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View Full Version : If you're thinking of refinancing, it's getting even better



JohnnyMack
3/18/2009, 10:51 PM
We've been going through this over the last few weeks and today with the announcement that the Federal Reserve is going to be buying up bonds and mortgage backed securities rates went down. Looks like they're expecting it to go even lower by the end of the week. 4.5% seems to be a possibility. I've been playing chicken with my bank on signing the rate lock and I'm crossing my fingers I guess right.

Anyways borrowing that much money for that low of an interest rate is a good thing.

OUAlumni1990
3/18/2009, 11:24 PM
I was thinking about buying a new house, but since the stimulus doesn't include it now, I'm thinking about just refinancing my current house. Its hard not to turn that down, 4.5% wow...

JLEW1818
3/18/2009, 11:53 PM
When i bought a house, i just made sure i could afford it. Not really hard, if every American did that we wouldn't be this ****ed right now.

colleyvillesooner
3/19/2009, 12:11 AM
We are in the market for a new house. Between the lowering interest rates and the $8000 tax credit now seems like a great time to be a first time home owner.

SanJoaquinSooner
3/19/2009, 12:32 AM
do you think they'd do an 8 year fixed refinance? I now have a 15 year fixed at 5.125% with 9 years left. If i can get 4.75 with no points with maybe 1500 or so closing costs, I'd consider it.

OUHOMER
3/19/2009, 04:58 AM
My son wants to buy a house, He thinking about moving home so can save up his down payment. I wish I had the money to loan him his down payment.

because now is the time

StoopTroup
3/19/2009, 05:06 AM
As long as you don't have a penalty for early payoff on your mortgage...why would you care if it's an 8 year instead of a 15 year? Simply do the 15 year...make double payments and be paid off in 7.5 years. Then you aren't strapped in case something happens.

yermom
3/19/2009, 06:22 AM
if you doubled the payments on a 15 year loan, it would take less than 7.5 years to pay it off, assuming you are paying toward principle with the extra payments

of course, the payments on an 8 year loan are less than 2x the 15 year loan too, i believe

i'm not sure why they don't do "simple" loans with houses like they do with cars now

jkjsooner
3/19/2009, 10:23 AM
I guess they'll do anything to prop up unreasonable housing prices....

Why don't we just let the market adjust. Sure, we can lower rates temporarily but at some point rates rise and that will put downward pressure on prices.

Partial Qualifier
3/19/2009, 10:28 AM
I've been playing chicken with my bank on signing the rate lock and I'm crossing my fingers I guess right.


I'm doing that exact same thing right now. Our mortgage chick called me in a panic 2 weeks ago when she could've locked us in at 4.85; we said "let's wait a little bit more". I think she hates us now, but if indicators suggest it won't be going way up anytime soon.. <crosses fingers>

jkjsooner
3/19/2009, 10:29 AM
My son wants to buy a house, He thinking about moving home so can save up his down payment. I wish I had the money to loan him his down payment.

because now is the time

Some markets, yes. Others still have a long ways to go until it's time to buy. Here in Arlington, Va. it won't be time to buy for at least a couple of years.

At some point we all got infatuated with what the monthly payment would be and forgot to consider the total asset price. I'd buy a cheaper house at a high rate long before I'd buy an overpriced house at a low rate. You can always refinance if the rates drop (assuming you bought at a low price). You're stuck if you buy at low rates and high price.

And considering the American public only cares about the monthly cost, rates and prices will be locked in an inverse relationship.

yermom
3/19/2009, 11:36 AM
math is hard ;)

Frozen Sooner
3/19/2009, 11:42 AM
Some markets, yes. Others still have a long ways to go until it's time to buy. Here in Arlington, Va. it won't be time to buy for at least a couple of years.

At some point we all got infatuated with what the monthly payment would be and forgot to consider the total asset price. I'd buy a cheaper house at a high rate long before I'd buy an overpriced house at a low rate. You can always refinance if the rates drop (assuming you bought at a low price). You're stuck if you buy at low rates and high price.

And considering the American public only cares about the monthly cost, rates and prices will be locked in an inverse relationship.

This.

Fortunately for me, people are rate suckers. I'm putting my place on the market on the 1st

1890MilesToNorman
3/19/2009, 11:47 AM
As long as you don't have a penalty for early payoff on your mortgage...why would you care if it's an 8 year instead of a 15 year? Simply do the 15 year...make double payments and be paid off in 7.5 years. Then you aren't strapped in case something happens.

