Mortgage Rates (3 Viewers)

[Chadstroma]

Welp we locked in yesterday as we are 27 days away from my closing date. 

Purchase Money Conventional 3.125 paying 1.625points. (I waived escrow .25 points, I also have a combo HELOC going behind that which added a .375 premium too). The points are fully tax deductible (and I can use them for sure) and the break even vs paying .75 points for a 3.5% mortgage was only 4 years. This is our forever dream home. From year 4 on we are saving a bundle in interest.  Don't be afraid to buy down your rate if you know you are staying at least 10 years or more. Especially for higher balance mortgages (We are taking a 500K first). Well worth it, and tax deductible if you itemize. 

I wanted under 3 but.....it was stupid expensive. Was hoping for that 2.875% that was around for the same price a month ago.....but the 10YR crept back up. I can’t complain at all about 3.125 for life. My current home is at 3.875 and I thought that was amazing when I got it back in 2012. 

USE A BROKER FOLKS!!!!! Forget online rocket mortgage BS or big banks (I work for a massive financial company and I still used my broker who has been helping me for over 20 years...I am loyal). Could have I gotten a slightly better price with my own company? Yeah.....but this guy has been there for me thick and thin and there is something to be said about relationships. When I needed a big bank the most (back in 2009 for my current home) none of them wanted to touch my purchase mortgage and I was scrambling. My broker was there to get me into my current home (long story). Loyalty. Then this year the jumbo market collapsed before my eyes. He was there again to get me this combo strategy and he acted lighting fast. That is why having a professional is critical. 

Most bankers and realtors will come to brokers to get their loans. I am talking mortgage loan officers at banks or direct lenders that come to broker and realtors who refer their clients to these retail places because they get 'co-marketing' dollars from them. It is a little dirty industry secret. 

 

[Chadstroma]

If you're getting a refi and have to have a home appraisal...

What do you do if the appraisal comes in MUCH lower than you were expecting? Is it worth it to pay for another appraisal? Can you request a different appraisal company? looking for options here

Ooof. 

Unless there is an error in the report, which you could fight over with the current appraisal, then chances are you would be wasting money with another appraisal. 

 

[Chadstroma]

Was hoping to close on our refi last week but it is being pushed to maybe next week or week after. Priority going to home purchases. Our 60 day lock “expired”  a couple days ago but they are honoring the lock until we close.

Yikes. Could be worst... could have a loan with Wells Fargo. Last I heard they were at 180 day locks mandatory on refi. I am sure that has gone down. Most of our lenders turn times have gone down dramatically. On some harder files it may take 45 days. 

 

[Mene]

Just closed on my re-fi today.  Original loan was a 30yr conventional @ 4%, purchased the home July 2017.  Only put 10% down, so had PMI on it.  The re-fi is another 30yr, @ 3.125%, appraisal waived, PMI removed, and closing costs were only 0.8% of loan amount.  Closed in 15 days as well, which was nice.  Really happy.

 

[Phil Elliott]

Yikes. Could be worst... could have a loan with Wells Fargo. Last I heard they were at 180 day locks mandatory on refi. I am sure that has gone down. Most of our lenders turn times have gone down dramatically. On some harder files it may take 45 days. 

I'm fine with it. The local (west Austin) housing market seems to be on fire. We had about 12 homes in our neighborhood go for sale the last couple of months and all but one have contracts. Only one of them reduced their list price after a few weeks. As mentioned previously , the appraisal was waived right away as we are just approaching our first year and using the same mortgage broker for refi. Wanted to go with our CC but they were just too swamped and we couldn't get anyone to answer our calls to get closing cost estimates.

 

[menobrown]

If you're getting a refi and have to have a home appraisal...

What do you do if the appraisal comes in MUCH lower than you were expecting? Is it worth it to pay for another appraisal? Can you request a different appraisal company? looking for options here

Maybe.

I'm a lender and I've saved a few loans with a second appraisal. I've had some loans that required two appraisals and the difference in value was vast.

But I've had clients who I have advised from wanting to pay for another appraisal if I simply don't see justification for a different value.

 

[Ignoratio Elenchi]

At the very beginning stage of looking into tapping into some home equity (either home equity loan or cash out refinance to a better rate), quick question for the experienced folks here: roughly how reliable are the free home value estimators online?  Getting a wide range of values, but even the worst of them puts the current value of my house at 15% more than we paid for it 8 years ago.  For some context, we haven't done any major improvements so in a vacuum the home is 8 years older and in worse condition now than it was when we bought it, just checking if it makes sense from a broader market context that the home is worth 15%+ more now than it was in 2012.  Obviously would need to get it appraised, but would prefer to have some reasonably accurate estimate of the home's value before we even get to that step.  

