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Time to refi an ARM and lock in a fixed?

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    World Trackday Champion xxaarraa's Avatar
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    Time to refi an ARM and lock in a fixed?

    I have a 7/1 ARM on my condo mortgage that originated in late 2014. I now intend to keep this condo for the foreseeable future and have been considering when to refinance it and lock in a 30 year fixed.

    In 2018, any indications that interest rates are about to go up? I am reading that long term rates on 10 year T-bills are slated to go up, which indirectly affects mortgage rates.

    Anyone else hear any data points on this?

    Also, my mortgage broker just quoted me a 3.875% 30 year fixed with $2900 closing costs. Seem fair based on your experience and current rates?

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    Last edited by xxaarraa; 01-08-18 at 07:10 PM.
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    Re: Time to refi an ARM and lock in a fixed?

    Check out Commonwealth mortgage. I've used them for my last three mortgages and have been very satisfied. You can see all their rates and closing cost options on the website without giving any personal info.

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    Re: Time to refi an ARM and lock in a fixed?

    What is the rate for a 15-year fixed? You might be surprised; when I had mortgages the 15-year fixed was only a couple hundred $/month more than a 30-year fixed because of the big difference in interest rates.

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    Re: Time to refi an ARM and lock in a fixed?

    The interest rate sounds about right, but work your ass off to get them to eat the closing costs. Flat out tell them you're not interested unless there's $0 closing; and be prepared to actually walk. A good buddy of mine put his name/info into one of those "give me a refi quote" websites, and gave that line to every refinancer who called him. Eventually, one of them blinked, and he got his rate w/no closing costs.

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    Re: Time to refi an ARM and lock in a fixed?

    Quote Originally Posted by number9 View Post
    What is the rate for a 15-year fixed? You might be surprised; when I had mortgages the 15-year fixed was only a couple hundred $/month more than a 30-year fixed because of the big difference in interest rates.
    We refi'd our 30 yr(at year 28) into a 15yr, and we were able to get the same monthly payment. This was due to a lower APR(3.125 vs 4) and due to dropping the PMI of our FHA loan. Saved about 75k in interest IIRC.

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    World Trackday Champion xxaarraa's Avatar
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    Re: Time to refi an ARM and lock in a fixed?

    Quote Originally Posted by Honclfibr View Post
    Check out Commonwealth mortgage. I've used them for my last three mortgages and have been very satisfied. You can see all their rates and closing cost options on the website without giving any personal info.
    Thank you! Yes, commonwealth's rates do seem very attractive, not sure if there is a catch. A 3.765 with zero closing sounds way better than the deal my broker offered me. I sent a screenshot from Commonwealth's page to my broker to see if he can match, I appreciate the pointer.

    Quote Originally Posted by number9 View Post
    What is the rate for a 15-year fixed? You might be surprised; when I had mortgages the 15-year fixed was only a couple hundred $/month more than a 30-year fixed because of the big difference in interest rates.
    Very interesting, and you got me thinking long term. A 15 year @ 3.25% for the amount I am borrowing works out to about $1k more per month than a 30 year fixed (3.765%). However, I may be able to swing it and that's really the smart move in the long run. Will keep you posted.

    Quote Originally Posted by Mustang View Post
    The interest rate sounds about right, but work your ass off to get them to eat the closing costs. Flat out tell them you're not interested unless there's $0 closing; and be prepared to actually walk. A good buddy of mine put his name/info into one of those "give me a refi quote" websites, and gave that line to every refinancer who called him. Eventually, one of them blinked, and he got his rate w/no closing costs.
    I had no idea about lenders waiving closing costs. Commonwealth seems to offer zero closing costs, so I will definitely be pushing for this with my guy.

    You guys are awesome, I am glad I asked. Will keep you all posted.

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    Last edited by xxaarraa; 01-09-18 at 05:50 AM.
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    Re: Time to refi an ARM and lock in a fixed?

    Quote Originally Posted by ctbandit View Post
    We refi'd our 30 yr(at year 28) into a 15yr, and we were able to get the same monthly payment. This was due to a lower APR(3.125 vs 4) and due to dropping the PMI of our FHA loan. Saved about 75k in interest IIRC.
    I did the same thing at the 27 year mark. Went from a 5.125% to a 3.375% 13.5 year biweekly. My payments were a decent amount more though. Didn't have the tax haven of interest either so I had to change federal tax claims from a 2 to a 1. No closing costs often comes with some sort of contract though, or at least mine did. I have to keep the note for 3 years or else I have to pay costing costs.

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    Re: Time to refi an ARM and lock in a fixed?

