Refiance?

[jpk]

I am interested in trying to get a mortgage with a lower interest rate, possibly an interest only or some kind of program that has a low rate for 2-3 years and then goes up after that. I am currently at 6.53% and have 3.5 years left at that fixed rate. I am not clear on how the refinance process works. I have been in my home almost 1.5 years. I live in Gilbert, AZ (suburb of Phoenix). I don't think I have a whole lot of equity in my place due to the market here, but again I am not sure. I have never taken out an equity loan or had a recent appraisal.

My middle FICO score is 666. What are my options or what steps should I take next? Thanks for any tips.

[crnbread73]

Spam

[firstsource]

The first thing you should confirm is to see if you have a prepayment penalty. Many of the 5 year ARM's have what is called a "Soft" prepay. This means that if you sell your home there is no prepayment penalty (that would be called a Hard" Prepay), but if you refinance there is a prepayment penalty.

Reading between the lines it sounds like you are having slight financial problems, in that saving a few hundred a month would help a lot. For that reason the expense of a refinance probably does not matter to you, but should be a consideration. A refinance this soon after a purchase will be less expensive than your first closing, but not a lot less.

With your scores, you would qualify for a fixed rate 30 year mortgage where the first 10 years would be interest only. Due to weird market conditions, at this time fixed rate mortgages are the same or slightly lower in rate than are ARM's.

Hope that helps.

Charles

[crnbread73]

My post to the original poster was not spam. I was unaware of offering to help someone by getting more info on their situation was against the rules here. But it seems to me by the moderator saying my message was spam then he is the only one allowed to get business off of this forum. Because if he is the only one allowed to reply then I guess he is the only to earn the business and you can't say that you don't get the business because I have seen other posts on this board basically from people telling others to contact you for loans. To me that is almost like free advertising.

[2ndTimeAround]

jpk

Since your have 3.5 years left before your loan goes live (adjustable)...

Also looking at your have only had it 1.5 years, you haven't build much equity.

I recommend waiting it out, doing another loan right now you will add to your principle.

I have noticed a trend - twice a year the feds adjust rates to control inflation. The week after 6/15 and 11/15 rates are lower (except on election years).

Stay where you are.... ...

My $00.02

[jq26]

I have noticed a trend - twice a year the feds adjust rates to control inflation. The week after 6/15 and 11/15 rates are lower (except on election years).

jpk: I think you got great advice all around.

2ndTimeAround: You have posted your "Fed sets rates twice per year" theory before. Can you elaborate? My understanding is that mortgage rates set themselves based on bond yield plus margin spread. The Fed has no 6 month rate-setting schedule that I know of. I'm not sure what you are referring to.

[firstsource]

To jq26

You are correct for rate in the conforming/prime rate market. Other than for the past 3 weeks (market has been a little skitish) if you follow the 10 year bond yield you will know what rates are doing in the market place. There are times when money seems to get tight so the profit margin goes up or goes down as there is more money available.

Sometimes investors will lower their margin for a few weeks just to get business "in the pipeline" but by and large mortgage rates follow the bond market.

Charles