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When to refinance mortgage?

Posted by rivkadr (My Page) on
Fri, Jul 18, 08 at 17:30

My husband and I have about 16 months left on a 5 year interest only ARM. Now, before you get on your high horse and start lecturing about subprime mortgages, buying more house than you can afford, blah, blah, blah, let me say that my husband and I got this mortgage fully aware of what we were getting.

When we got the mortgage, we were aware of the fact that both of us would be making a good deal more money within the next few years. So while a 30-year mortgage was just out of our reach at the time we bought the house, it's something we can easily afford now. (should we have waited to buy a house? Maybe. But again, we went in the whole time with the plan of refinancing eventually, and I frankly wouldn't give up the last few years of owning it. I'm happy with the decision we made.)

Unfortunately, I feel like we may have missed the boat as far as refinancing goes -- I wish we had done it even just a few months ago. Obviously, I'd like to get the best deal we can as far as interest rates...and I know none of you have crystal balls, but what would you do in my shoes? As I said, we have another 16 months left on our ARM -- do we wait and see if rates go down, or do we go ahead and refinance now, when the rates are only kind of so-so? What's your guess as to where things are going to go?


Follow-Up Postings:

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RE: When to refinance mortgage?

Hi rivkadr,

Unfortunately, I feel like we may have missed the boat as far as refinancing goes -- I wish we had done it even just a few months ago. Obviously, I'd like to get the best deal we can as far as interest rates...and I know none of you have crystal balls, but what would you do in my shoes? As I said, we have another 16 months left on our ARM -- do we wait and see if rates go down, or do we go ahead and refinance now, when the rates are only kind of so-so? What's your guess as to where things are going to go?

STRICTLY my own 2 cents....

Over the next 16 months I definitely believe we'll see further dips in rates. I'd get with your loan pro, get set up, and set a rate-watch target to have him/her shoot for.

Luck!
Dave Donhoff
Leverage Planner


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RE: When to refinance mortgage?

I'm a moron. I was thinking we bought the house in 2004, but we actually bought it in 2005. So we haven't even been in it yet for a full 3 years yet. We've actually got about 28 months left on our ARM, which gives us some time to watch the mortgage rates and hope it drops. We're going to be smart, though, and pounce on a low rate as soon as possible...


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RE: When to refinance mortgage?

I'd really suggest NOT trying to personally "make the call" of when the rates are 'at their best.' That's an exercise in futility, and even the best & brightest traders who make their living with real money on the line do not do that.

INSTEAD; take your time and choose a target rate that WILL work for you. One that you won't kill yourself if you lose out on getting, and yet you'll accept as sufficient even if it gets locked and closed yet rates go further down.

Remember though, pick a rate too low and if the market doesn't get there you then ride the wave from there. (Personally I wouldn't be overly worried though... rates are unlikely to rise significantly for many many years.)

BOTTOM LINE;
Pick your target, get your credit file pre-completed, and and set the "target rate lock order" with a good loan officer you know and trust. Then, go live your life and wipe the stress out of it.

Have an awesome, easy, lazy summer!
Dave Donhoff
Leverage Planner


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