Can I Get A Refinance Rate Under 4.25%
EVERY TIME mortgage interest rates dip to a point that’s approximately 1% lower than they were 18 to 24 months ago – homeowners begin looking for an opportunity to refinance.
I’ve been in the mortgage business since I was 15 (and yes, I’m older than dirt) so I estimated the other day that I’ve seen 8 refinance cycles in my professional career… and everyone is pretty much like the last one.
The interesting thing about where we are in this refinance cycle is that rates do not seem to be going UNDER a certain threshold. This normally happens when we hit a “Bottom.” Let me explain – Mortgage Interest Rates do not exactly follow the 10 year Treasury Bill, but it’s pretty close. (It’s more difficult for consumers to find the FNMA / GNMA MBS pricing). So if the 10 year Treasury is at 3.25% one day – and the next day it’s at 2.89%, you figure rates might go lower. The lower the yield generally leads to lower mortgage interest rates.
For the last month what’s happened (in our market) is that the RATE has not gotten lower… however the amount we can contribute to cover closings costs changes with the market… sometimes we can cover $500 in closing costs, and when the market moves in our direction, we can pay more… but the RATE is not getting lower. Even if you wanted to pay POINTS to get a 4% (4.375% APR) 30 year fixed rate mortgage - I’m not sure you could find someone who could do it! The banks do not seem to have a “desire” to hold 30 year fixed mortgages lower than they are now… and frankly, I can’t say I blame them!
What I’m saying is this: I’m not seeing mortgage interest rates for the best credit and property in the BEST real estate markets go below where they are right now. Let’s say you have a 5.75% mortgage interest rate, and you originally borrowed $250,000 on a 30 year fixed rate mortgage in August of 2007. Your current balance, if you’ve made all of your payments on time, is approximately $241,000. You could have @ $6500 in closings costs to refinance in NC, if you ONLY want the lowest rate! Granted, you might lower your Principal and Interest payment from $1458 to $1218 a month. So you’re saving $240 a month – but you’ve raised your balance to $247,500. It will take you a little over 2 years to “recover” that $6500 you are adding to the balance.
Most people we talk to are “gun shy” when it comes to erroding ANY equity in their home – they simply do NOT want to be in a position of owing more than they can sell for (even though in NC we are in a pretty good position!).
Because of that – most of the folks we work with are either getting a 20 or 25 year term… or they are saving $160 a month on their mortgage with a refinance, and not adding anything to the balance.