I have a mortgage ($180,000) now at 5.625 with a PMI adding an extra $144 to my payment. I want to Refi $135,000 putting $45,000 down.One reason to get rid of PMI and 2nd to get lower interest rate. My fica scores are high 700. I have time and no real pressure like originally when buying....so what is the professional opinoin out there. I would like to get under 5%. I am close to retirement and want to get the lowest payment I can as this will most likely be the house I will spend the rest of my life in. We had a commitment with Suntrust (4.8725%)and they wouldn't honor the appraisal. This is what my Broker is telling me. So now the rates went up. I am upset with Suntrust, Broker and the whole system. The value is in the house, I have plenty $'s down, excellent credit and good solid income...32 years on job. Does anyone out there think the rates will come back down below 5% again any time in the near future? My Broker says he thinks they will and not to worry....... House is my primary in Fl. Should I hold on?????

Thanks in advance,

Judy

I do believe that we will see sub 5% par rates in the near future, but you could also pay some discount points and get that rate below 5% at this point as well.

You may want to inquire as to the exact reason that the appraisal wasn't accepted by Suntrust.  It may be that another lender will need a different appraisal and not have a problem but there could be an issue that many lenders will not accept that could be holding you back from refinancing.

Don't refi. Recast. 

Call your lender and ask them to recast your loan after you put the extra $35,000 on the principal.  Chances are, they will do that for you for a nominal fee, and then, you'll probably be below 78% LTV, and they are required by law to cancel your PMI.  It won't change your rate, but your payment will drop by about $200.00

I know I can get rid of the PMI by putting the money down and getting the house to a 80/20 but I can do that any time.....I am trying to get lower interest rate at the same time and get more bang for my bucks! Maybe $400 less amonth compared to just $200 less a month. I am retiring in 2 years and now is the time to get my payments lower if I can.

Thanks............

Like Ken suggested, I would find out why you're appraisal wasn't accepted as this could happen with the next lender too.  You shouldn't be angry with the broker (and I'm not just saying that because I'm a broker), because we have no control over the appraisal or how the bank underwrites your loan or if rates go up or down. 

If you're looking at getting under that magical 5% then look at paying some points upfront to see how much that will save you in the long run.  But also look at how much you would still be saving if you were at 5% - 5.25%, along with dropping the PMI.  We might get under 5% again but no one knows for sure.  The difference in P + I from a loan of 180k at 5.625% to a loan of 135k at 5.25% is approx. $300.  Add on the fact you'll be dropping the PMI and you're looking at saving $450/month.  Waiting for 4.875% will only save you another $31/month over a rate of 5.25%.

Scot mkes sense. And s per tody's rates you can get 5.00% at a cost of $798 only. So, this is also a good option you can look at.

Regardless of whether you are looking for a 30 year or a 15 year the rates are under 5% right now.  Do not pay points to buy a rate down ever.  It takes too long to recoup what you spent.  Find yourself another Broker give him a copy of the appraisal so that he can review and see if the problem is something that will stop you with any Lender.  If you cant do that then just go to another Broker and let them know that you had a previous problem with the appraisal and after discussion you should be able to get to the bottom of that problem.  But refinance now.  The rates are under 5% and you should be able to get a good deal now. 

Karen or Kristy or whatever you call yourself,

Rates are not under 5% for a fixed 30 yr and are just under that for a 15 year.  Since Judy is retiring I don't think she wants the high payments that would come with a shorter term of 15 years, since she had said her main goal was to lower her payments.

You're also 100% incorrect in saying that you should never buy down the rate.  If you do a simple cost analysis, you'll see that most times you'll recoup your costs within 3 - 5 years.  If she spent 1% (or $1350) to buy down the rate from 5.375% to 5% than that would save her $32/month.  Let's say she has closing costs of $2500, she'll recoup her costs in approx. 6.5 years.  Since she said she's going to be living there the rest of her life, it makes sense to look at buying down the rate. 

I'm not saying it always makes sense to buy down the rate, but you are not doing anybody any favors by throwing out horrible advice like that and talking about rates that are not available for a fixed 30 yr mortgage.

Right on Scott.

Louis

Wow, Karen or "kristy", I sure hope that you are not in the industry, because its people like you that are hurting our industry and name.  Thats so far off its not even funny.  Please refrain from ever posting to this site again. We are here to educate, not stupify.

Thanks Scott...........appreciate your input.

Well that is your opinion - I don't feel the same way.  Number 1 did you ask her if she wanted a 30 yr

or 15 yr?  She said that she is getting ready to retire - she has exc credit - long term emp. why would

she not want to reduce her terms by 15 years.  She may be able to keep her payments the same and

shave off 15 years worth of interest.  She already said that losing the PMI would change her payment

by 200 so why not.  Your just answering her based on your assumption - But if you take into consideration

all that the lady is saying she is talking about doing more then just lowering a payment. 

Furthermore, let me say agian, I would not have someone buy down points!!!!!  Your right it will take them

5 years to recoup not 3-5 years - 5 years - everytime - run the numbers.  So    AFTER  5 Years they will

feel the savings - statistics state that people move every 5-7 years - so really they are getting 2 years worth

of savings - you the Lender - you are the one that benefits from bought down points - not the buyer - unless it

is a relocation and the Company relocating them are paying the points.  I would much rather them take that

money and put it towards a credit card with a rate of 99% - or put it against the car that depreciated when

they drove it off the lot, or better yet put it in the bank and make interest off of it.  But to buy down points is lining

the Lenders pockets!!!!!!!!!  So there is your free education.  And by the way - I will answer any questions in

the future that I want to being that I make way more sense then the 4 of you put together!!!!!!!!!!!!!!!! Capish???

I am looking for a 30 year loan and I am trying to get my payments low so that I can live comfortably on my Social Security (if it is still there in 2 years lol)and my pension from work. I could care less if it is paid off at this point. I want to enjoy my retirement and not strap myself to pay a 15 year motgage. I may be 10 feet under before that, 63 now that would make me 78...... I just hope the rates come down to at least 5%.

Thanks for everbody's input

Judy

You make no sense and you don't have any idea what you're talking about.  She said she's going to most likely live in the house the rest of her life and she even said thanks after our responses, so I'm pretty sure we were assessing her situation and needs correctly. 

Buying down the rate doesn't pad anybody's pocket.  The lenders offer certain rates based on the return of investment on the secondary market.  If 5% is what a bank is offering as the par rate on a given day, then a rate of 4.75% costs more.  Who would pay for that?  The borrower of course.  It costs the bank money to get you a rate lower than par so they pass that cost on to you.  As far as the timeline is concerned of how long it takes, I was saying on average it takes 3 - 5 years in MY EXPERIENCE AS A LOAN OFFICER.  I explicitly said it will take her approx. 6.5 years to recoup her costs.  If someone has a larger loan amount than that than they would recoup their costs even faster, I just had someone who will recoup his costs of refinancing within 16 months and he bought down the rate. 

Plus, you never talked about the fact that you said rates for a 30 yr mortgage are under 5%, which they absolutely are not, unless you wanted to pay points and I think we know your stance on that subject. 

"So there is your free education"...   from the short bus!

Judy, great smile.  Have you ever looked into a reverse mortgage?, if not you may want to get more information as you plan for your retirement.  This type of a loan will eliminate your monthly mortgage payments, and thereby enhance your options as you plan for your retirement.  This loan is not for everyone, but since you have no plans on moving, nor do you see a time or need to pay off your home in the future, this loan will provide some additonal options.

Louis