Should I Refinance My Mortgage Now or Wait Until Jan 30, 2008?
by: Brian.Brady on January 22, 2008 14:53:48 2 comments »
"Should I refinance my mortgage now that the Fed has lowered the overnight lending rate .75% or should I wait to see if they cut rates more, when they meet on January 30, 2008?"
That question was asked of me today by one of my favorite borrowers. I met Jim, a sales representative in Paradise Valley, Arizona, in 1994. Jim was one of my first customers, responding to a mailer I sent about VA Interest Rate Reduction Loans (VA IRRL). We reminisced about the 8 loans I funded for him, these past 14 years. Jim traded up, in 1995, to a home in Ahwatukee. He traded again, in 1998, to a home in Paradise Valley. He has turned a $83,000, zero-down home loan, purchase into a seven-figure home, with a $400,000 mortgage. He's four years into a 5.25% 5/1 ARM and wondered if it was time to pull the trigger. Here's what I told him:
"Jim, you've always done well by seizing opportunities when they came. You bought a home in Ahwatukee because it was affordable, not because you were greedy. You stretched to get into the Paradise Valley home because you felt it was affordable, not because you were greedy. So, I'll ask you to be consistent here and make this decision based on affordability rather than greed. You've had your eye on the 5.25% rate for a few weeks; today it became affordable. I think mortgage rates could come down a smidgen more, in the next week. Maybe I'm being greedy by suggesting that you hold out for that last little drop"
I shared this chart from Loan Toolbox, with Jim:
San Diego County is home to many military installations. We are proud to have so many neighbors who served our country with distinction. The VA offers loan guarantee programs that have made housing more affordable for so many veterans of our Armed Services. If you have a VA home loan, we might be able to save you some money.