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Replies (28)
- George DeVine, "George DeVine"
- Contributions:857
Matt,
One of the most important factors is how long you intend to own the home. Please answer that question, so we can give you some intelligent advise.
- Rob Cochems
- Contributions:3523
Matt,
If it is declining rapidly, I would move now. Rates are pretty low right now, so with good credit it should not be that painful.
- Matthew Brown, "matthewcbrown"
- Contributions:171
What is your margin?
- CORONA NICK
- Contributions:2218
Refi now if you plan to keep your house for a long period of time, like forever...lol I was in the same position at the begining of this year, my loan would have reset in 2010, I had a great 4.875% rate.... but when rates fell sometime in FEB, I refi'd to a 15yr fix at 5%.... it was a great move for me, as though now, I dont have to worry about it. You seem to be a responsible person, bite the bullet now, risk should be averted as much as possible, due to the uncertainty of what is to come, like skyrocketing rates...
- Carl Henker, "Carl Henker"
- Contributions:755
I would strongly consider refinancing now as the future is very uncertain regarding rates. But I think there is a good chance rate's will be higher in 12 to 15 months. I am assuming you intend retain the property for a number of years past your adjustment date. Hope this helps
- Andrew Adams, "203K Specialist"
- Contributions:9349
Unless you plan on moving in the next two years the question is will the pain of paying 6% today be more tolerable than paying 7.25% 16 months from now. If the answer to that is yes eliminate the upside risk. You will only know you made the right choice in hindsight so you need to base the decision on today's pain vs future pain!
- Martin Farris, CFP, "Dream Home Funding"
- Contributions:789
Matt, post a quote request. I don't think your rate on a 30 year fixed will be that much higher than what you already have, and if your value is dropping you may be stuck if you wait another year and it keeps dropping. I'm assuming you plan on keeping the house awhile.
- Justin Sheftell, "Courtesy Mortgage"
- Contributions:3428
I agree this would be a good time to see what is out there on refinance. LIBOR went up to 6.4 yesterday, it is quite possible you could be facing a fully indexed rate of 8-9% on your loan.
Also, you might want to double check on your first rate increase. The note will define the annual increase, but it will also define the first change max and this might exceed 2%.
You already made some salient points about declining markets and also about "biting the bullet". If you know you need to refinance at some point, closing costs are "sunk" meaning you are going to either pay them now or later, so they shouldn't factor in your decision.
If you plan to keep this property 7-10 years or more then that is even more reason to get a new loan.
- CORONA NICK
- Contributions:2218
SanDiego, where do you get LIBOR at 6.4? Thanks
- Matthew Brown, "matthewcbrown"
- Contributions:171
Yikes, I am seeing 3.1%
- Rob Cochems
- Contributions:3523
- Matthew Brown, "matthewcbrown"
- Contributions:171
Ouch. I guess my rate sheet tomorrow will reflect that.
- Justin Sheftell, "Courtesy Mortgage"
- Contributions:3428
Nick, my mistake, LIBOR was in the news quite a bit yesterday, but after reading more the news was about the LIBOR overnight dollar rate which doubled from 3 to 6 and was back to 5 today.
Wrong rate, my error.
San Diego.
London has it on 2 fronts. They got the US market and the Russians shutting down temporarily. The fear is the same . Liquidity and they are HOARDING US dollars. Banks are afraid to lend hard currency to each other.
- Tammy Stockdale, "Colorado Mtg Broker"
- Contributions:6995
Matt, if you are in a declining market, I would refi now into a 30 yr fixed rate. Rates are under 6% and the difference in rates between an fixed and ARM are so minimal. I wouldn't risk losing any more value and being unable to refi when the ARM resets next year.
What state are you in?
- CORONA NICK
- Contributions:2218
WOW, I tried to look it up myself, but the old rates are still there.... this means ARMs have become much more costly to carry.. which most likely means, more foreclosures, leading to plummeting home prices more, making more underwater, thus more foreclosures... into a downward spiral.... is the end near?
- Tammy Stockdale, "Colorado Mtg Broker"
- Contributions:6995
Nick, do you happen to have anything positive to say?! If not, can I have a corona with lime?
