Refinancing advice

caliman · Post by **caliman** » Fri Aug 10, 2007 10:19 am

Situation:

i have a fixed 5-year jumbo loan at 4.5% whose fixed rate time expires june 2008. With all the current issues in the loan business what should i do? should I wait until march/April next year to get the wheels of refinancing going, or should i get going now before it's too late?

Thanks,

Caliman

valerie · Post by **valerie** » Fri Aug 10, 2007 4:18 pm

How long have you owned your home?

If your loan has a prepayment penalty (many do) it's not likely

you could refi and come out of it anyway financially "ahead".

Have you read the fine print? Some of them have a limit on how much

they can bump you up.

Lon · Post by **Lon** » Fri Aug 10, 2007 4:50 pm

caliman;677424 wrote: Situation:

i have a fixed 5-year jumbo loan at 4.5% whose fixed rate time expires june 2008. With all the current issues in the loan business what should i do? should I wait until march/April next year to get the wheels of refinancing going, or should i get going now before it's too late?

Thanks,

Caliman

If you can afford those big strokes, I would wait until next year.

Accountable · Post by **Accountable** » Fri Aug 10, 2007 5:05 pm

Try to calculate all the costs of carrying the loan vs all the costs of paying it off early.

How high are your payments going to jump? How long would would it take for the savings of the new loan overtake the penalties of paying the old? Are you going to keep the house that long?

caliman · Post by **caliman** » Fri Aug 10, 2007 10:11 pm

Thank you for your replies....here is a little more info

1.) no prepay penalty

2.) when the fixed rate period ends it will go up 2% and top out at 10%

3.) i have lived in the house for 7 years

4.) i plan on staying for awhile

mikeinie · Post by **mikeinie** » Fri Aug 10, 2007 11:24 pm

You may want to consider looking into then, I think interest rates are on the way up. Here is a thought, instead of locking yourself in entirely on fixed. Split the loan between fixed and variable. Keep the amount in variable that you think you can pay off over the next 3 to 5 years, then focus on getting it down with extra payments etc. It makes a difference getting you dept down and reduces interest payments.

Accountable · Post by **Accountable** » Sat Aug 11, 2007 4:35 am

And for chrissakes, don't let anybody tell you that tax deductions should play any part in your decision. Remember, for every $15 of your own money that Uncle Sam decides to give back to you, you've spent $85 that's not coming back. Better to save the whole $100.

Nomad · Post by **Nomad** » Sat Aug 11, 2007 9:50 am

How does a fixed rate change ?

I have a fixed rate thats ummm.......fixed. Period.

Fixed-Rate Mortgages

A fixed-rate mortgage charges a set rate of interest that does not change throughout the life of the loan. Although the amount of principal and interest paid each month varies from payment to payment, the total payment remains the same, which makes budgeting easy for homeowners.

Accountable · Post by **Accountable** » Sat Aug 11, 2007 3:57 pm

It's a jumbo loan, Nomad. Starts fixed for awhile then changes to variable rate.

Nomad · Post by **Nomad** » Sat Aug 11, 2007 7:51 pm

Honestly I cant understand why people get into variables and loans with arms. You are only saving a few $ a month for a short time then WHAM.

Accountable · Post by **Accountable** » Sat Aug 11, 2007 8:04 pm

Nomad;678062 wrote: Honestly I cant understand why people get into variables and loans with arms. You are only saving a few $ a month for a short time then WHAM.
Yup yup yup. Mm hm. :yh_clap