Thursday, June 28, 2012

Missing the boat on mortgage rates

I remember when we refinanced our mortgage back in 2002. Rates were at "historic lows" and I clearly recall being told that "it will never get any better than this."

That rock-bottom rate was 5.85% on a 30-year-fixed loan.

Fast forward to today when that rate sounds astronomical. I cringe every time I hear some financial guru say that if you haven't refinanced by now, you're crazy. I cringe not because I'm crazy, but because I'm broke.

It seems illogical to me, but we can't refinance. I've tried. Too much debt, I'm told. Duh. I've talked through our situation with the refinancing department of Wells Fargo, who holds our current mortgage. I've pointed out that we have never been behind on our mortgage, that we have more than $100,000 in equity in our home - about half its value - and have been in this home for 17 years. And I've pointed out that we'd be better able to handle our bills if we had that little bit of breathing room a lower payment would afford. They didn't buy it.

I tell myself that our interest rate really is incredible when compared to years past. It's just that it could be better. A lot better.

Debt really messes things up, you know?

Sarah

11 comments:

  1. We refinanced in 2011, and the best we could do was 5.25%. Our loan to value ratio was too high. It was still better than the over 7% we were paying.

    Property values in our neighborhood have plummeted, and once again, we are underwater on our mortgage. Add in that we pay over $625 a MONTH just for escrow. There isn't anything we can do.

    We have an FHA loan, and have to pay PMI for 5 years. So January 2016 (unless our loan to value ratio gets better), I can finally get rid of that.

    Yea...it all sucks. I hear ya.

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    1. Ugh, PMI. We paid that for our first house and it made me sick every single month. Hope your neighborhood recovers enough for you to get rid of that monkey earlier. Bleh.

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  2. It does! The ability to refinance and take advantage of opportunities like that is a great reason to get rid of that other debt! Those low rates aren't going away any time soon. And lower mortgage rates aren't the only benefit... once your money is working for you rather than against you, it starts making its own money and that is quite magical. You don't have to work as hard to increase your savings.

    We're still at 4.75% (after two no-fee refinances) because running the numbers the cost to do a refinance doesn't make sense in most of the scenarios I run. (We may have to move in a couple of years for work.)

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  3. Keep at it sister. We were turned down by a bank also. Us Bank held our mortgage and we had a very high debt to income ratio. So we refinanced at the credit union 3.36 it was hell getting it done, but like you we had over 100,00 in equity and we had never been late on the mortgage. Go try, all they can say is no and then try again next year and the next!

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  4. Do you have mortgage brokers in the US? If so, try contacting one and see if they can negotiate a better rate for you.

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  5. Try a mortgage broker. Is your credit score good? Yes, you have a lot of debt, but you also own quite a bit of your home so that's a big plus.

    We are considering refinancing again, as the rate we were quoted was 2.875%. Insane, really, but it will save us $400 a month, although it will add another two years. We are in good shape for a refi, although it is such a hassle to do.

    I hope you are able to find someone to refi for you. It really will save you a lot of money.

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  6. We just got a 3.75% rate on our new house and that is the lowest Ive ever seen in my entire life! You may want to check with other mortgage companies about refinancing as they may have other programs or different criteria than Wells Fargo. And you are right--debt does mess things up!

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  7. I just wanted to thank you for putting your journey out here I have just started mine. I read through your archives last night and it made me go through the credit cards and see if we could get a better deal. I found we were paying 19.99 on a credit card when we had some balance transfers that would at least cut that for a year so at least the money going to the cards will pay off the balance and not the interest. Thanks!

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  8. Have you tried a credit union? Our bank wouldn't consider refinancing our house - said we didn't have enough equity. We transferred all our banking to a credit union and were able to refinance in January at 3.35, I think, on a 15 year. I'll never go back to a bank again - we just love the credit union!

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  9. I think your proposal makes perfect sense but I think wells Fargo doesn't want to lose your current amount of interest...the jerks!

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