Edit: I guess it make sense as a baseline - just in the context of inflation, today's dollars would be 10%+ more than 2012 dollars.  Mainly curious if there are any sites that tend to be more or less reliable in terms of estimating home value.  

 

[menobrown]

#5: Rate is not the end all be all of doing a loan. You have the rate which of course is important but there are also fees and origination charges. A typical game that is played is showing a great rate but then when you compare to another lender you see that you are really PAYING for that great rate. Often times as a broker, I am able to match the rate and give a credit versus the origination points they are charging. Be mindful of that. 

#6: Use the Loan Estimate! Wherever you go, when you get the Loan Estimate, shop it to other lenders. You can just send it to the lender and let them come back with their offer or you can put more work in it and just shop and compare rates. What happens if you do? Worst case, you get the peace of mind that you are getting a good deal. Best case, you save yourself thousands of dollars!

You gave an epic ton of good advice in your post and I'd just like to add to these two.

Do NOT use APR as a tool to compare mortgages. APR's major fault is it assumes you are carrying the loan for the life of the loan and that's actually rare. APR is not great to compare lenders/brokers and it's not great to use as tool for what loan is best for you as it's going to constantly lead you to higher fees options that present lower rates as at some point you will come out ahead but that could take more time then you'd ever hold that mortgage.

As Chad said, fees and rates have to both be compared and with regard to fees mainly lender fees should be the focus.

Get quotes. If you are confused on which makes more sense between a lower fee option vs higher rate option from different lenders feel free to ask those lenders for similar quotes. As an example if one lender is offering you  a 15 year fixed today at 2.25% today with $2,000 in lender fees and another is offering 2.5% and they are going to actually give you money via a lender credit, see if the other lender has similar deal. 

One key expression I'll tell you to watch out for and if you hear it you'll know you are dealing with the wrong place is if they tell you something like the rates are the rates or "we all get our money from the same place" which is their attempt to tell you rates are the same for everyone. That's totally false. Not all loan officers have access to the  same rates and profit margins have a wild variance and impact rates. One of the biggest things my clients tell me when if/when they shop my offers is so and so said this can't be real because "we all get our money from the same place".  The loan officer telling you that my not even be lying, he's telling you what he might now or has been trained. He, or she, might legit now know better rates exist then what he has to offer but either way when I hear that phrase it's usually a pretty big indicator this is not the right company to give me the best deal.

 

[menobrown]

At the very beginning stage of looking into tapping into some home equity (either home equity loan or cash out refinance to a better rate), quick question for the experienced folks here: roughly how reliable are the free home value estimators online?  Getting a wide range of values, but even the worst of them puts the current value of my house at 15% more than we paid for it 8 years ago.  For some context, we haven't done any major improvements so in a vacuum the home is 8 years older and in worse condition now than it was when we bought it, just checking if it makes sense from a broader market context that the home is worth 15%+ more now than it was in 2012.  Obviously would need to get it appraised, but would prefer to have some reasonably accurate estimate of the home's value before we even get to that step.  

It's a good guide. Afraid to say the reliability is not spot on but as an estimate and a guide it's worth using to set your expectations. You indicated you were using several and that's a great approach.

But yes 15% increase in most areas in 8 years is extremely justifiable even if the house is in a little worse condition and really the condition is usually not huge for the appraisal value. For the most part unless you are in an area that suffered a massive job loss or financial collapse home values tend to just go up. There are periods at times they stall or take a step back during bad financial times but over the course of the long run,  which for sure is 8 years,  high majority of home values do nothing but increase and at a lot higher rate then 15% over 8 years.

 

[Ignoratio Elenchi]

It's a good guide. Afraid to say the reliability is not spot on but as an estimate and a guide it's worth using to set your expectations. You indicated you were using several and that's a great approach.

But yes 15% increase in most areas in 8 years is extremely justifiable even if the house is in a little worse condition and really the condition is usually not huge for the appraisal value. For the most part unless you are in an area that suffered a massive job loss or financial collapse home values tend to just go up. There are periods at times they stall or take a step back during bad financial times but over the course of the long run,  which for sure is 8 years,  high majority of home values do nothing but increase and at a lot higher rate then 15% over 8 years.

Cool thanks, it does make sense but the housing market is not something I've really paid attention to much since we bought the home so I was honestly not sure what to expect going in.  Nice to have a decent estimate for the low end so I have a rough idea at least how much equity we can tap into without going over 80% LTV or anything like that.  

