How low will mortgage rates go?

[Anonymous]

Looks like mortgage rates are falling again. I’ve got a jumbo loan at 4.25%, would love to refinance but feel like it’s only worthwhile if I can get a rate at least 3.25%. Is this a pipe dream? Anybody think rates will go that low?

[Anonymous]

Definitely not soon--maybe once we're in the throes of the next recession when it's the only tool left for the Fed to throw at it. 4.25% is nothing to sneeze at, though, and you wouldn't do meaningfully better today without paying a lot of points or moving to an ARM.

[Anonymous]

We have a jumbo at 4.5 and are in the process of refinancing to a 3.875. We are getting a credit that covers almost all the closing costs so we are only paying $200 out of pocket to refi. We are staying with the same bank. Call your bank and see what they can offer. It is worth a call.

To figure out if it’s worth it, compare how much you will pay in interest each month vs what you pay now and see what your break even is on the cost to refinance. If it’s 6 months to break even and you plan on being there a long time, then I’d do it even if it’s now a really low rate like you want.

[Anonymous]

*not a really low rate. Sorry for the typo.

[Anonymous]

We bought in 2016 with a 3.35% rate. So who knows. maybe they will dip again.

[Anonymous]

Anonymous wrote:We have a jumbo at 4.5 and are in the process of refinancing to a 3.875. We are getting a credit that covers almost all the closing costs so we are only paying $200 out of pocket to refi. We are staying with the same bank. Call your bank and see what they can offer. It is worth a call.

To figure out if it’s worth it, compare how much you will pay in interest each month vs what you pay now and see what your break even is on the cost to refinance. If it’s 6 months to break even and you plan on being there a long time, then I’d do it even if it’s now a really low rate like you want.

That is a great rate--which bank? I haven't yet seen anything that low but a refi instead of a HELOC would make sense for us if I could find it. Our current bank doesn't get below 4% without paying points, unfortunately.

[Anonymous]

My feeling, having lived dropping rates before, is on a refi always do a true no cost refi (where you get a credit, or negative points, not where you are rolling costs into the loan balance) and then do it anytime you can drop your rate a 1/4 percent or more (for free).

Then you candecide whether to pay extra principal or switch at some point to a shorter mortgage.

[Anonymous]

Anonymous wrote:My feeling, having lived dropping rates before, is on a refi always do a true no cost refi (where you get a credit, or negative points, not where you are rolling costs into the loan balance) and then do it anytime you can drop your rate a 1/4 percent or more (for free).

Then you candecide whether to pay extra principal or switch at some point to a shorter mortgage.

+1. This is what we did on the way down last time around--we refinanced four times in the end. Two were no-cost refis and two had fees but the rate dropped enough to break even in less than 18 months. (In those two cases we also had the no-cost option but the rate was higher; in retrospect I'm glad we paid the fees for the lower rate but it wouldn't have made sense with a longer break-even period.)