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Location: Monterey Bay, California -- watching the sea lions, whales and otters! :D
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Hi,
On Friday I signed papers to refinance my mortgage at 5.87%. With all the talk of maybe lower rates, would it be wise for me to cancel during my 3-day period and see what happens, or take the 5.8? I'm not very well-versed in these things, and I'm not sure if I should call the broker, or just let it go. Today is the 3rd day. Thanks for any feedback.
On Friday I signed papers to refinance my mortgage at 5.87%. With all the talk of maybe lower rates, would it be wise for me to cancel during my 3-day period and see what happens, or take the 5.8? I'm not very well-versed in these things, and I'm not sure if I should call the broker, or just let it go. Today is the 3rd day. Thanks for any feedback.
You are not, IMO, going to see a rate very much lower than that. If it does drop, it will not be enough to make any difference
It's really dependent on what kind of mortgage you chose... is that rate on a 30 year fixed? If so you're well below the national average. Even if that is a rate on a 5 year fixed, it's still a great rate.
I personally say keep the great rate, and be happy the loan is closing and move on with life.
A couple things to consider if you were to go against the grain and rescind the loan. First, it's likely you are locked with a particular lender, and it's highly unlikely they would extend a free rate reduction even if they did drop. At the very least you would have to pay a quarter point, or take a .125% hit in rate to get into the new rates. So, you'd more likely end up having to go with a completely different lender, which means starting over. Granted they would have everything from you, so it wouldn't take too long...
In addition, the meeting tomorrow has nothing to do with mortgage rates. It has to do with short term rates. Granted it will likely have an effect on investor confidence, which in turns can create change in the 10yr and 30yr bond markets, which directly affect A paper mortgage rates. Even if the stock market eats it, and the bond market improves mortgages, the best you'd see would be a .25% drop in rate in the short term. Because of the investment concerns around mortgage, lenders treat interest rates the way gas stations treat gas these days. They are fast to go up, but very slow to go down. Most lenders will try and sneak some extra profit in the short term before they drop rates... they will only drop rates to stay competitive.
So... assuming you read all of that... it sounds like you have a fantastic rate. So my advice is to get your favorite blanket, some great snacks, and go kick back on the couch and enjoy all of the pilots coming out this week on tv for the new shows
Location: Monterey Bay, California -- watching the sea lions, whales and otters! :D
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Thanks everyone -- including the bird in the bush metaphor!
I spoke to the broker, and she explained it the same way that UseJeff and Greatday did. So, I'm sticking with it. She did say that I was a "cream puff" client (I have a really good credit score) with income verified, and she said the same things. Even if it did go down a little, she didn't think it would make much difference because people are not expecting the rates to go down like they did a few years ago (I hope not, now that I've signed the papers!).
Thanks again. I appreciate the feedback and advice!
that's a great rate, but someone to forgot to mention how many points are you paying for that rate? 1 discount point? 1 origination fee?
Quote:
Originally Posted by Wisteria
Thanks everyone -- including the bird in the bush metaphor!
I spoke to the broker, and she explained it the same way that UseJeff and Greatday did. So, I'm sticking with it. She did say that I was a "cream puff" client (I have a really good credit score) with income verified, and she said the same things. Even if it did go down a little, she didn't think it would make much difference because people are not expecting the rates to go down like they did a few years ago (I hope not, now that I've signed the papers!).
Thanks again. I appreciate the feedback and advice!
Location: Monterey Bay, California -- watching the sea lions, whales and otters! :D
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I'm not paying points for the rate. It just happened that last week the rates dropped for a couple of hours and I jumped in then since all my paperwork was done. THIRTEEN MINUTES later, they went back up to over 6! My papers were faxed at 1:22 p.m., and when the broker called to see if mine was locked in, the broker at the company said, "Was that before..or after...the rates went up?" 13 minutes and I'd have lost it. I had no idea the market was that volatile.
Anyway, it's a done deal, so that's it. Thanks for all the advice, it is very much appreciated.
I like how UseJeff explained it best Wisteria! So the only reason I'm 'chiming in' after you've already made the decision is because I didn't notice anyone else post what I like to do when I'm in your position . I like to play "What If" with a mortgage calculator and see what the numbers would be had I gotten a lower interest rate, taking into account all the added fees also (APR).
It's rather simple to do and I typically use Bankrate dot com, but you can also google mortgage calculators and find other websites. I think what you would find is, a small reduction in the interest rates would be ever so minor dollarwise in your monthly payment, to the huge hassle of starting all over again with another lender . And the probability of you getting a 'better' rate than 5.8% right now, is very low IMHO .
No, a minor difference (6.1 vs. 6.25) will in fact add up to a significant amount of change in 30 years.. But, most of us who were advocating not making themselves crazy and just going with it (it was a good rate) are saying so because with rates changing constantly (constantly) you'd have to be more obsessive than a day trader to lock in exactly the lowest rate ever. Its more "luck". You notice in the morning that rates have dropped, you call your lender and say "lock" and by the time they push the button - the rates have risen 0.15%. You can't make yourself crazy about it. So its more imporant to worry about - does the rate that you can get put you in a range that you can comfortably afford. (For me, under 7%, preferably under 6.5).
Additionally, most people won't be in these homes for 30 years (everyone says/thinks they will, but most people move every 8 years or so).. so, most people never see the full 30 years worth of ramifications..
But it is a valid point, small rate differences when accrued for 30 years make a huge difference.
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All good advice Wisteria!
. And the probability of you getting a 'better' rate than 5.8% right now, is very low IMHO 