 

[skol asylum]

Closing on my refi tomorrow. Mobile notary coming to me. Told my wife I suppose it would be a little antisocial to put a table and chairs in the driveway and sign outside in the AZ heat.

 

[Dan Lambskin]

Closing on my refi tomorrow. Mobile notary coming to me. Told my wife I suppose it would be a little antisocial to put a table and chairs in the driveway and sign outside in the AZ heat.

When we did ours (April) she just came to the door, handed me a packet and went to her car and called me and walked me through it, then picked up the signed packet 

 

[Poke_4_Life]

We have good credit and we're on the last 5 years of a 15 year primary note.  Have about 2/3 of our home's value in equity.

Wanting to get a HELOC to get some final remodel work done before we sell the home in next few years. 

Quoted 4% and a $100 processing fee for a HELOC up to 15% of home value, more than enough for our remodel work.  No prepayment penalty and this is our primary bank for checking/savings, so we could easily pay this off pretty quick and extra payments will be easy with intrabank transfers.  

Should I even shop for a lower rate?  Feels odd not shop the HELOC, but I can't see saving a significant amount and/or more convenience than this note.

 

[Ministry of Pain]

It was spoken when I was picking up paint for the inside projects we're working on, it was mentioned that interest rates WERE NOT likely to see any increase until Mid-Late 2022? 

-If this is true, no rush to Refi and by that I just simply mean you should definitely do it and cash in if it makes sense but it also allows you to shop a little and just double check on fees and such. 

-I don't see how the housing market collapses with these measures put in presently and keeping them there for some time. I would also anticipate A LOT of new constructon. There are gigantic projects around the North Palm Beach area going West and those are going to explode and while inland in FL doesn't appeal to me, lot of families opt for more space and less "city/beach" vibe and go West. 

-Would like to find a duplex or two to try and buy then rent while things are topsy turvy and hope to scoop something up but I know I can't be alone in wanting to pounce and invest while rates are low, that makes slim pickens.

 

[Ministry of Pain]

We have good credit and we're on the last 5 years of a 15 year primary note.  Have about 2/3 of our home's value in equity.

Wanting to get a HELOC to get some final remodel work done before we sell the home in next few years. 

Quoted 4% and a $100 processing fee for a HELOC up to 15% of home value, more than enough for our remodel work.  No prepayment penalty and this is our primary bank for checking/savings, so we could easily pay this off pretty quick and extra payments will be easy with intrabank transfers.  

Should I even shop for a lower rate?  Feels odd not shop the HELOC, but I can't see saving a significant amount and/or more convenience than this note.

My opinion is if it sounds good and you're comfortable then move ahead. The difference in .25%/.5% on Under $50k I'm assuming isn't going to make a hill of beans difference and especially if you're going to pay it off and not carry it around for several years. And I imagine you will increase the overall value of your house as well.  

 

[SoBeDad]

It was spoken when I was picking up paint for the inside projects we're working on, it was mentioned that interest rates WERE NOT likely to see any increase until Mid-Late 2022? 

-If this is true, no rush to Refi and by that I just simply mean you should definitely do it and cash in if it makes sense but it also allows you to shop a little and just double check on fees and such. 

-I don't see how the housing market collapses with these measures put in presently and keeping them there for some time. I would also anticipate A LOT of new constructon. There are gigantic projects around the North Palm Beach area going West and those are going to explode and while inland in FL doesn't appeal to me, lot of families opt for more space and less "city/beach" vibe and go West. 

-Would like to find a duplex or two to try and buy then rent while things are topsy turvy and hope to scoop something up but I know I can't be alone in wanting to pounce and invest while rates are low, that makes slim pickens.

Palm Beach and Broward counties are getting out of states buyers and also some migration from Dade. In the last year, We had 2 employees who work with me in Miami Beach buy older but nice townhouses in the Sunrise area for 225k and 250k. They eventually got jobs in Broward because the commute was too long. Three years ago we had 2 employees with young kids move to inland Palm Beach and Tallahasse and buy homes in the  $350k range that would've been about double in a nice Miami neighborhood. I think Florida real estate is a good buy, outside of Miami and perhaps a some urban areas. Jacksonville is also building alot.

 

[Poke_4_Life]

My opinion is if it sounds good and you're comfortable then move ahead. The difference in .25%/.5% on Under $50k I'm assuming isn't going to make a hill of beans difference and especially if you're going to pay it off and not carry it around for several years. And I imagine you will increase the overall value of your house as well.  

