Refinance Mortgage Rates Up or Down (mortgage broker, refinancing, credit score)

[QKIBO83]

Well i bought my house about 9 months ago and got stuck with a somewhat bad rate 6.55 for 30 years fixed conv. I would like to refinance and as everyone out there would like to make sure that i get the best rate possible. Right now i see the rates fluctuate between 5.5 and 5.7 for 30 yr fixed. I would like to go with 0 points option. I also understand that the rule of thumb is do not refinance uless you are cutting the rate by at least 1 percent which in my case would mean 6.55-1 = 5.55. Can anyone make any suggestions or predictions on where the rates will go from this point on. Thank you in advance.

[chris_ut]

The Fed supposedly will dropped rates today and I read an article recently stating that they might drop mortgage rates to 4.5% to pick up the market so you may want to wait and see if that comes about. I think 4.5% is as low as it can go once everyone adds their profit so if that comes about then there will be no better time to refi.

[Mr. Krinkle]

The Fed rates don't have much to do with interest rates.

[chris_ut]

Last week, the Federal Reserve announced that it would buy $500 billion in mortgage-backed securities guaranteed by Fannie Mae, Freddie Mac and Ginnie Mae. Mortgage rates immediately dropped, and that led to a surge in mortgage refinancing activity for the week — even with the Thanksgiving holiday.

On Wednesday, people close to the discussions said that the Treasury had been talking with Fannie Mae and Freddie Mac about ways to drive down mortgage rates to as low as 4.5 percent. That rate is about a percentage point lower than the going rates for such loans. - NY Times

[baggiegenes]

There is much more to this than just rates. How much did you put down on your home? Rates and or mortgage interest may have gone up if you didn't buy with very much down. Given the fees I believe it usually doesn't pay to refi into an FHA after 9 months unless the rates are way down.How long will you stay in your house. If you lower the rate 2% but only stay a couple of years, you probably won't recoup the cost. On the other hand, a 0.5% rate cut over 15 years could add up to big savings.Also, if you've taken out additional credit besides the mortgage to furnish your house over the last 9 months, your credit score may not be as good as it was back then.It never hurts to talk to a bank or mortgage broker though. Just don't let them pressure you into paying an app fee until you are sure it is going to be worth it.

[SilverWings]

It is worth noting that this "proposed" 4.5% interest rate the Fed is throwing around would only apply to new purchases in order to stimulate the housing market. It's not being proposed for Refi's in good standing. Things can always change but I wouldn't hold my breath. If you can get 5.5, that's damn good and probably worth it if you plan to stick around a few years.

[jimboburnsy]

If you consider that my parents generation would have been extremely happy to have 14.5% interest, I would say that 6.55% isn't too bad. There's no magic here, just run the numbers. How much are closing costs, how much do you save per month, how long until the closing has paid out, how long do you plan on staying in the house, etc. etc. If you think you will be in the house for five years and the difference in monthly mortgage payment will take six years to pay back closing costs, that's a no brainer.

This is my favorite calculator: Karl's Mortgage Calculator

Play around a bit to see how far ahead you are (if at all) with refinancing.