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      03-04-2020, 11:16 AM   #1
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Best time to refinance a home?

With mortgage rates as low as they have been since 2008, and likely to get lower because of COVID-19 impending doom, is it best to refinance a home now?

I originally started with a 30 year, then dropped to a 25 year, and now I'm wondering if it's time to go to a 15 with these rates.

Anyone on here in the industry?
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      03-04-2020, 11:22 AM   #2
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Quote:
Originally Posted by VisualEcho View Post
With mortgage rates as low as they have been since 2008, and likely to get lower because of COVID-19 impending doom, is it best to refinance a home now?

I originally started with a 30 year, then dropped to a 25 year, and now I'm wondering if it's time to go to a 15 with these rates.

Anyone on here in the industry?
I'm not an expert but I'm sure you will be asked what your current rate is in order to determine if it makes sense.
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      03-04-2020, 11:34 AM   #3
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In a few days mortgage rates will come down, but how much depends on whether the 30 year and 10 year treasury rates remain low or start to rebound. I looked at TIAA bank’s web site yesterday and saw 3.25% for a 30-yr fixed jumbo refi rate, 3.00% for a 15-yr fixed jumbo refi. I would expect 25-50bps drop from there at most. Both loans had points, which I always assume are negotiable.

The old rule of thumb was 1/2% (50bps) or more lower rate was worth it to refi, depending on points and fees. That was when the basis was over 6%; so maybe with a basis around 4% for an existing loan only 25bps would make sense?

So much depends on the current loan: rate, payment, remaining term; versus the new loan. Extending the term at a lower rate can really help cash flow, for example. Alternatively, if your goal is to pay off faster, the 15-year could work or you could roll the dice on an ARM and make extra principal payments.
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      03-04-2020, 11:40 AM   #4
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Banks are prioritizing new business over refi at the moment. They are also reluctant to lower rates in the hope that the dip in the 10yr is temporary. Most are currently facing a MASSIVE backlog but are hesitant to hire necessary staff as the market could evaporate on a dime. My mortgage guy told me not to anticipate rates going much lower than this but if rates do drop over a quarter point, I get to adjust to that lower rate prior to closing.
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      03-04-2020, 11:43 AM   #5
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Do it now, or in the near future. Attempting to find the bottom of interest rates is analogous to trying to time the stock market.

I am not in the mortgage industry but have owned homes and held mortgages for almost 30 years. I am of the view that paying the lowest lifetime interest expense is a virtuous idea.
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      03-04-2020, 12:23 PM   #6
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Do it now, or in the near future. Attempting to find the bottom of interest rates is analogous to trying to time the stock market.
I would normally agree with this, but knowing the general public, and the impending doom of COVID-19, and the effects just starting to be shown, wouldn't waiting at least a few more weeks be prudent?
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      03-04-2020, 12:25 PM   #7
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You're going to have a 60-90 day lock at this point anyway. That give you a lot of weeks, should rates decline further.
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      03-04-2020, 01:13 PM   #8
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Look at credit unions as well, my bank is at 2.875% for a 30y fixed without points.

There is no time like the present if it makes sense for you!
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      03-04-2020, 01:53 PM   #9
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Look at credit unions as well, my bank is at 2.875% for a 30y fixed without points.
Without points? Forgive me. Is this that the rate is actually lower, but they are selling it higher?
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      03-04-2020, 02:02 PM   #10
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Quote:
Originally Posted by VisualEcho View Post
I would normally agree with this, but knowing the general public, and the impending doom of COVID-19, and the effects just starting to be shown, wouldn't waiting at least a few more weeks be prudent?
That's the point he is trying to make - there could be a drug released tomorrow and Corona is an after thought. Most people think impending doom...I always say go against the general public and you will prob be right. Lock that puppy in!
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      03-04-2020, 02:11 PM   #11
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I just redid mine on a 30yr, then worked with my financial advisor to set up CD's to essentially pay it on a 15yr version in end of year lump sums. This allows for safety net if your finances crash one year, you have the lower 30yr payment, but you still net pay the 15yr if all goes well.
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      03-04-2020, 02:52 PM   #12
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Quote:
Originally Posted by Hawkeye View Post
Look at credit unions as well, my bank is at 2.875% for a 30y fixed without points.

There is no time like the present if it makes sense for you!
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      03-04-2020, 02:59 PM   #13
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Quote:
Originally Posted by tim99ws6 View Post
I just redid mine on a 30yr, then worked with my financial advisor to set up CD's to essentially pay it on a 15yr version in end of year lump sums. This allows for safety net if your finances crash one year, you have the lower 30yr payment, but you still net pay the 15yr if all goes well.
That's pretty damn interesting.
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      03-04-2020, 03:21 PM   #14
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I pay an extra $500/mo on my mortgage and $5k/yr around bonus time which will cut 12 years off my term. It's especially important during the first several years as only about 1/3rd of your payment is going toward principal. It isn't until year nine that you'll even break 50%.
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      03-04-2020, 03:34 PM   #15
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Quote:
Originally Posted by cmyx6go View Post
I'm not an expert but I'm sure you will be asked what your current rate is in order to determine if it makes sense.
This plus term, amount financed and closing costs matter. Just run the numbers at current rates and 25 bps lower. Is it worth the risk waiting for that extra 25 bps or taking what’s available now? Judgment call - no one knows because if it was predictable that they will go down, the mad rush to refi would not be happening yet.

My guess is that they will not spike up in the short term, but they could start to inch up for a lot of reasons.
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      03-04-2020, 03:44 PM   #16
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Thanks for the idea, just refinanced mine again.... 3rd time in the last year Got 2.75% without points from a local CU. Closing costs are the only out of pocket and breakeven was right over 1.5 years
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      03-04-2020, 03:54 PM   #17
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Our house is paid off....but wife wants to find our final house to retire in before the end of the year. I just hope the 15 year rates are similar when we do make the move.

Even though we will have all the equity of this house to use, I'm planning on an upgrade as I have garage plans!
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      03-04-2020, 03:54 PM   #18
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Quote:
Originally Posted by KingOfJericho View Post
You're going to have a 60-90 day lock at this point anyway. That give you a lot of weeks, should rates decline further.
This is only valid if the rate lock period has a provision which allows the buyer to float down to the lowest rate.
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      03-04-2020, 04:03 PM   #19
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The reality is that they're not going to "plunge" from here. We've definitely seen rates drop full points in a short period of time but that was when they were much higher and/or the Fed intervened. It's not like the 10yr is suddenly going from 1% to -2%.
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      03-04-2020, 04:07 PM   #20
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Quote:
Originally Posted by KingOfJericho View Post
The reality is that they're not going to "plunge" from here. We've definitely seen rates drop full points in a short period of time but that was when they were much higher and/or the Fed intervened. It's not like the 10yr is suddenly going from 1% to -2%.
But you'd agree that at the moment it's a great time to refinance, correct? I mean, it could still drop, but probably won't go more than .5 less?
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      03-04-2020, 04:36 PM   #21
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But you'd agree that at the moment it's a great time to refinance, correct? I mean, it could still drop, but probably won't go more than .5 less?
I even think 0.5% less is a stretch. I think now is a great time to refi, which is why I'm in the midst of doing so.
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      03-04-2020, 04:47 PM   #22
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Since we're talking about re-fi's, how many people escrow their homeowners, flood, and property taxes vs paying them out of pocket. Ours were escrowed initially, but the current mortgage lady suggested I just pay them each year.
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