Thanks.  That was my thought as well, but I'm so used to shopping rates that it just feels weird. 

 

[Ministry of Pain]

Palm Beach and Broward counties are getting out of states buyers and also some migration from Dade. In the last year, We had 2 employees who work with me in Miami Beach buy older but nice townhouses in the Sunrise area for 225k and 250k. They eventually got jobs in Broward because the commute was too long. Three years ago we had 2 employees with young kids move to inland Palm Beach and Tallahasse and buy homes in the  $350k range that would've been about double in a nice Miami neighborhood. I think Florida real estate is a good buy, outside of Miami and perhaps a some urban areas. Jacksonville is also building alot.

Mrs and I closed on a home in Biscayne Park of Miami in 2012, I had to do a "Rehab" loan where the bank gave me(loose term) $25k roughly on top of the $175k I paid on the home, we closed NYE 2012-true story. We sold 3 years to the day, it was a shocking number IMHO and we could have held on longer but I'll say we managed to gobble up 75% of the increase and let someone else take it the rest of the way. We were stoked moving to Palm Beach/Jupiter, this Inlet actually used to be a direct hub for "Square Groupers" and I'll leave it at that. Also Jupiter Island is it's own beast but Tiger lives there and tons of CEO types have homes there. 

All you have to do is go 1-2 miles inland and you an find good deals, you just can't have an Ocean View unless you want to really shell out some dough. We should really stop telling people how easy it is to operate for the most part down here. No State taxes, never bitter cold, every water friendly outdoor activity you can think of, it's ridiculous. You gotta love how the news makes this place look so much worse than it really is. 

 

[Ministry of Pain]

USE A BROKER FOLKS!!!!! 

this guy has been there for me thick and thin and there is something to be said about relationships. When I needed a big bank the most (back in 2009 for my current home) none of them wanted to touch my purchase mortgage and I was scrambling. My broker was there to get me into my current home (long story). Loyalty. Then this year the jumbo market collapsed before my eyes. He was there again to get me this combo strategy and he acted lighting fast. That is why having a professional is critical. 

 

[rascal]

Thanks to chad for all of his comments and help.

My situation from my initial mortgage, 30 at 3.5%, is that it's better financially to stay with it and just make more payments.

My sister was able to refi on hers, so it was beneficial.

Hopefully others can take advantage.

 

[Chadstroma]

Closing on my refi tomorrow. Mobile notary coming to me. Told my wife I suppose it would be a little antisocial to put a table and chairs in the driveway and sign outside in the AZ heat.

I had a refi last week. Client called me during because of a misunderstanding on the closing docs. He lives in the city of Chicago in a condo. I am not sure if it was him or her or both that wanted it like this but she gave him docs, ID'd him and then went to her car and waited while he signed. 

So... 

 

[Chadstroma]

We have good credit and we're on the last 5 years of a 15 year primary note.  Have about 2/3 of our home's value in equity.

Wanting to get a HELOC to get some final remodel work done before we sell the home in next few years. 

Quoted 4% and a $100 processing fee for a HELOC up to 15% of home value, more than enough for our remodel work.  No prepayment penalty and this is our primary bank for checking/savings, so we could easily pay this off pretty quick and extra payments will be easy with intrabank transfers.  

Should I even shop for a lower rate?  Feels odd not shop the HELOC, but I can't see saving a significant amount and/or more convenience than this note.

Yes. Shop. 

CU's are a great place to shop for a HELOC. Community banks are also a good spot. 

You shouldn't need to pay anything on a HELOC. 85% CLTV isn't that bad. I would think you should be able to get prime plus no margin on that so a rate of 3.25% but I don't keep up on the equity loans so maybe things have changed during COVID and that is harder to find now? But I would shop. Absolutely. 

 

[Zegras11]

Closed today on a refi of a rental home we bought almost two years ago.   Went from 5.3 to 3.99%.   Much lower payment.

 

[lumpy19]

Currently at 3.625% FHA loan, got quoted 3% 30 year conventional refi which would save me $300/month but I can't move forward until I'm off my 25% furlough schedule.  Hoping to wait it out and the rate holds, not much else I can do.

 

[skol asylum]

Currently at 3.625% FHA loan, got quoted 3% 30 year conventional refi which would save me $300/month but I can't move forward until I'm off my 25% furlough schedule.  Hoping to wait it out and the rate holds, not much else I can do.

That's annoying. I can't imagine rates going up anytime soon but who knows. Good luck.

