now covered in sheetrock) and the property had changed hands 3 times already. Amerisave refused to issue the mortgage because of this, and frankly, were jerks about it. We refinance with another company with no problem. IMHO I'd take my business anywhere but Amerisave.
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I locked 30yr @ 3.875% 0pt 0fees yesterday morning.
The day before yesterday I left instructions with my broker to lock in when it hits 4% 0pt and he walked in yesterday morning and the first thing he saw was this rate, and locked it for me. I was previously on 3.875% 15 year loan, but ran the calculations and realized i can knock another year off my mortgage by switching back to 30 year, paying the same monthly nut, but paying down the mortgage with some of my emergency fund because i don't need as much with a 30 year. If you don't need the money in the bank, you're much better off paying down your mortgage because it's like instantly earning 15 years (or 30 years) of interest at 4% (compounded).
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harry J - who did you refi with?
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My ARM just reset to 2.875% and the fed is going to keep short term rates at zero for next two years . . . . woo hoo.
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Tenouncetrout:
It is the amortization schedule that causes you to pay more in interest even though you are refinancing to a lower rate. Because the schedule gets reset when you refinance and right now you may be at a point on that curve, where you have started cutting off principal and hence your interest (overall). So if initially your loan was for 15 yrs and you have already paid for 2 years, you got 13 to go. But now instead of 13 you will be paying interest for 15 years when you refinance. Especially if you have been paying extra principal, you would not find it beneficial to refinance.
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If I use something like the Mortgage Worksheet in windows Calc built in Windows 7 calculator, I get the desired results.
But when I use those bank Advert calculators that dot the internet on every site imaginable, I get screwy numbers.
Last night I was playing around and should save around 80 to 90 dollars, yet the Refi bids all come back with a monthly payment close if not a bit over what I'm already paying. And that's with paying 5% down and financing the balance after a year of paying mortgage payments already.
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idesi says
National Bank of Kansas City, which i found from the google "interest rates" page
https://www.google.com/advisor/mortgages?bsp&s=1&kw=interest%20rates&cat=2&schema=refinanceAmb&c=ct_fam&group=Exp-ambiguous&schema=refinance&q=interest%20rates
(they come and go from this list - as do many of them)
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Madison, WI
Quite a game the banksters/feds are playing trying to keep home values propped, while still originating larger loans. The interest rates are just a ploy to get people to buy into. The interest on that 600k loan is still 23 thousand dollars a year, some people just got the big money I guess.
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thedrew, You bring up a couple of interesting points. I went with my old mortgage broker who I had last refied with in 2003. It appears he is no longer independent and has a relationship with a mortgage bank. The appraisal had to be paid for by credit card (and I wasn't going to send in the appraisal authorization form until I had locked in my rate). Is this standard practice for most mortgages these days? Or is this the way it's always been (once the appraisal is ordered you're obligated to pay for it)? My mind is bit fuzzy on this matter as it's been a while.
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EBGuy says
Borrowers are running the show. Make them operate on your terms. Lenders are very hungry for loans right now, and all the brokers are just about gone. By the way brokers are typically a terrible approach. You should always make sure you are dealing with the folks who will actually fund your loan. That is where you'd best deal is.
If you have a conventional loan you will need an appraisal (this is not the case with an FHA loan which is one of the awesome features of that product, especially it a negative equity situation). And someone has to pay for that appraisal. And yes it is typical that lenders will try to rope you in to the deal by pushing the appraisal cost on you. Most borrowers won't want to back out if the have spent $300. However, as I said, the borrowers rule the roost right now. I will tell the lender if they want your loan they have to take all the risk including covering the appraisal fee. Takes about 5 mins for a good loan officer to determine if that appraisal is going to come back negative. Howevere, they will tell you that it may not appraise and that's the risk, but the reality is that they just want you to put skin in the game so you don't back out on the deal.
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It's funny because I don't see anyone writing about a review of a GFE and TIL to evaluate any loan deals. And lenders are required to supply potential borrowers with a GFE and TIL prior to any transaction to allow and encourage shopping the loan. Most lenders break the rules here and don't provide the GFE and TIL to you until you have already put skin in the game, again as an attempt to prevent borrowers from shopping.
I reccomend that before anyone gives a lender a cent you should always request a GFE and TIL. And get them from a few lenders to shop. If they resist or come up with some story why they can't do it. Move to the next lender.
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thedrew says
Absolutely, I have posted my buying experience last summer, many times.
I kept getting "Preliminary GFE" with a cacamamie excuse, that their computer hasn't been updated with the new rules. This was fairly recent after the B Frank financial reform boondoggle.
In fact, the bank kept me on the ledge of nerves, that my loan whole loan application was still up in the air, until the day before we closed. My Title company didn't get papers from the bank until the afternoon we were supposed to close. I was still signing papers and making financial copies days before closing.
I was also making copies and complying to requests every other day from July 15, when I put in the offer and filled out the loan application, until September 1st, when I closed.
