Comments from readers

Sory said...

Can you please post information concerning when to refinace? How many points down should the market be compared to my current rate to make it worth a refi?

Broker Boyce says... Thanks Sory for the question. The consensus is that the new rate to refinance at should be at least 2% lower than the rate you are paying now. Length of time you plan on staying in your house, terms of the new mortgage and cost of refinancing all should be considered before signing on the dotted line. Here are a few posts and links that I thought would be helpful.

Refinancing BLOG

The rule of thumb in refinancing states that a home loan refinance will only make sense if your interest rate gets lowered by at least 2 percent. However, know that mortgage terms are not created equal. Before deciding to refinance, make sure that you carefully consider all the aspects of the new mortgage and make sure that you will get a better deal than your previous one. read more.....

Refinancing - another opinion

How do you know if it is a good time to refinance? Generally the rule of thumb is the new loan must be at least 2 percentage points lower than your current loan, but the size of the loan (especially large ones) could change that. The other big question is how long you plan to stay in the home you refinance. if you only plan to keep it a short time, then you may not have time to recoup the cost of refinancing. read more.....

Considering Refinancing?

Who should consider refinancing?

The general rule of thumb is, refinance if your mortgage rate is about 2 percent higher than market rate because the savings will in time cover the closing fees. For a $500,000 mortgage, which is not uncommon on Long Island, the closing costs are about $4,000 to $5,000. There are several factors to consider, including the amount you want to borrow and how long you plan to live in the home.

Borrowers whose adjustable rate mortgages will reset to at least 7 percent within 12 months should consider refinancing, said Emmett Laffey, chief executive of the Greenvale-based First Allied Mortgage Bankers and Laffey Associates, a real estate agency. "The break-even point might be five to six years if you figure in the closing costs," he said.

From the National Association of Home Builders

Answers to Home Buying Questions:

It’s always better to trade up in a buyer’s market, like the one we are in now. While the value of your house has fallen, the price of higher-end homes has also dropped.

Here's an example. Say your neighbor sold his house six months ago for $300,000. In today's market, your home's value has decreased 10 percent and you could only get $270,000. So you might think you'd be taking a $30,000 'loss' on your home.

But, don’t forget that higher priced homes are also dropping in price.
So, using the same example, the $500,000 move-up home you'd like to buy has also dropped 10 percent in value and now sells at $450,000. If you sold your home today for $270,000 and purchased the larger house for $450,000, the difference in price would be $180,000.

But if you waited to recoup the 10 percent value on your home and sold it at $300,000, chances are that same move-up home would also move up in price to at least 10 percent to $500,000. That’s a $200,000 price difference between the two homes.

So by not waiting and selling today, you would actually save $20,000. And most likely, by jumping into the market today your savings would be even greater because consumers have much more bargaining power when shopping for higher-end homes in a buyer’s market. read more.....