 

[Chadstroma]

Currently at 3.625% FHA loan, got quoted 3% 30 year conventional refi which would save me $300/month but I can't move forward until I'm off my 25% furlough schedule.  Hoping to wait it out and the rate holds, not much else I can do.

Did they look at conventional as an option? Not furlough related but may end up being a better option.... I have seen it more than once where a lender just does a FHA streamline when doing a conventional refi would make more sense. Sometimes you don't have an option but you want to cover your bases. Hopefully you went to a broker. 

 

[lumpy19]

Did they look at conventional as an option? Not furlough related but may end up being a better option.... I have seen it more than once where a lender just does a FHA streamline when doing a conventional refi would make more sense. Sometimes you don't have an option but you want to cover your bases. Hopefully you went to a broker. 

Yes getting out of FHA and into a conventional, enough equity to avoid PMI

 

[Chadstroma]

Yes getting out of FHA and into a conventional, enough equity to avoid PMI

Ok, rock n roll

 

[-OZ-]

@Chadstroma - just another note to say thank you.

I've received 3 calls in the past couple weeks, companies offering to work a refi.  I just ask if they can beat 2.75%/30. Each one has said "nope, congrats" and hung up.

ETA- even the broker I used, we chatted about the Cyber document they needed for compliance, she mentioned that she hasn't been able to get that deal even on a VA since then.

 

[Chadstroma]

@Chadstroma - just another note to say thank you.

I've received 3 calls in the past couple weeks, companies offering to work a refi.  I just ask if they can beat 2.75%/30. Each one has said "nope, congrats" and hung up.

Love it. 

 

[Chadstroma]

Alert! Rates are really good right now. If you have been thinking of refinancing (or buying) but were waiting, I would say pull the trigger. There isn't too much lower for rates to go. The 10 year treasury yield will be moving up and things should get more normalized with the normal coupling of the 10 yr and mortgage rates. I don't think that rates will jump up but I don't see much more room for them to go down. I am not sure there is a point in waiting for anything. 

Get in touch with a true independent broker (if you need help finding one, let me know I can get you in touch with someone) and take a look. 

 

[cubd8]

Alert! Rates are really good right now. If you have been thinking of refinancing (or buying) but were waiting, I would say pull the trigger. There isn't too much lower for rates to go. The 10 year treasury yield will be moving up and things should get more normalized with the normal coupling of the 10 yr and mortgage rates. I don't think that rates will jump up but I don't see much more room for them to go down. I am not sure there is a point in waiting for anything. 

Get in touch with a true independent broker (if you need help finding one, let me know I can get you in touch with someone) and take a look. 

If you have just refinanced (I did at 3.12% in January in consolidating my two open mortgages on a 15 year loan), and believe you can get a rate below 3%, does that make any sense? Just curious at this point.

 

[Chadstroma]

If you have just refinanced (I did at 3.12% in January in consolidating my two open mortgages on a 15 year loan), and believe you can get a rate below 3%, does that make any sense? Just curious at this point.

The real way to answer this is to get a real idea of what rate you are looking at (let's say 2.875%) and the accompanying cost savings (let's say $100 a month) and the true cost of doing the loan, which is how much you are paying = points, fees, title cost, taxes, etc. Exclude escrow and prepaids as those are not actual costs (let's say $2,000) and then figure out how long it takes for you to recoup those costs (in this example, 20 months). That point is your break even point. If you expect to keep the property longer than the break even point then it makes sense to refinance. The previous costs of doing another loan should not be factored in. It is a sunk cost. Whether you keep it or don't keep the loan, it is money already spent. You don't want to keep yourself from saving money just because you spent money before. That makes no sense. So, don't look back. Just look forward. Have an idea of how long you will keep the property and have an idea of what is available to you and figure it out from there. 

 

[joey]

The real way to answer this is to get a real idea of what rate you are looking at (let's say 2.875%) and the accompanying cost savings (let's say $100 a month) and the true cost of doing the loan, which is how much you are paying = points, fees, title cost, taxes, etc. Exclude escrow and prepaids as those are not actual costs (let's say $2,000) and then figure out how long it takes for you to recoup those costs (in this example, 20 months). That point is your break even point. If you expect to keep the property longer than the break even point then it makes sense to refinance. The previous costs of doing another loan should not be factored in. It is a sunk cost. Whether you keep it or don't keep the loan, it is money already spent. You don't want to keep yourself from saving money just because you spent money before. That makes no sense. So, don't look back. Just look forward. Have an idea of how long you will keep the property and have an idea of what is available to you and figure it out from there. 