Actually I ended up closing on September 2nd, because the bank didn't send over the paper work to the title company until the afternoon I was supposed to close. So I had to wait until the next day.
It was the most stressful experience I ever had to suffer.
I probably have Cancer brewing, heart condition in the works, and stomach ulcers my gut hurts sometimes now, from the experience. It emboldened my resolve to be a cash player, I don't buy anything on Credit.
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Meridian, ID
Many folks think they will have to pay back the $6500 or $8000 home buyer credit if the house is sold within three years. You only have to pay it back if you make a profit on the sale.
http://www.irs.gov/newsroom/article/0,,id=217784,00.html
Read the bottom three items carefully.
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I waited for the FTHB credit crap to expire.
Besides keeping houses inflated, I didn't want to be in a position, where Uncle Sam comes calling for his dues, at a time I didn't have it.
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GFE (Good Faith Estimate), TIL (Truth in Lending)
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I feel so bad about not taking a "No Risk Mortgage". I paid 2.15 points to bring the rate down a half point from 4.875. If i wouldn't have piad that much i would refinanced again today.
.....Bummer.
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The best deal I can find on amerisave for no points and money back on a conforming loan is 4.25 points. I only see rates below 4 if you're willing to pay points or go to a 20 year.
I'm debating whether or not to refinance. I'd have to pay $12k to qualify for a conforming (I owe $429 and conforming is $417 here), but I'd save around $450 a month.
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Kevin says
It would take 27 months for that to pay off, but it'd be good after that, although you'd need to include transaction fees.
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SF ace says
Sorry, I think I misread what he was saying the first time around.
Yes, if you're just knocking off principal -- that's true. You definitely have to consider this apples to apples -- e.g. $417K at the current lender vs. $417K at new lender, although most of the $450 is just through the rate reduction. This seems like a no brainer if you have the $12K, assuming the transaction made sense the first time around. The opportunity cost on $12K these days is not that great, and $5K+/year savings is more than just beer money. However, consider that you may be extending the term of your loan, so you may be paying it for longer.
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Over the life of the mortgage, the difference works out to be around $75k.
Could I turn $12k into $75k over 30 years? Well, probably actually. That'd only require an average return of 6.5%
Realistically though, planning 30 years out this way is a fool's errand, especially for such a relatively small amount. I'll probably live here for at least three years though, so I think I'll do it.
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Kevin says
How far are you along in your current mortgage? If a refinance resets the payments to almost all interest and cuts substantially into the principle being paid off each month then it makes no sense at all.
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47 male
Lafayette, CA
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There's another big spike downward in rates because of the turmoil in today's market.
Not quite as low as last week, but Amerisave has a 4% mortgage with negative points ($1443)
This is significantly lower than yesterday.
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Poway, CA
middleman's website
Iwog, do you have to pay for a non-refundable appraisal before locking in the rate?
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middleman's website
Iwog, do you have to pay for a non-refundable appraisal before locking in the rate?
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Kevin says
But as I mentioned, and as bob2356 did too, did you extend your term as well?
If you refi from the remaining 23 years of a 30 year loan back to a 30 year loan, you're not saving as much as you think.
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middleman says
No. The rate is locked in before they charge the appraisal fee.
They don't make this real clear, even after you start the refi, but the credit card number you give them isn't charged unless you're locked.
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corntrollio says
Yeah I can do math.
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The rate is down to 3.75% on a 417-625k loan again today.
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Yep. 10 Yr is at 1.47 % yield - lowest ever. Rates are crazy low. Bad economic data lately plus the instability/uncertainty in Europe driving it down. It's a good time to refi.
Read something in this thread about ARMs. In general, stay the hell away from ARMs. ARM Rates are so close to fixed, it just doesn't make any sense. Might as well lock in, with the premise that one of two things are going to happen in the mid-term future - 1) The world is coming to an end, or 2) Rates are going to go up. Stick w/fixed if your in the world hanging around for a bit camp.
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There's a lot of cash chasing too-few investments and driving down yields.
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wthrfrk80 says
Where is the cash coming from? China? LOL.
We have been sending a lot of dollars over there for the last 20 years or so. Now it finds its way back to our shore buying real estate. Real estate is known to be a decent inflation hedge, and it pays a little dividend monthly too. Of course landlording is not for everyone, but I don't think the Chinese really minds. Landlording is a walk in the park given their hardworking background.
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thedrew says
Yep. Maybe the market is telling us depression is ahead. We're living through historic uncertain time, which is definitely exciting & scary at the same time.. This economic cycle only happens once every 80 to 90 years. The ride will be rough so buckle up. it was nice knowing you all. Hope to see you all at the other end of the tunnel. :)
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I'm waiting for the negative interest rate. I get money per month for going into horrendous debt and supporting the lives of the wealthy.
Would that mean instead of a tax credit I would have to pay more taxes? Gasp.
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wthrfrk80 says
There is a lot of cash chasing investments that aren't a ponzi scheme. You can get great returns on many euro zone countries bonds right now. Of course many of the "safe" investments aren't any better, just better marketed.