Should I refinace my mortgage 6.25% current interest rate on 30-year fixed?

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I currently have fixed rate of 6.25% for a 30-year mortgage. I just took this mortgage out June 2007 (due to divorce). I owe $ 130,000 on the mortgage and my monthly payments are $ 1100 with taxes, insurance etc. I think the actual mortgage is $ 818.

Or with all the closing fees, appraisal fees, etc. I am not really going to benefit and should just stay put?

Note: I currently do bi-weekly payments..hoping to skim 6 years and $ 42,000 off the current loan.

I am considering refinancing now. But if I wait six months, I will have time to do some remodeling that will definitely bring up the value of my house. This would decrease my loan to value, hence no PMI payments….I however know nothing about the current mortgage trends. I can get a 30 yr fixed at 6.125% with a broker I am working with now. Am I risking too much to wait 6 mos to refi? I currently am in an interest only loan of 7.25% I only did it to get the house knowing I was going to refi in the future. So do I do it now or in 6 mos? I don’t gain much, other than a more stable loan by refi now. Thank you Thank you

9 Comments
  1. Reply
    kemperk
    February 20, 2011 at 8:04 pm

    the most it will go down to is 5.1. Just about 1 point. Since you already know about making more payments, I think you should not
    bother with it–just keeping the payments as often as you can.

    and ask the lender about the discounts of making a small extra
    payment every payment day. That can knock off another 12 yrs!

    but I think you are doing great!!

  2. Reply
    Vince T
    February 20, 2011 at 8:28 pm

    It’s easy, run the numbers. How much you would pay in fees now and how much you would save if you shaved a point off. If the break even point is around couple years go for it. I’ll wait couple months tho. I feel the rates will get even lower with the feds dropping to 0-.25%, you’ll see sometime in feb.

  3. Reply
    greffy
    February 20, 2011 at 9:26 pm

    You may have picked the perfect time.

    The Feds dropped the rates today! If I were you I would not wait for another rate drop. I think they are going up, up ,up over the next few years.

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  4. Reply
    crey r
    February 20, 2011 at 10:06 pm

    fix up the home but when you refinance tell your friend you want 5.875 or better you could get it now if you needed.

    i would definately get the upgrades done asap and then refinance but dont wait till the last minute.

    and when you do refinance make sure you get he rate you want and try to get it under 6% its possible now and if things dont go up you should have no trouble getting it

  5. Reply
    Brand X
    February 20, 2011 at 10:21 pm

    Nobody really knows where interest rates will be in 6 months. On the one hand, the rapid decline in the dollar versus other currencies makes imports more expensive (from China whose yuan cost 10% more now than last year) which leads to inflation (and thus higher interest rates). This implies that the fed will raise interest rates to prevent inflation.

    On the other hand, if the recent subprimal fear continues, then domestic demand might shrivel up putting our domestic production at risk…this implies that the fed will lower interest rates even more in order to keep us out of recession.

  6. Reply
    DJ B
    February 20, 2011 at 11:08 pm

    You may want to refinance now just to get out of that interest only loan. Don’t wait, each day put’s you behind on the priniciple, thus taking away from your equity position.

  7. Reply
    Mike
    February 20, 2011 at 11:37 pm

    No one knows where the interest rates will be in 6 months.

    The FED dropped the discount rate, but that wont effect 30yr fixed mortgages much.

    One thing is for sure… the value of homes in most of the country is going down…. so even after you remodel, you might be lucky to break even value-wise in 6 months…. so I would not bank on your house being worth more in 6 months.

    6.125% is a very good rate right now… they have been hanging over 6.5% lately. I would jump on that.

  8. Reply
    realtynewsman
    February 21, 2011 at 12:02 am

    With an interest only loan in this market (which means your loan balance may be rising while your home value is falling) you are playing with fire.

    Home prices are falling and interest rates were trending up (as of 8/17/07). Depending on your market, the amount of your refinance, and a host of other factors, the work you do on your home could amount to a hill of beans in terms of added value.

    A mortgage market shake out stems from too many risky subprime and Alt-A loans written without regard to borrowers’ ability to repay, a resultant rise in foreclosures from those unable to pay rate-reset increases in monthly payments and the negative impact of those foreclosures on investment funds that buy and repackage the loans as securities.

    With the securities failing as investment vehicles and some lenders shuttering shops and filing for bankruptcy, lenders have attempted to plug the financial drain, by tightening underwriting standards and by taking many loans off the menu. That means with each passing week you loan choices diminish. That 6.125 percent rate you speak of may no longer exist.

    In addition to lenders tightening money on subprime and Alt-A loans, they are also rising rates on jumbo loans (those of $ 417,000 and more), so they could get you coming and going.

    This is NOT a wait-and-see market.

  9. Reply
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    February 21, 2011 at 12:11 am

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