Refi or hold out?

[Gunslinger]

SO I keep getting these offers from the company that I went through when I orriginally bought the house to Refi my VA loan at 5.25%.  Right now my mortgage is at 6.125%.  This would save me about $150 a month in P&I.

Here's the kicker though....would you hold out for rates to get to the 4% mark?  I'd also be adding about $3k onto the balance of my mortgage but the refi would not have any out of pocket expenses.  I'm only going to own this home for another 3 more years at most and right now the loan balance is $17K below market value.

What would you do?

[FrodeMk3]

Originally posted by Gunslinger
SO I keep getting these offers from the company that I went through when I orriginally bought the house to Refi my VA loan at 5.25%.  Right now my mortgage is at 6.125%.  This would save me about $150 a month in P&I.

Here's the kicker though....would you hold out for rates to get to the 4% mark?  I'd also be adding about $3k onto the balance of my mortgage but the refi would not have any out of pocket expenses.  I'm only going to own this home for another 3 more years at most and right now it's about $17K below market value.

What would you do?

Wow. If you do refi now, you know for a fact you will get a lower rate.

Any waiting for a lower rate, is just a gamble. It's not gaurenteed to go very much lower than it is now. You can, but if you do, keep a very careful eye on what is going on, because it's easy to miss it if it start's going up again. It's a tough decision, to be sure.

[rabbidrabbit]

If you know you will be leaving in 3 years why not get a 3/1 or 5/1 arm?  You could knock off another 3/4 percent or more.

[LePaul]

Im in the exact same spot, Gun

Quoted 5.25% the other day, $1600 cost to do so (wrapped up into loan)

I'm waiting to see if it goes down a bit more.  Waiting to see what the next Fed Meeting shows.

Im at 7% now.  If I can nail under 5%, that would be awesome.

[Gunslinger]

Made an error in the first post.  My balance is about 17K below market value of the house right now.  

They are also offering an option to skip 2 payments.  I know what this costs in the long run but in the interem I can pay off a BUNCH of high interest debt.  

Thanks for the responses so far....glad to know I'm not the only one.

[rabbidrabbit]

Originally posted by Gunslinger
Made an error in the first post.  My balance is about 17K below market value of the house right now.  

They are also offering an option to skip 2 payments.  I know what this costs in the long run but in the interem I can pay off a BUNCH of high interest debt.  

Thanks for the responses so far....glad to know I'm not the only one.

Getting a HELOC to pay off the high interest or just getting a large enough mortgage to do so might make more sense.  Look at your total debt and focus on minimizing the interest rate across the board.  Also don't forget that HELOC's and mortgages have tax deductions that further reduce the effective rate.  Run the math and ideally focus on minimizing the costs over the length the debt.

I'm kinda in the same boat where my 5/1 is going to go ARM next year but I'm not worried yet since I can't beat the current 4.22 %

[texasmom]

I'll watch this thread with interest. TxDad's been considering the same.

[rpm]

Just make sure you get locked into a rate and not an ARM. You have no idea what the rates may be like in 2 years.

[eagl]

I did one like that a few years back, but I went from 7.25 to 6.0, and only kept the house for 2 more years.  I had to pay a point to get the 6.0 as well.

You'll want to do the math.  You need to get an exact dollar amount for the cost of the refi (points, fees, etc) and determine how much per month you'll save.  Add up the monthly saving over the three remaining years (or make a conservative estimate of the shortest time you'll have before selling), and see what your savings are.

I personally wouldn't count on mortgage rates going any lower than they are now, but you should also shop around to find the lowest rate with the lowest points and fees.  You might be able to get a better deal at one place if you have a pre-approval from somewhere else in hand that you can wave under their nose and ask them to beat.

I'm considering aiming for 5%...  I'm at 6.25% right now on a fairly hefty mortgage.  I might keep the house as a rental or sell it in 2.5 years, but I won't know until I move.  That means I'll have to be careful about eating refi points and fees.

[eagl]

Originally posted by rabbidrabbit
If you know you will be leaving in 3 years why not get a 3/1 or 5/1 arm?  You could knock off another 3/4 percent or more.

And then if he can't sell the house when he moves, he gets stuck with a massive monthly payment increase unless he refinances yet again...

Those ARMs have always been risky unless you get lucky with the market.  If you have money to play with, go for it...  The conservative bet is still on a 30 year fixed and make principle reduction payments whenever possible to increase how much of your monthly payment goes against the principle.