Is everybody jumping on the refinance bandwagon? I read a headline recently which read "Obama Says Refinance Now". I find it amazing that the POTUS is now acting like a bank president. He fired the head of GM but with the banks he's just going to assume the job responsibilities.
But it did get me thinking...maybe this is the time, if a bank will refinance a loan to two old fogies like us. I thought our mortgage at 5.625% fixed for 22.5 years was pretty good but rates really have dropped. With no shopping around at all, I've found rates as low as 4.25% fixed rate for 30 years 285 points and closing costs of $5,238. Let's see, if I save $150 a month on house payments, I'll break even in 4.5 years!
Other combinations are available, of course, and we might eventually refinance. But what I'm trying to say is that it is no slam dunk. And just because the POTUS is encouraging it, doesn't necessarily make it a good deal.
I don't know if it was you or Obama who got Jon thinking, but now he's looking around at rates. Don't think we are goin to bother, though, we're already below 5%.
ReplyDeleteWhere did you find those rates? The total payment would be more than 200 less than our current interest only payment! (Our rate isn't bad, but it's no 4.25% either.)
ReplyDeleteThe rates I was looking at were from CitiBanks website. Although we currently have our loan from them, the rate pages didn't seem to depend on our being current customers.
ReplyDeleteI think the conventional wisdom was to refinance if you could pay back the closing costs within 5 years or if the interest rate was at least 1% less. I think it's definitely worth looking at.