Another REALLY important point for folks refi-ing a loan they’ve had for a few years is too look at the Total Remaining Cost of the loan you’re have vs. the new one. Here’s a calculator that I shared up thread that I found super useful when running scenarios for my recent refi

https://www.calculator.net/mortgage-payoff-calculator.html?cloanamount=400000&cloanterm=30&cinterestrate=3.875&cremainingyear=22&cremainingmonth=0&cpayoffoption=extra&cadditionalmonth=120&cadditionalyear=0&cadditionalonetime=0&type=1&x=0&y=0#loanterm

the contrived example from that link shows a $400k loan @ 3.875% that's 8 years in. The Remaining Payments is key since you’re paying heavily front loaded interest in the early years of a mortgage, so you’re remaining payments from this moment til payoff is what you really want to be looking at (in addition to the already mentioned actual closing costs/fees on a new loan)  

I also like that this calculator lets you put in extra principal balance payments to show how you can pay it down faster with a little extra each month. 

 

[⚡DEADHEAD⚡]

Has the story changed on jumbo loans? 

 

[phowler13]

Another REALLY important point for folks refi-ing a loan they’ve had for a few years is too look at the Total Remaining Cost of the loan you’re have vs. the new one. Here’s a calculator that I shared up thread that I found super useful when running scenarios for my recent refi

https://www.calculator.net/mortgage-payoff-calculator.html?cloanamount=400000&cloanterm=30&cinterestrate=3.875&cremainingyear=22&cremainingmonth=0&cpayoffoption=extra&cadditionalmonth=120&cadditionalyear=0&cadditionalonetime=0&type=1&x=0&y=0#loanterm

the contrived example from that link shows a $400k loan @ 3.875% that's 8 years in. The Remaining Payments is key since you’re paying heavily front loaded interest in the early years of a mortgage, so you’re remaining payments from this moment til payoff is what you really want to be looking at (in addition to the already mentioned actual closing costs/fees on a new loan)  

I also like that this calculator lets you put in extra principal balance payments to show how you can pay it down faster with a little extra each month. 

Thanks that calculator is very helpful. I’m looking for advice. I’m in NY and I owe about 130k on house at 3.6% and have About 22 years left on mortgage most likely less years. We’ve Been paying an extra 500 a month on the mortgage mostly since we got the loan. House is worth 375k or so.  We were going to just stop paying the extra in mortgage and out that towards addition.  Got a quote today for 2.5% on a 15 year cash out refi today. I’m thinking it’s a no brainer correct?  Question is how much to cash out?  50k cash brings things to even less than we have been paying. The money is so cheap though and we could cash out 100k - 115k or so and safely invest/ etc.  (ideas?). That’s 200/250/month or so more than we’ve been paying.  I know there is some risk tied to it but I’m tempted.  Maybe split the difference?  Any advice would be appreciated. 

 

[joey]

Thanks that calculator is very helpful. I’m looking for advice. I’m in NY and I owe about 130k on house at 3.6% and have About 22 years left on mortgage most likely less years. We’ve Been paying an extra 500 a month on the mortgage mostly since we got the loan. House is worth 375k or so.  We were going to just stop paying the extra in mortgage and out that towards addition.  Got a quote today for 2.5% on a 15 year cash out refi today. I’m thinking it’s a no brainer correct?  Question is how much to cash out?  50k cash brings things to even less than we have been paying. The money is so cheap though and we could cash out 100k - 115k or so and safely invest/ etc.  (ideas?). That’s 200/250/month or so more than we’ve been paying.  I know there is some risk tied to it but I’m tempted.  Maybe split the difference?  Any advice would be appreciated. 

I’m no expert but the first thing I wonder is how much value do you estimate to add to your house by doing the addition vs the cost of doing the work. That said, I love investing in remodels on my house (converted a crappy sun room into a family room, did a big master suite addition, remodeled 2 bathrooms) since I feel like it’ll pay for itself over the 16 years we’ve been here and the likely 10 years more. And, most importantly, I get to enjoy the upgraded house, which holds a lot of value for me. 

 

[phowler13]

I’m no expert but the first thing I wonder is how much value do you estimate to add to your house by doing the addition vs the cost of doing the work. That said, I love investing in remodels on my house (converted a crappy sun room into a family room, did a big master suite addition, remodeled 2 bathrooms) since I feel like it’ll pay for itself over the 16 years we’ve been here and the likely 10 years more. And, most importantly, I get to enjoy the upgraded house, which holds a lot of value for me. 

