Comments on: Advantages and Disadvantages of Fixed and Variable Interest Rate Home Mortgage Loans

By: Bleaker

Bleaker — Mon, 11 May 2009 10:32:27 +0000

If you could get 6% on a cash out refinance without PMI and minimal costs, the new first mortgage would give you a lower average cost of funds and monthly payments.

On the other hand, if you have to pay a couple thousand in closing costs on a new first, the low closing cost on the 2nd might be better. It may really come down to how much additional borrowing you would be doing at the higher rate vs. what the difference in closing costs is.

To do a proper analysis, I would need more information. I would suggest calling a couple banks and having them put together some good faith estimates. The analysis is not difficult so any competent loan officer should be able to help you with it. Watch out for pressure to refinance the first. If you are only borrowing a few thousand on the 2nd (home equity), you are probably going to be better off going that route, the the LO may try to steer you into a new first as they can't make any money on a little loan.

Good luck.

By: spooky

spooky — Mon, 11 May 2009 08:26:57 +0000

By: jthagreat04

jthagreat04 — Sun, 10 May 2009 22:31:24 +0000

If she has a VA loan then have her call the company that holds her mortgage, see if she can get a lower rate with a new loan. They may offer some type of VA streamline refinance so it will be fast and easy and a lower rate for her.

By: km

km — Sun, 10 May 2009 03:00:58 +0000

because the loan was secured by real estate it is technically a mortgage. If you do refinance you will be looking at a either a new conventional mortgage or a new home equity loan.

By: Rich B

Rich B — Sat, 09 May 2009 16:14:40 +0000

Try to hold out for 4.5% fixed for a 15 year loan. There is always the possibility of a 3.5% rate if the economy does not recover by summer..

By: madshop

madshop — Sat, 09 May 2009 07:21:44 +0000

Honestly, no I don't. You have two years of security left at a rate that is currently pretty hard to find. If you are planning on being in your home only 3-4 more years, then find out what your adjustment cap is. All 5-year ARM's have an adjustment cap that limits what the loan can adjust to initially, and depending on what that is, you may find it in your best interest to ride it out until you decide to sell. You have to consider the cost to refinance versus the monthly savings you'll get by refinancing. So, let's say that you decide to stay in the home for three years. You're rate is fixed for the next two years, and depending on it's adjustment cap, let's say two percent, your rate would be fixed for the third year at 7.25%. Depending on the size of your loan amount, your payment may only increase by $100 a month. Let's say the cost to refinance is $2000, it would then take you 20 months to break even on your costs, and if you were only in the home for 12 more months it would not make sense to refinance.

If you would like further details, or if you would like me to take a look at it, email me directly, I would be more than happy to. Hope this helps.

By: Andrew W

Andrew W — Fri, 08 May 2009 18:20:07 +0000

Whether or not you personally can do any kind of refinance depends on your credit, income, and the value of the home.

If you're asking if no or low closing cost mortgages exist? Absolutely. Typically the rates are a little bit higher, but honestly your rate is really high right now, it should still be significantly cheaper than 12.75 even with the bank paying the closing costs.
By the way check your Adjustable Rate Rider from your original mortgage. Odds are there are caps on how much and how often your rate will adjust. If you're paying this loan off in the next few years it may not even be possible for it to adjust up to 18.75 that quickly.

By: michael o

michael o — Fri, 08 May 2009 16:57:13 +0000

Right now rates are LOW, I would just refi instead of the HELOC that might cost you 7% on up. Why pay for 2 transactions.