    Quote Originally Posted by xxaarraa View Post
    Thank you! Yes, commonwealth's rates do seem very attractive, not sure if there is a catch. A 3.765 with zero closing sounds way better than the deal my broker offered me. I sent a screenshot from Commonwealth's page to my broker to see if he can match, I appreciate the pointer.
    No catch that I've seen, the home we live in now was purchased and then refinanced through them and we're about to close on a new home next week. In every case the rate and closing costs matched what I got off the website. I haven't ever done a zero closing cost loan through them though, since we intend to keep the homes a long time so it made sense to pay a few discount points.

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    Re: Time to refi an ARM and lock in a fixed?

    Condos can be subject to different rules for refis. Don't assume that everything will be the same as advertised home refis

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    Re: Time to refi an ARM and lock in a fixed?

    Just in case you need / want to check with another source, we've used Patriot Mortgage three times and have been very happy with them - never paid any closing costs. If you do end up with a 30 year, some lenders have bi-monthly payment options. They don't lower your monthly payment but make a big dent in the total interest / years paid out.

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    Re: Time to refi an ARM and lock in a fixed?

    No skin in the game, but I used Leader Bank a couple of times and was happy with them.

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    Re: Time to refi an ARM and lock in a fixed?

    Quote Originally Posted by Honclfibr View Post
    No catch that I've seen, the home we live in now was purchased and then refinanced through them and we're about to close on a new home next week.
    I called and spoke to commonwealth and they seem very professional. I am giving my broker who I have worked with on two homes a chance to match commonwealth, just out of courtesy and respect for the relationship. If he's not able to, I intend to proceed with Commonwealth.

    Quote Originally Posted by Bonk! View Post
    Just in case you need / want to check with another source, we've used Patriot Mortgage three times and have been very happy with them - never paid any closing costs. If you do end up with a 30 year, some lenders have bi-monthly payment options. They don't lower your monthly payment but make a big dent in the total interest / years paid out.
    Very interesting. I did not know this! Yes, it seems if lenders offer booking payments twice a month, it makes a very sizable dent on the interest you end up paying over the life of the loan. Some scenarios on a quick google search pointed to as big as 4 years on a 30 year loan.

    I asked Commonwealth about this, and they said that there is not a way to shop based on this criteria, as lenders will not commit to monthly or bi-monthly servicing till after close. Is that consistent with what you have seen?

    Home mortgage is such a klugey and complicated business. So many nooks and crannies around subordination fees and points and adjustments to balance when you are trying to decide the optimal strategy for you. I am glad I started this thread!

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    Last edited by xxaarraa; 01-09-18 at 04:40 PM.
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    Quote Originally Posted by Ductard View Post
    Personally, I would just call up Shell and see which bike they have specified for Rotella.
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    Re: Time to refi an ARM and lock in a fixed?

    There's a lot of confusion between paying bi-monthly and paying bi-weekly. Paying bimonthly means that you pay half your monthly payment twice a month. This saves almost nothing over the life of the loan, all it saves you is about a month of payments over the life of the loan.

    Paying bi-weekly means that you pay half your monthly payment every two weeks. This has the effect of significantly reducing the length of your mortgage because instead of making 24 payments per year, you make 26. Essentially you make an extra two payments a year, which get applied to the principal and reduce the length of the loan. This can add up and save years, but you're doing this by making extra payments - something you can do on a loan anyway. Some people just find it convenient because you're dividing the loan up into nice even segments, especially if it aligns with a two week pay period.

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    Re: Time to refi an ARM and lock in a fixed?

    Quote Originally Posted by xxaarraa View Post
    I asked Commonwealth about this, and they said that there is not a way to shop based on this criteria, as lenders will not commit to monthly or bi-monthly servicing till after close. Is that consistent with what you have seen?
    I should think they could tell you the bank behind their rates, and you could do the homework? Our mortgage is with SunTrust and they definitely advertise a "payment accelerator" option. Our first mortgage was with GE Capital (also via a broker) and they too had a bi-monthly program. To me it sounds like maybe the person just didn't know and didn't feel like finding out.

    I have the amortization schedule somewhere and it's knocking like 5+ years and $80K off our final payment.

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    Re: Time to refi an ARM and lock in a fixed?

    Quote Originally Posted by Honclfibr View Post
    There's a lot of confusion between paying bi-monthly and paying bi-weekly. Paying bimonthly means that you pay half your monthly payment twice a month. This saves almost nothing over the life of the loan, all it saves you is about a month of payments over the life of the loan.

    Paying bi-weekly means that you pay half your monthly payment every two weeks. This has the effect of significantly reducing the length of your mortgage because instead of making 24 payments per year, you make 26. Essentially you make an extra two payments a year, which get applied to the principal and reduce the length of the loan. This can add up and save years, but you're doing this by making extra payments - something you can do on a loan anyway. Some people just find it convenient because you're dividing the loan up into nice even segments, especially if it aligns with a two week pay period.
    This. When I budget monthly costs with my biweekly I multiple the mortgage payment by 26 and divide it by 12 to get my average monthly payment.

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