I have a 10/1 ARM that expires in Nov. 2013. We are currently at 5.375% and owe 210,000.00. We would like to refinance to a 15 year fixed mortgage loan at 5 to 5.5%. With refinance fees and possible point buy downs (7000.00), does it make sense to refinance now with the 7000.00 worth of fees or should we wait until we get closer to the 2013 date?
Given the slight or possibly no change in your interest rate, I don't see how you can justify the $7000 in costs. Have you tried to get quotes from other lenders? If not, I strongly suggest that you do so. Bills.com makes the process real easy. If you want to apply for free and see if you can save with Bills.com's pre-approved lenders, just follow this link: Mortgage Refinance Quote
The right time to refinance has more to do with you than with the mortgage market. Sure, low interest rates are a factor, but your individual situation is the greatest indicator. For example, are you paying on a loan that requires you to carry mortgage insurance? Have you built up enough equity to drop that insurance through a refinance? If so, refinancing could save you hundreds each month.
One potential problem encountered by many borrowers trying to refinance their home loans are early refinance penalties charged by their current lenders. Many loan agreements state that borrowers must pay a penalty to their current lender if they wish to refinance their loan before the expiration of a certain period defined by the loan agreement. These penalty periods vary from loan to loan, but are frequently between two to five years from the date of the original mortgage. Before you attempt to refinance your current mortgage, you should contact your current lender to discuss whether or not your current loan agreement includes a prepayment penalty, and if so, its amount and when you can refinance without penalty. These penalties can be quite costly, and can easily make a refinance loan too expensive to save you money over your previous loan.
When making loan decisions, one of the most important factors potential lenders review is the loan-to-value ratio, or LTV, of the proposed loan. This ratio compares the amount of the loan you are trying to obtain to the current value of your home. The interest rates charged on 100% loan-to-value refinance loans, such as ones that many new homeowners seek, are generally higher than the rates charged on loans with a with lower loan-to-value ratios. However, if your credit score has increased significantly since you first purchased your home (or if your income has risen and your debt to income ratio has improved substantially), you may be able to obtain a lower interest rate regardless of your DTI.
Lastly, depending on your loan size and a few other variables, you may qualify for an FHA loan. Ask your lender or broker about if this is right for you.
I wish you the best of luck, and hope that the information I have provided helps you Find. Learn. Save.