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We have 4 years left on our 5 year term of 5.1%….there is still 208k left on our mortgage, the table looks like we should have it paid off in 18 years.

With rates the way they are, how do I figure out what point it makes sense to pay the penalty and re-negotiate my mortgage rate early of the renewal?

This is a Canadian question, and RBC is the lender if that helps.

Given that you have 4 more years at the current, low interest rate and would then have only 14 years left on the mortgage, the best answer likely is to NOT consider refinancing at all during the fixed rate period. Even if you were able to get a lower interest rate, the payment of penalties to refinance along with additional closing costs would require a significant amount of time to recover these expenses at the lower rate. A much better solution would be to apply the closing cost money and penalty money, along with any other funds you may find available, to make extra principle reduction payments. Even a modest extra amount of 5% to 10 % of the total monthly payment paid each month can reduce your eventual payoff considerably. With not much effort and consistently paying a little more toward principle each month, you could have about 10 years or even less left on this loan when the fixed rate ends. If the rate resets to a higher level, the amount remaining will be significantly smaller, thus the total remaining interest paid would not be a major concern. And if you did decide you wanted to refinance at that time, your options are much better as you would have lots of equity and the term would be very short, making the loan attractive to many lenders.

Trying to determine the best time to buy - would like to have 20% down to avoid private mortgage insurance, but not sure if its worth waiting if the market makes a turn around and interest rates go back above 6%
I realize you cant really predict this, but what are the experts saying?

Rates are going up. I suspect by spring, rates will be back into the 6's.

Being waiting for the bottom of the market might save a few thousand dollars, but people who waited for the bottom of the interest rates will save much more over the life of the mortgage.

Will mortgage rate fall below 5% in the new year, will inflation raise greater than 3% will the US dollar ever match the British pound what do you think? Serious educated discussion please.

no way! i don't think the mortgage rate will drop below 5%.

Looking to buy a house in Virgina and am shopping around for low mortgage rates. Anyone know of any low rates?

All banks just about offer the same products and loan programs with the different qualifications in each of their programs.

No one can tell you the best rate for anyone individual. If all you are interested in is the best rate possible you can go to your local paper, they are publiched each day by participating banks.

Your interest rate is based on your credit score and how well you have paid your consumer debt over time.

In order to find out the type of loan programs you are qualified for you will have to fill out a loan application, preferrably with a mortgage broker, which you can find one in your local telephone book.

He will fill out this application, which takes awhile so grab your favorite beverage and sit down. Once you have completed the application, he will then run your credit report which will have your credit scores. These credit scores will determine your interest rate.

The amount of your monthly debt payments you are required to pay as per your credit report and the amount of mortgage you can take on based on your income will determine the amount of house you will be able to purchase.

When you speak with the mortgage broker you will need the following documents to complete the loan application

#1 One month of pay stubs for each person that will be on the mortgage.

#2 Six months bank statements from each bank in which you bank as well as statements from any 401K plan from your place of employment.

#3 Two years of federal income tax along with the W-2 that match.

Once he has all that he need he will be able to tell you the loan programs you are qualified for, the approximate interest rate and monthly payments

He can then issue you a pre-approval letter so you can purchase a home. In this pre-approval letter will be the amount of house you are qualified to purchased.

Once he gives you this pre-approval you may now find a real estate agent to find yourself a home or he might have a referral.

Once you have found a home the real estate agent will then prepare a contract for you and the seller to sign.

Your mortgage broker will now order an appraisal to show proof of the property value.

The mortgage broker might ask for additional information or documentation, don't get all up tight this is normal, just supply the information or find the documents needed.

After the appraisal has been completed you will be called by your mortgage broker to sign your loan docs so you can take possession of your new home.

I this has been of some use to you, good luck

"FIGHT ON"

We would like to refinance our current mortgage and I was hopeful that the result of the Fed rate cut would be a drop in the mortgage rates. However, it seems like mortgage rates only dropped by about 1/4 % point (I was hoping to go down to about 5% on a 30 year fixed rate with no points with an excellent credit score). What determines whether mortgage rates fall and how much?

Fed rates are only very short term loans from one bank to another.
30 year mortgages are loaned based on long term data. What does the investor believe the inflation rate will be over the next 7 to 10 years (the life of most loans before they are paid off).

If the fed rate cut leads lenders to believe the inflation rate will be low then they will lend at lower rates. They use long term bonds and other data to guess at this.

My husband and I are first time home buyer's. We didn't kow if it was better or worse to let several banks run pre-approvals. I wasn't sure if it would hurt our credit for a bunch of diffrent people to pull up our history. I want the best rate but I don't want to harm our rating. What is the best route to take when looking for a mortgage?

Why don't you just ask for their rates without having them run your credit history? That's what I do.

My sister has an adjustable rate mortgage. Over the past year her mortgage payments have gone up several times. Now her monthly mortgage payment is $2,235 for a 2000 sq ft home in a nice area. No new construction has gone up..so I dont understand…

I was under the impression if you paid your bills on time your monthly payment would adjust down not up.

My condo (2500 sq ft also in a very nice area) payments have gone down, but her payments keep rising..why?
DJM: You hit on something that required a phone call to my sister. I pay $50 over my monthly payment while my sister simply pays the monthly payment…

Great answers here. So far only one answer had me pulling out my hair because the person used a lot of jargon…

in an ARM loan, once a year the money markets are accessed to determine the cost of the particular reference interest rate. Might be yield to maturity of 10 year government bonds, for example, or average cost of funds at all S&Ls in the western US.

to that percentage one adds the amount specified in the contract … 375 basis points, for example [which means 3.75% since 100 basis points = one percent].

This becomes the new interest rate on the loan.

Then an amortization table is consulted with the remaining principle balance, remaining life, and the new interest rate. This determines the P&I portion of the payment.

The taxes and insurance portion is approx equal to 1/12 of the most recent property tax and insurance bills received and those two portions are the total months bill.

***
So if your sister benefitted from low rates over the past several years and the new calulated rate is higher, her monthly payment goes up.

Monthly payments also go up if property taxes or insurance skyrocket [as is happening in Florida atm].

does this help?

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The Fed has announced they may cut interest rates in the middle of March. I am currently working on getting a mortgage for a property I will close in mid-April. Should I wait to lock the rate until after the Fed announces the cut?

With the threat of inflation scaring the bond traders these days, another rate cut by the Fed would likely cause mortgage rates to rise. Don't get greedy. Cut your best deal now.

I would like to hear your take on why this is happening . For 3 straight weeks, interest rates have been dropping on 30yr mortgages. My rationale : I think they are falling because the mortgage lenders do not have enough demand but an over-abundence of capital from foreign countrys as the USA keeps buying more imports than selling the world stuff, and its causing another imbalance where the countrys are running out of places to invest.I also think it's further proof the housing bubble has popped…..I suppose many here will say it's going to be good for housing as there is no 'bubble'. I'd still like to hear from you.

On a very fundamental basis, it is that mortgage demand has dropped. Rates can only decrease if the mortgage lenders (1) have access to cheaper funds (2) willing to squeeze their margins.

Regardless of the trade imbalance we currently have, mortgage lenders have money to invest in mortgages and are lowering rates to do it.

It is a further sign that a recession is right around the corner. When the yield curve inverts (longer rates are lower than short term rates), a recession is coming. Just in time for the 2006 elections!