At what mortgage rate would it be breakeven to refinance my house?

[JEDI]

With the Fed dropping rates (expected .50% drop this month), mortgage rates will be dropping too.

15yr mortgage @5.5%. Have 9yrs and $85k left. According the Amortization schedule, i'll be paying $23k in interest in those 9yrs. (so i'm paying $108k total in the 9yrs.)

1) if i get a 10yr mortgage, how low would rates have to be for me to refinance (assume no fees).

2) would it make sense to get a 10yr mortgage since i only have 9yrs left on my current mortgage? Why/Why not? If not, what kind of mortgage would make sense to refi into? (5/5 Arm???)

Thx! (I suck at these mortgage calculations)

edit:
Fed Rate drop end of month, not next week

 

[Special K]

Originally posted by: JEDI
With the Fed dropping rates (expected .50% drop next week), mortgage rates will be dropping too.

i owe $85k @ 5.5%. I have 9yrs left on my 15yr mortgage. According the Amortization schedule, i'll be paying $23k in interest in those 9yrs. (so i'm paying $108k total in the 9yrs.)

1) if i get a 10yr mortgage, how low would rates have to be for me to refinance (assume no fees).

2) would it make sense to get a 10yr mortgage since i only have 9yrs left on my current mortgage? Why/Why not? If not, what kind of mortgage would make sense to refi into?

Thx! (I suck at these mortgage calculations)

A rate cut next week? The FOMC calendar says the next meeting is Jan. 30/31.

 

[ZzZGuy]

I'm at a loss for words with regards to the faith you put in these forums.

 

[lokiju]

Granted this is a short term refi you're looking at but I'd avoid any ARM's at all cost.

 

[Slew Foot]

technically, the fed rate cut doesnt affect mortgage rates. Rates usually go UP after a Fed rate cut, a few days a go they took a huge dive for fixed non jumbo rates, likely due to low demand.

 

[alkemyst]

Originally posted by: JEDI
With the Fed dropping rates (expected .50% drop this month), mortgage rates will be dropping too.

15yr mortgage @5.5%. Have 9yrs and $85k left. According the Amortization schedule, i'll be paying $23k in interest in those 9yrs. (so i'm paying $108k total in the 9yrs.)

1) if i get a 10yr mortgage, how low would rates have to be for me to refinance (assume no fees).

2) would it make sense to get a 10yr mortgage since i only have 9yrs left on my current mortgage? Why/Why not? If not, what kind of mortgage would make sense to refi into? (5/5 Arm???)

Thx! (I suck at these mortgage calculations)

edit:
Fed Rate drop end of month, not next week

How does Fed affect new mortgage rates unless you are picking an adjustable?

 

[QED]

Originally posted by: JEDI

1) if i get a 10yr mortgage, how low would rates have to be for me to refinance (assume no fees).

It's real simple.

If there are no fees, and everything else being equal, it makes sense to refinance whenever the new rate is lower than your current rate.

2) would it make sense to get a 10yr mortgage since i only have 9yrs left on my current mortgage? Why/Why not? If not, what kind of mortgage would make sense to refi into? (5/5 Arm???)

Yeah, a 10-year fixed mortgage would be best. Typically rates on a 10-year mortgage will be lower than those on a 15, 20, or 30-year loan.

And just because the term is for ten years, doesn't mean you need to take ten years to pay it off. Your new payment should be lowere than your current payment since your term is one year longer, and your rate is lower-- but you can continue making your OLD payment on your new loan to pay it off in even less time than it would take you pay off your existing loan.

Just make sure any new loan does not have a pre-payment penalty-- most loans with few or no closing costs will have a pre-payment penalty, but typically just for the first few years.

 

[Capt Caveman]

Will you save by refinancing your mortgage?

 

[KK]

I don't think you'll save anything by refinancing based on the fact that you WILL have fees unless they some how roll those fees in you mortgage, or offer you a higher rate that would offset any difference in your current rate and the rate being offered. Your 5.5@15 years isn't bad at all.

 

[JEDI]

Originally posted by: KK
I don't think you'll save anything by refinancing based on the fact that you WILL have fees unless they some how roll those fees in you mortgage, or offer you a higher rate that would offset any difference in your current rate and the rate being offered. Your 5.5@15 years isn't bad at all.

the only fee for the 15yrs @5.5% refi was $90 for county fees. i consider $90 for a 6figure morgage close enuf to no fees.

QED:
i should have refied 2yrs later to another 15yr @4.85%. but at that time, i didnt want to extend my mortage 2yrs more. Never thought of your suggestion of paying the same amount as my old mortage, and still get out in 13yrs or less.

that would have been ~$75/month less = 900/yr less = $13500 less over the life of the loan. now kicking myself