I'm pretty sure I would be able to get what I put into it back, and yes it is great to enjoy and upgraded home. I talked to another financial guy and he said to just ride it out at 3.6%  Don't pay extra on the mortgage and use that money to pay off addition, invest.  There are so many different ways of looking at things...

 

[acarey50]

I'm pretty sure I would be able to get what I put into it back, and yes it is great to enjoy and upgraded home. I talked to another financial guy and he said to just ride it out at 3.6%  Don't pay extra on the mortgage and use that money to pay off addition, invest.  There are so many different ways of looking at things...

If you go that route, I'd think you'd be better off to go ahead and refi (even with no extra cash out) to the 15 year at 2.5% (take 7 years off your loan and lower your payment, seems like win-win), then you'd have even more monthly cash flow to put towards paying off the addition or to continue paying the mortgage off faster.

 

[Buttonhook]

Thanks that calculator is very helpful. I’m looking for advice. I’m in NY and I owe about 130k on house at 3.6% and have About 22 years left on mortgage most likely less years. We’ve Been paying an extra 500 a month on the mortgage mostly since we got the loan. House is worth 375k or so.  We were going to just stop paying the extra in mortgage and out that towards addition.  Got a quote today for 2.5% on a 15 year cash out refi today. I’m thinking it’s a no brainer correct?  Question is how much to cash out?  50k cash brings things to even less than we have been paying. The money is so cheap though and we could cash out 100k - 115k or so and safely invest/ etc.  (ideas?). That’s 200/250/month or so more than we’ve been paying.  I know there is some risk tied to it but I’m tempted.  Maybe split the difference?  Any advice would be appreciated. 

I'm in same boat as you generally, and am leaning heavily towards a 30-year loan.  Will be 1/4-1/2% higher rate but I can control my payments (i.e. still pay off in 15 years) and also limit your risk (i.e. go back to minimum mo. payment if times get tight).

Plus the rates are SO low right now, it's hard not to try to take out as much cash as you can.  Getting returns of > 2.5% shouldn't be too hard with some simple investing or just keep it in savings so you can sleep better at night. 

 

[phowler13]

I'm in same boat as you generally, and am leaning heavily towards a 30-year loan.  Will be 1/4-1/2% higher rate but I can control my payments (i.e. still pay off in 15 years) and also limit your risk (i.e. go back to minimum mo. payment if times get tight).

Plus the rates are SO low right now, it's hard not to try to take out as much cash as you can.  Getting returns of > 2.5% shouldn't be too hard with some simple investing or just keep it in savings so you can sleep better at night. 

Just got the 30 yr quote and yep about a 1/2 pt difference.  Tough decisions. The cash back sounds good,  the flexibility sounds good. Back to 30 years, not so much. 

 

[Don't Noonan]

Just got the 30 yr quote and yep about a 1/2 pt difference.  Tough decisions. The cash back sounds good,  the flexibility sounds good. Back to 30 years, not so much. 

I am at 3.62% on 30 year.  My Dad just refinanced to 2.90% on a 30 year getting cash out.  I would love to do the same and pay off my cars.

 

[Chadstroma]

Wow... feels like it should be Friday to me...

Rates are good right now for sure. Someone asked about Jumbo... they are coming back a little but still problematic. I wouldn't expect the carpet to be pulled out from you though like I was worried about a month or so ago. 

Two noteworthy things for me today. 

1) I finally got my California license to go through! YEA! 

2) Started yet another loan for a mortgage loan officer at a large bank. It is funny how many loans we brokers do for mortgage bankers and realtors.

 

[Buttonhook]

Just got the 30 yr quote and yep about a 1/2 pt difference.  Tough decisions. The cash back sounds good,  the flexibility sounds good. Back to 30 years, not so much. 

a 1/2 pt?  That might not be worth it, unless you know you'l be sticking with this loan for a while.  I'm referring to a loan with no points.  Just got a quote yesterday and difference in rate between 15-yr and 30-yr is less than 1/2%.  If I compare the 15-year loan to the 30-year loan that's paid off in 15 years, for my loan of just over $400,000 my monthly P/I payment goes up about $60 (only 2%) The built-in security is I can also lower my monthly P/I payment by almost $1,100 (33%) if times get tight.   

 

[Buttonhook]

Wow... feels like it should be Friday to me...

Rates are good right now for sure. Someone asked about Jumbo... they are coming back a little but still problematic. I wouldn't expect the carpet to be pulled out from you though like I was worried about a month or so ago. 

