So a bit after the pandemic started, interest rates dropped. I applied to refi my rental and my home, but so did millions of others and even after the Fed dropped rates to almost 0, the interest rates bounced back up.

I'm a buy and hold guy and unless I win the lotto, I'm keeping the units here in Los Angeles.

So here's where I'm at:

Primary home:
*Same interest rate as what I currently have (vs. a quarter less when I first applied)
*Goes from 20 year to 15 year mortgage (I'm right around 5 years in of the 20 year)
*Monthly goes down by about $430/month
*Costs about $3,900

Rental:
*Interest rate drops half a point
*Goes from 30 year to 15 year mortgage (I'm just shy of 5 years in of the 30 year)
*Monthly goes up by about $170/month
*Costs about $9,200

So I think I will pass on re-financing the rental but I think the primary is a no-brainer since my monthly goes down.

But do you guys think the rates will come back down sometime after we get out of lockdown from this pandemic?

That's what's making me think of waiting. I also don't want to miss the boat because the economy rebounds faster than expected and rates go back up.

What say ye in the mortgage business?

I know it's like when my real estate clients ask me if prices will go up or down and I tell them my crystal ball is in the shop.

What if you just paid the 3900 to the principal, how early would you pay it off?

run it here

Loan What If

Just a guess, but I'm doubtful rates are going to drop much lower than they are now. And even if they did drop slightly, would that be enough to offset your loan costs of refinancing? Banks and lending markets are in a complete state of chaos right now, so predicting virtually anything about where they're headed is near impossible.

Bigdeal, I'm with you, this is the rate floor for the next 12-14 months anyway.

Personally - neither one makes sense. Unless you can get the rate to drop 0.75-1%, you won't come out winning. There is no sense in re-fi just to drop the term from 20 down to 15. Just pay the current 20 like a 15. Usually, a committed family will pay it off even quicker as they see the traction that they are creating by biting into the principal.

Or the bank needs to discount or wipe the loan costs. Not just drop it back into the loan balance.

Andrew

Yeah people think the rates won't go any lower. Too bad I didn't get in just a little bit earlier. Would have been sitting pretty for both properties.

For my home, I pay an extra 50% each month to my principal now so I'm paying it off much faster.

This will allow me to pay it off even faster as I'd put the $430 savings back into paying off the principal.

The good thing is if I end up losing my job in the future, my monthly mortgage will be $430 less than it is now, so that will give me a bit of breathing room.

I think I'll pull the trigger on the home re-fi and hang tight with the rental.

quote:

Originally posted by El Cid 92:
Personally - neither one makes sense. Unless you can get the rate to drop 0.75-1%, you won't come out winning. There is no sense in re-fi just to drop the term from 20 down to 15. Just pay the current 20 like a 15. Usually, a committed family will pay it off even quicker as they see the traction that they are creating by biting into the principal...

Andrew

^^^

This x 100!

I don’t know about the rental but I’m sure banks will refi at no cost for the home - no points, no origination fees.

Since you have a rental, I’m thinking you could leverage both as a two fee to the same finance person for no costs.

I’m also thinking for the rental, any costs you do incur can be deducted as expenses.

...

The rumors from my wife are that once this is over, there will be a rush to refi due to people trying to clear debt aimed during the shutdown.

That will lead to mortgage companies "pricing for worse" to try and manage the amount (to many refi applications? Raise rates to slow it down, which is why rates dropped, then jumped back up as the pandemic hit)

All in all, she's not expecting to see super low rates anytime soon.

Agree with Gibb. Refinances are crankin’ already (and have been). Not only do lenders control volume via rates but many large lenders such as Chase are tightening credit standards and some are backing off higher LTV stuff. Though I no longer work for a lending institution, I’m in the industry and know of folks working weekends to keep up with the demand for refinances.

While working with three different banks to get preapproved for mortgages on new house over the past few weeks, all three loan officers commented on how slammed their banks were with refinances.

I'm 8 years in on a 20 year on my current mortgage with US Bank @ 3.875% and I am looking to re-fi to a ~11 year closer to 3.00%. I can't get the US Bank mortgage guy to even call me back.

quote:

Originally posted by 1967Goat:
I'm 8 years in on a 20 year on my current mortgage with US Bank @ 3.875% and I am looking to re-fi to a ~11 year closer to 3.00%. I can't get the US Bank mortgage guy to even call me back.

Tell him you want to do a 30 year fixed and draw $xx,000 amount of equity out. Bet he calls ya back.

quote:

Originally posted by RogueJSK:
While working with three different banks to get preapproved for mortgages on new house over the past few weeks, all three loan officers commented on how slammed their banks were with refinances.

My daughter works for Quicken Loans in Detroit doing refi’s! Everyone is working from home and they are swamped!

I just signed my refi docs last week, almost 60 days from start to finish. Started the process a bit before everything started closing down.