Profile picture for gatespud

When to Refinance

It looks as though the Fed's are going to cut interest rates to a very low number.  The question is if they cut the rate to this low number, should a person look to refinance even if they have only lived in their home for less then 1 year?

  • October 24 2008 - US
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Answers (7)

Profile picture for Rob Cochems

Gate,

 

Folllow mortgage rates, not the FED Fund Rate.

  • October 24 2008
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When Fed cuts rates, typically the rate to the borrower goes up.  Not always, but usually.

  • October 24 2008
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Profile picture for gatespud

From what I am reading they are going to cut across the board... but I may have read it wrong.  But lets just say they did cut mortgage rates to a very low number.  Does it make sense to refinance if your rate is upwards of 6.5% currently?

  • October 24 2008
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The Fed does not control mortgage rates.  In fact, mortgage rates often go up when the Fed cuts the Fed Funds rate.  Mortgage rates a function of mortgage backed securities, not the federal reserve.  The only mortgage related rates that fall when the Fed cuts rates are those that are tied to the Prime rate which changes in lock step with the Fed Funds rate - Home Equity Lines of Credit.

  • October 24 2008
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Profile picture for Rob Cochems

Gate,

 

The FED's dont cut mortgage rates.  Two completely different monsters....

 

Not knowing all your details...the safe bet would be to refi, if you can lock in at 5.5 or lower.

  • October 24 2008
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Profile picture for gatespud

Thanks everyone for the information, I am very thankful for you help!

 

Doug

  • October 24 2008
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Profile picture for Heartlandb05

Gatespud,

 

Use this calculator to weigh the savings vs. the cost of the refinance with how long your looking to stay in the home.  It will give you more guidance to see if the new refinance rate is right for you versus your current situation.

 

http://www.zillow.com/mortgage/calculator/Should-I-refinance-my-home-mortgage.htm

  • October 24 2008
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