- CORONA NICK
- Contributions:2218
Sure, "squeeze squeeze, ooooh ya".... nice and cold, just for you, a cyber Corona... As far as positive for me, I have my health, my family, my dog, and all my cars, and bike are paid off..... as far as the country, well we've seen better days, but hey, I can still go out and buy stuff with my credit card...lol
- Michael Mazursky, "FHA Mortgage"
- Contributions:314
The Fed will keep bailing out the big Financial Instutions if needed, but if Morgan Stanley is merging with Wachovia and WaMu is being auctioned off, I think they get it now. Our industry will be consolidating. The lenders in trouble will be gone. The Financial Institutions that can afford to absorb the short term losses will reap the benefits. While all this news may be bad, in a way it has to happen for things to get better. If a troubled bank has $100 billion in bad mortgage paper and have to file BK, that $100 billion will be sold for .20 on the dollar. If that $100 billion is now $20 billion, if you were the investor, wouldn't you write down the $100 billion to affordable levels so you can make money on your $20 billion? That means you could write it down 70% and still make $10 billion. This is what the market needs. For all you in CA, if you are owe $400k and its now worth $300k, they could write your loan balance down and still make money. If you factor the 70% discount, their break even is $80k. No one wants to see a Financial Institution fail, but is it possible filing a BK can help the market? Could this keep foreclosures and short sales off the market? If so, wouldn't that keep values from falling? Wouldn't that keep people in their house? One would say that could destroy the market. But at this point, how much worse can it really get? You save AIG and the market is down another 500 points. You would think that the current investor would want to change the terms to make their money back. Unfortunately, most of those investors will not take write downs and loan mods end up in foreclosure anyway. The new investor that buys the paper will be able to write down the loan balance and keep these people in their home. They can re-write the loan anyway they want because they are getting that $100k loan for $20k. As bad as it sounds, it makes sense to me...
- Joe Cafiero, "Joe Cafiero"
- Contributions:3221
FHA....How does this rambling help Matt decide whether or not he should refinance.
- Michael Mazursky, "FHA Mortgage"
- Contributions:314
my bad i clicked on the wrong thread. i didnt realize it until after i submitted. unfortunately you can't delete your posts here. my mistake.
- matt.tolman
- Contributions:31
Thanks for all of the helpful replies. To answer some questions:
I do plan on staying in the home for a long time. The only thing I could see that would force me to move would be if I had to relocate for a job, but my job is pretty stable so I would make the decision based on the assumption that I will be living there forever.
I am in Utah which was doing well for a while while other markets were crumbling, but now our market has started to crumble too. Utah was one of the last states to ralley during the housing boom, so the ARMs are resetting later in Utah and the downturn was delayed. That said we have been rapidly declining and I fear based on the number of houses on the market that are not moving we may have a lot more downside yet to come.
Based on the comments I think the right thing to do will be to go ahead and refinance now. That was the direction I was leaning, and the comments I have been reading have reinforced that for me. I certainly don't want to end up in a situation where I am stuck paying 7% for 15 years.
I will be posting a mortgage request today.
Thanks for all of your comments.
I do plan on staying in the home for a long time. The only thing I could see that would force me to move would be if I had to relocate for a job, but my job is pretty stable so I would make the decision based on the assumption that I will be living there forever.
I am in Utah which was doing well for a while while other markets were crumbling, but now our market has started to crumble too. Utah was one of the last states to ralley during the housing boom, so the ARMs are resetting later in Utah and the downturn was delayed. That said we have been rapidly declining and I fear based on the number of houses on the market that are not moving we may have a lot more downside yet to come.
Based on the comments I think the right thing to do will be to go ahead and refinance now. That was the direction I was leaning, and the comments I have been reading have reinforced that for me. I certainly don't want to end up in a situation where I am stuck paying 7% for 15 years.
I will be posting a mortgage request today.
Thanks for all of your comments.
- Greg Darlin, "Greg Darlin"
- Contributions:3238
Matt,
Everyone on here has suggested for you to refinance. If you lock in at 5.5 and have to pay a point, it does not really matter, based on what you have said. Your mortgage balance is pretty low and an increase in 1/4 point should not hurt you financially. However, if you wait and . . . it can scare your wallet much more.
Post a loan request and enjoy the security of knowing you are fixing your rate.
- matt.tolman
- Contributions:31
Posted my loan request: Request # ZR-SLMGBWS
- Nic Netherton, "Colorado Lender"
- Contributions:7219
Ok, we'll keep an eye on it for ya Matt.
- Nic Netherton, "Colorado Lender"
- Contributions:7219
The one from "Citizens Comm Bank" looks pretty good Matt. Your other offer is high for today's market.
- matt.tolman
- Contributions:31
locked in at 5.75% on a 30 year fixed :)
- CORONA NICK
- Contributions:2218
Good luck Matt. I would deal with someone who is local to you, over the net, your taking extra chances... watch out for the bait and switch.
Should I refinance my ARM or sit tight and wait
If I refinance I will likely be paying a higher rate (guessing around 6% - I have good credit), and probably some closing costs too. However, at some point I will need to bite the bullet refinance. Considering I have about 15 months before the rate resets do I take the pain now and refinance or should I sit tight and enjoy my 5.25% rate and hope that rates come down further at some point before I am forced to refinance.
Any thoughts on what I should do?
I currently owe 150,000 on a house that is worth about 230,000 and rapidly declining in value (would have appraised for $300,000 a year ago).
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