Two noteworthy things for me today. 

1) I finally got my California license to go through! YEA! 

2) Started yet another loan for a mortgage loan officer at a large bank. It is funny how many loans we brokers do for mortgage bankers and realtors.

@Chadstroma    Any chance you have a good reference in Colorado?  I've been using a broker for years, as you've suggested.  For the first time I got a quote that didn't feel very competitive.  I know him well enough that I'm going to talk to him first and be upfront about my concerns, but if his numbers don't change I'm going shopping. 

And, I wanted to say thanks for all your insight and thoughts on this thread, much appreciated.

 

[phowler13]

a 1/2 pt?  That might not be worth it, unless you know you'l be sticking with this loan for a while.  I'm referring to a loan with no points.  Just got a quote yesterday and difference in rate between 15-yr and 30-yr is less than 1/2%.  If I compare the 15-year loan to the 30-year loan that's paid off in 15 years, for my loan of just over $400,000 my monthly P/I payment goes up about $60 (only 2%) The built-in security is I can also lower my monthly P/I payment by almost $1,100 (33%) if times get tight.   

Oops meant difference of rate between 15 and 30 year was about  1/2 %. About the same rate it seems you got quoted. 

 

[Don't Noonan]

@Chadstroma Question for you.  What is the normal fee for a mortgage broker these days?  I used to be in the business 16 years ago and I always charged a point or 1%.  That was reasonable and if I got any rebate from the lender I would pass that on to the client as a credit on their closing statement.  

I just called and spoke to the lender you referred me to and he said the lowest he could go was 1.5%.  That seems steep.  On my $460k loan that is almost $7k.  

Thanks.

 

[Chadstroma]

@Chadstroma    Any chance you have a good reference in Colorado?  I've been using a broker for years, as you've suggested.  For the first time I got a quote that didn't feel very competitive.  I know him well enough that I'm going to talk to him first and be upfront about my concerns, but if his numbers don't change I'm going shopping. 

And, I wanted to say thanks for all your insight and thoughts on this thread, much appreciated.

Yea, I know a couple there. Feel free to PM me with your contact info if/when ready and I can connect you to someone. 

 

[Chadstroma]

@Chadstroma Question for you.  What is the normal fee for a mortgage broker these days?  I used to be in the business 16 years ago and I always charged a point or 1%.  That was reasonable and if I got any rebate from the lender I would pass that on to the client as a credit on their closing statement.  

I just called and spoke to the lender you referred me to and he said the lowest he could go was 1.5%.  That seems steep.  On my $460k loan that is almost $7k.  

Thanks.

TOTAL different game now than then. 

LPC and BPC. LPC everything is baked into the loan and the lender pays the broker. LPC is fixed, no sliding scale like before. 

BPC the borrower pays the broker directly. The benefit is that the cost is not baked into the loan so you can get rates pushed down further. The borrower usually gets a lender credit to cover some or all of that charge. The lender credit can pay for all costs on the loan EXCEPT the actual BPC including escrow funding. When I do BPC I am usually trying to get as much lender credit to cover that cost as possible. So, if you are getting a lender credit of $7K and your fees, title, taxes, prepaids and escrow was $7K then you would actually be paying $7K. 

Overall, 1.5% is very low comp. But I would make sure you are not misunderstanding and that they are not giving any lender credits to offset that. 

 

[Don't Noonan]

TOTAL different game now than then. 

LPC and BPC. LPC everything is baked into the loan and the lender pays the broker. LPC is fixed, no sliding scale like before. 

BPC the borrower pays the broker directly. The benefit is that the cost is not baked into the loan so you can get rates pushed down further. The borrower usually gets a lender credit to cover some or all of that charge. The lender credit can pay for all costs on the loan EXCEPT the actual BPC including escrow funding. When I do BPC I am usually trying to get as much lender credit to cover that cost as possible. So, if you are getting a lender credit of $7K and your fees, title, taxes, prepaids and escrow was $7K then you would actually be paying $7K. 

Overall, 1.5% is very low comp. But I would make sure you are not misunderstanding and that they are not giving any lender credits to offset that. 

Not sure I follow you here so let's keep it simple.  Back in my day as a mortgage broker when I processed a refinance for a customer I charged 1%.  So for a $400,000 loan I made $4,000.  I had a buddy that always charged 2% and I thought that was crazy high.  He would charge 1% origination fee and then collect 1% from the lender (basically he hiked the rate up so he got paid under the table from the lender).  Are you saying that making 1.5% on a $400k loan is low to you??  That is $6,000.