My current interest rate on my mortgage is 6%. If rates drop to 5% should I refin? I’ve been here 4 years now.?
by Mortgage Rates on Saturday, October 9th, 2010 | 6 Comments
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If your house was appraised two years ago, it’s probably down 20%-30% by now, so you probably won’t be able to refinance. However, if the value is still $470,000, you should refinance if you plan to be in the home for four years or more. Your mortgage payments will drop about 15% (taxes and insurance won’t drop).
A two year old appraisal will not be valid and I doubt your property is even valued at the price you paid for it. You might try to negotiate the interest rate without refinancing if you are current in your payments. Just tell them that times are tough and see if they offer you some kind of break.
They are right, the value of your house is a moving target so you may not be able to refi even if you want to. As far as a lower rate, rule-of-thumb is the rate has to be 2% lower than what you have now and you have to plan to stay there for at least 4 more years to make it worthwhile. Unless you have an adjustable loan, with no pmi, you’re sitting pretty good.
Don’t forget to factor in the cost of the refi
Just the monthly saving isn’t all that matters, there are costs of doing refi
need to know the loan amt to figure out the savings. However, take 1% of the loan amount divided by 12 and this is the avg savings a month.
I am refin my house. I purchased in 2001 with a 6.25% 30 yr fixed. I’m in the process of refin with a 15 year fixed at 5%. Payment only went up 150, but it’s paid off in 15 years.
Before anything get it reappraised have the feeling you will come in at around 325,000 that would make refinancing impossible.