Yep, that's the way to do it! When bad times hits yer family you don't want to be strapped. Be disciplined and make those principal payments.

OUAlumni1990
3/19/2009, 12:22 PM
As long as you don't have a penalty for early payoff on your mortgage...why would you care if it's an 8 year instead of a 15 year? Simply do the 15 year...make double payments and be paid off in 7.5 years. Then you aren't strapped in case something happens.

Heck why not go 30 years? If I die in 25 years before I pay my mortgage, I'm not going to care too much. :) Thats the way I look at it. Unless you are going for the lower 15 year rate, then I guess it makes sense...

Pogue Mahone
3/19/2009, 12:26 PM
I got a 4.6 percent rate, no points in Arlington, Va., first-time buyer mortgage in about 90 seconds from Wachovia/Wells Fargo. The "frozen credit market" reports amuse me.

And JKJ, it probably is time to buy here.

StoopTroup
3/19/2009, 12:37 PM
if you doubled the payments on a 15 year loan, it would take less than 7.5 years to pay it off, assuming you are paying toward principle with the extra payments

of course, the payments on an 8 year loan are less than 2x the 15 year loan too, i believe

i'm not sure why they don't do "simple" loans with houses like they do with cars now

I realize that Yermom...I was just trying to keep it simple. My point is if you make payments on top of your scheduled monthly payment and payoff early...you reap substantial savings without putting yourself or your budget at risk if your were for some reason unable to make your payments for a short time.

OUAlumni1990
3/19/2009, 12:39 PM
I just checked Wellsfargo....4.625% for both 15 and 30 year loans. WOW

StoopTroup
3/19/2009, 12:40 PM
Heck why not go 30 years? If I die in 25 years before I pay my mortgage, I'm not going to care too much. :) Thats the way I look at it. Unless you are going for the lower 15 year rate, then I guess it makes sense...

I think it depends on some factors when you do this. If your in your 50's and want to pay it off soon and that's the house you want to retire in...you might want a shorter loan period. Also...if your undisiplined and don't think you'll make extra payments and just spend the extra cash...you might want to strap yourself into the shorter pay period.

Again...it's more about you as the buyer IMO.

We're getting 5.75% on our current house and have paid 7 years on a 15 year mortgage. If I thought I needed the money...I might refinance but we're more into maybe putting this baby on the market in the next year so we'll probably pass on this opportunity and see what's happening in a year.

Now if I could refinance without any closing costs and could secure 4.675%...I'd be running down the street to do so, especially if I needed the cash.

OUAlumni1990
3/19/2009, 12:48 PM
^^^Thats a good point. I am far from being debt free, so my extra money goes towards paying down debt. The mortgage will be the last debt to be paid down, mainly because the interest is so low and tax deductible. Its true, Id like to pay it off before retire, and I can also make extra payments if I have money lying around and don't know what to do with. But I prefer not being tied to a high mortgage if I don't have to.

Jerk
3/19/2009, 05:14 PM
Wow! The Fed is printing money to buy T bonds and you guys are celebrating?

Good luck with that.

Chuck Bao
3/19/2009, 05:53 PM
Wow! The Fed is printing money to buy T bonds and you guys are celebrating?

Good luck with that.

Forgive me if I'm wrong and I could be really, really wrong. I'm not getting the part where what the Fed is doing is so bad.

And, we have gone so far outside textbook economics that it really doesn't apply. This is sorta like reading those really old science textbooks.

Doesn't the government still owe this money? That's the really bad part, not what the Fed is doing.

There are those old fangled economists worried about the money supply in circulation. That doesn't seem to be getting out of control, especially with the huge amount of health wiped out over the last year.

The Federal Reserve has its...ahem...reserves. Let's use them. Or, we could just rely on the Chinese to keep buying up US government debt and, personally, I'd rather not rely on the Chinese.

For myself, I've been too conservative and I finally bought my own place last year. I financed it with a company loan at 2.75% interest and a 5-year payback period. I sold company shares last year to pay for most of my condo and I'm now very afraid of a huge US tax payment with penalties on capital gains. Nobody else I know reports this, but I am now resigned to the fact that I will have to take out a loan to pay my US taxes with penalities.

It's all freaky.

