So what you the gurus think?

I closed on a house August 17th with 6.5%, 30-year Fixed mortgage, no points.

With everything going on with the housing market and economy, do you think mortgage rates will fall to 5% or so in the spring, maybe?

im in the mortgage biz and right now rates on a 30 year fixed are at 6-6 1/8th which is right about where we feel there going to hang. with the way home prices are falling i wouldnt be surprised to possibly see a slight increase in rates in the future.

home prices go up = rates go down
home prices go down = rates drop

I'm not following....?
I'm an Appraiser, and also interested in a possible re-fi soon. (current note is 6 3/8%, purchase @ 30 yrs., got it 2/06)
Maybe things are different in your market, but around here things look grim. At best, I would say there is an almost across the board drop in prices by 10-15%.

I saw an order the other day, cash out re-fi, $151K loan amount (~65% LTV), 30 yrs. @5.5%.

No joke. This was a local lender too, not some fly by night broker, so I am assuming he didn't pay a bunch of points or fees either.


I see them dropping, probably not far, but likely closer to 5.875% for 30 yr. notes by the first of the year.

Sorry to be so long winded, but, in closing, there is a method to this.
How long are you planning on keeping the mortgage? (avg. is about 4 years).

How much is a re-fi going to cost you (in fees, points, title work, etc.)

I think anything less than a point lower is not really worth looking at UNLESS you are in a good equity situation and looking to pull some cash for an actual investment in the improvements, then and only then can you justify it.

Thanks,

I was thinking that I wouldn't do a re-fi unless it was at least 1.5 points less interest, or 5%. My new appraisal will put my equity beyond 20-percent, so I will be able to drop the $212 per month mortgage ins, just looking for other possible cost savings.

I wouldn't re-fi to pull money out, just to reduce monthly cost on interest.

I will probably keep this place for at least ten years... probably longer. This is my dream home!

What did you do to get the increase in value? Usually in the 1st year if you cannot prove an increase in value because of tangible work, the mortgage holder will not simply take a new appraisal on an existing loan and drop your PMI.

Hopefully you are in contact with the mortgage holder during the process. Here are the basic rules:

PMI CANCELLATION CIRCUMSTANCES

There are two circumstances under which the holder of a mortgage must cancel or terminate the private mortgage insurance requirement of a mortgagor. There is also a "high-risk" exemption from these cancellation requirements.

The cancellation/termination provisions apply only to:

1. mortgages made one-year after date of enactment and

2. mortgages on owner occupied single-family primary residences. For adjustable rate mortgages, the cancellation or termination will be based on the amortization schedule in effect at the time of cancellation or termination (the most recent calculation) rather than the initial amortization schedule. Balloon mortgages are treated like adjustable rate mortgages (uses most recent amortization schedule. Cancellation/termination rights are based on modified terms if loan modification occurs.

Borrower-initiated Cancellation

When a mortgage that is subject to PMI reaches an 80% loan-to-value ratio (LTV) based upon the initial amortization schedule or pre-payments, the borrower may make a written request that PMI be canceled.

The mortgage holder must cancel the PMI if the following conditions are met:

the borrower has a good payment history (no mortgage payment 60 days or longer past due in the 12 month period beginning 24 months before the cancellation date or a payment 30 days or longer past due in the immediately preceding 12 months calculated as of the later of the cancellation date or the date on which a borrower requests cancellation). If a borrower is not current on payments as of the termination date, but later becomes current, termination shall not take place until the first day of the following month;

the mortgage-holder approved verification of property value; and

the certification that the property's equity is unencumbered by a subordinate lien.
Automatic Termination

When a mortgage that is subject to PMI reaches a 78% (LTV) as a result of the initial amortization schedule, the PMI must be automatically terminated provided that the borrower is current on payments. If the borrower is not current, the PMI must be automatically terminated when the borrower becomes current; cancellation will take place the first day of the following month. With a 30 year mortgage, it will take eight or ten years on average to reach the point where you can cancel the insurance.

If the loan is determined to be a "high-risk" loan, cancellation and automatic termination is delayed until the loan reaches its half-life in the case of conforming loans, and 77% LTV or its half-life, whichever occurs first, in the case of all other high-risk loans. "High-risk" will be defined by Fannie and Freddie in published guidelines for loans that do not exceed the applicable annual conforming loan limit and mortgagees for all other loans.

Yes, I know about the one year rule. However, there was a descrepancy in the original appraisal. That with the work that has been performed, the mortgage company said it should not be a problem and I am awaiting their decision. Even if I had to wait until next year, I'd still be happy.