Mortgage Question

[pmui]

when do you know when it's time to refinances? I'm asking because the Fed keep cutting the interest rates. Is there a website that can calculate if i will be saving any money if i refinance? I currently have a 30 yr fixed at 5.6ish%. Any insight would be appreciated.

 

[Tangs Rule]

I don't know about any website, but I read that rates will most likely be cut next week to all time lows. Keep your eyes open for that.

You already have a pretty low rate, I remember somebody telling me it wasn't worth refinancing unless the rate is 2% lower than the rate you currently have.

 

[Killerdrgn]

when do you know when it's time to refinances? I'm asking because the Fed keep cutting the interest rates. Is there a website that can calculate if i will be saving any money if i refinance? I currently have a 30 yr fixed at 5.6ish%. Any insight would be appreciated.

Don't refinance now. The fed cutting interest rates will have nothing to do with your mortgage. If you check local interest rates now they're still hovering in the 6% range. The banks set the mortgage interest rates not the fed. And since the banks are in trouble over lending i highly doubt they're going to be lending any more money on the cheap any time soon.
The fed rates are what the interest rates banks can lend to each other overnight. And since banks aren't lending to each other, we are in this credit crisis now.

 

[pmui]

i see. I didn't realize the interest rate was not mortgage rates.

 

[ming]

The fed rate does affect the rates you get for a mortgage, but killerdrgn is right. You won't be seeing any low rates soon because banks are afraid to lend to each other, much less likely to lend to you

 

[Killerdrgn]

The fed rate does affect the rates you get for a mortgage, but killerdrgn is right. You won't be seeing any low rates soon because banks are afraid to lend to each other, much less likely to lend to you

Actually it doesn't affect it directly. For banks mortgage rates are set by supply and demand, banks will take loans for each other to increase supply. However, that supply doesn't have to go toward public mortgages. It may go toward commercial lending, or heck even their own securities and trading desks. But generally when money gets cheaper for them to borrow they try to increase demand by lowering their own interest rates, but obviously not as much as their own decrease in interest as theres still profit to be made.

 

[JRWOHLER]

Well I guess there are some facts in what has been said.
Rates are determined by a number of factors. Demand, expected future (rate curve/expected inflation), rates, risk (market and personal), and supply of money to name some of the major ones.

Here are recent rates charted (from CITI bank this morning) lousy image sorry but you can see general movemnts.

Range has been about 5.4-6.6%. So the credit crunch has indeed kept the rates high which was a good general statement.

Now should you refinace? Now, no way because your rate is well below what you can refinance at now. Now I think rule of thumb is about .5% but that is over 30 years. Sometimes banks indeed due to demand will offer no closing costs ect which lowers the cost of refinacing and thus lowers the percentage savings needed. What you need to do is take a mortgage calculator(find some bank who offers one on the web). Figure out what it costs to refinace and the savings on interest(total interest expense using your current rate at years remaining - refinance rate at total years). Subtract cost from savings and you have it.

Not a short answer but an accurate one.

 

[Timbo]

I would look for a rate of 5% or less depending on what the closing costs would be. Also, remember that your house might not be worth as much in this market, so lenders might not even refinance you right now.

 

[dmr2000]

you can do a bi weekly I took a 20 year down to a 16 year and there was no charges for it though the lien holders

 

[joseney21]

i think mortgage rates are tied more to the LIBOR than the fed rates and i've the LIBOR is on it's way down. i'm pretty sure but not 100% on this one so you would have to look it up.

 

[TimberTDI]

I thought the libor rate was only used on on adjustable rates type loans?

 

[crox99]

you can do a bi weekly I took a 20 year down to a 16 year and there was no charges for it though the lien holders

Can you tell me how? Making bi-weekly payments, as please correct me if I'm wrong, you only pay half of the monthly payment with each payment therefore is like making an extra monthly payment every year. Making bi-weekly payments on a 20 yr mortgage can probably cut it down to not more than 2 years and not 4.