Jerk
3/19/2009, 05:57 PM
Chuck, read this and tell me what you think:

http://market-ticker.org/archives/879-Bernanke-Inserts-Gun-In-Mouth.html

Chuck Bao
3/19/2009, 06:27 PM
Chuck, read this and tell me what you think:

http://market-ticker.org/archives/879-Bernanke-Inserts-Gun-In-Mouth.html

Jerk, I did read it and they seem to be getting at the worst case scenario. That is not at all far fetched. I agree that it would be prudent for people to put up plywood around their windows for the potential storm ahead (i.e., pay off debt and save).

I'm not sure that it is all good advice because if everyone did that, the situation would certainly get far, far worse. As some mentioned here, buying a home in the down market with attractive financing is probably not a bad thing, depending on the location and, of course, stable income.

The Fed should come in for a lot of criticism for its mishandling of the property / financial derivative bubble. The article doesn't explain why the latest action by the Fed would be so wrong.

We've already covered that the media has been negiligent in covering this. Academia has been even worse. Of total economists employed, what percentage is employed by US universities? What are they doing? What are they teaching? Pretty much worthless stuff, if you ask me.

KC//CRIMSON
3/19/2009, 06:30 PM
You guys would be crazy not to buy or lock in at 4.6%. That's insanely good.

JohnnyMack
3/20/2009, 09:28 AM
people are rate suckers.

Rate suckers? WTF does that mean? I live in OKLAHOMA. You know that little part of the country immune to things like housing bubbles. I know you're the smart banker and I'm the dumb Okie, but borrowing that much money at 4.5% is cheap.

Frozen Sooner
3/20/2009, 11:17 AM
Rate suckers? WTF does that mean? I live in OKLAHOMA. You know that little part of the country immune to things like housing bubbles. I know you're the smart banker and I'm the dumb Okie, but borrowing that much money at 4.5% is cheap.

OK, Mr. Sensitive, perhaps if you had read the context of my post other than deciding to take offense, you'd have realized I was talking about purchase money mortgages, not refinances-and further, that I was specifically talking about people buying my house, which is certainly not immune to housing bubbles.

However, I'll explain further:

When the cost of borrowing is low, buyers tend to overvalue for the asset being purchased. Is a 4.5% mortgage "cheap" when you're using it to pay for a home that should be valued at half what you're paying for it?

Is Saturn 0% financing still a good deal when you forgo the $5000 factory rebate?

All things being equal, of course it's better to be paying 4.5% than 6.5%. In a purchase money situation, not all things are equal.

JohnnyMack
3/20/2009, 12:01 PM
Your momma.

StoopTroup
3/20/2009, 12:06 PM
I think everyone is scared of Jon Stewart coming after them if they make a bad decision. :D ;)

colleyvillesooner
3/20/2009, 12:30 PM
Your momma.

winner.

Frozen Sooner
3/20/2009, 12:49 PM
wiener.

Yes, you are.

I broke down and bought that iPhone app yesterday, by the way. I wound up with four screens of basketball goodness going at once yesterday.

colleyvillesooner
3/20/2009, 12:50 PM
The app works way better now than it did yesterday morning. It was giving connection errors every 2 mins. It seems to be ok now.

OUAlumni1990
3/20/2009, 01:58 PM
Your momma.


One of the best comebacks of all time. says it all...

jkjsooner
3/20/2009, 02:26 PM
I got a 4.6 percent rate, no points in Arlington, Va., first-time buyer mortgage in about 90 seconds from Wachovia/Wells Fargo. The "frozen credit market" reports amuse me.

And JKJ, it probably is time to buy here.

I guess we'll agree to disagree. Prices have not fallen much at all and are still way too high for the target population (even for affluent Arlington residents). The bubble has only begun to deflate in Arlington and DC. Look at your normal '90s price, adjust for inflation and you'll see that houses here are way overpriced.

Rent is generally only slightly cheaper than owning (at the time the house is bought and excluding upkeep). I would pay twice as much to own the place I am currently renting. Sorry, historical housing fundamentals have not yet returned to Arlington.

I've heard the "it is now time to buy" line for several years ago. Wasn't everyone saying that a year ago? Two years ago?

My instincts have served me well and I will trust them. In either case, we're not going back to the 10-20% runups per year in housing prices so I can afford to wait.

yermom
3/20/2009, 04:23 PM
One of the best comebacks of all time. says it all...

meh. it's a little overdone