How low can we go? 30 yr fixed at 3.75% with no fees...

NEW -> Contingent Buyer Assistance Program
And Lo, the 5th Seal was opened. The pale horseman read aloud "200+ Non Farm Payroll Jobs Created!" and thus there was much wailing and gnashing of teeth. Mortgage Loan Officers tore their garments, dressing in sackcloth and ashes saying "why, why o Lord didn't we lock everyone in yesterday....!"

This too shall pass. If anyone thinks the Fed is going to perform any meaningful tapering, I've got a nice bridge in New York City that I'd like to sell them.

My .02c
 
Zillow update:  primary residence, FICO 760+, LTV 60%, SFR, Jumbo, impounds?

5/1 ARM 2.625% w/$7000 credit

30 yr 4.375% w/$7000 credit

7/1 ARM 3.125% w/ $8000 credit

5/1 ARM trending down?  30yr is moving sideways
 
ps9 said:
Zillow update:  primary residence, FICO 760+, LTV 60%, SFR, Jumbo, impounds?

5/1 ARM 2.625% w/$7000 credit

30 yr 4.375% w/$7000 credit

7/1 ARM 3.125% w/ $8000 credit

5/1 ARM trending down?  30yr is moving sideways
Click to expand...

How soon can one refi after purchasing a home??
 
ps9 said:
Zillow update:  primary residence, FICO 760+, LTV 60%, SFR, Jumbo, impounds?

5/1 ARM 2.625% w/$7000 credit

30 yr 4.375% w/$7000 credit

7/1 ARM 3.125% w/ $8000 credit

5/1 ARM trending down?  30yr is moving sideways
Click to expand...

4.375% seems kind of high...
 
ps9 said:
Zillow update:  primary residence, FICO 760+, LTV 60%, SFR, Jumbo, impounds?

5/1 ARM 2.625% w/$7000 credit

30 yr 4.375% w/$7000 credit

7/1 ARM 3.125% w/ $8000 credit

5/1 ARM trending down?  30yr is moving sideways
Click to expand...
Easy call...5/1 ARM all the way.  The 1-year LIBOR which will determine your annual floating rate is slowly bleeding lower.  If your ARM reset today, your rate would be 2.875% today.  The 1-year LIBOR is indirectly based upon the Fed Funds Rate not what the 10-year is doing or if the Fed will taper and the Fed won't be increasing interest rates for a long while.
 
For those quotes, you have to be willing to impound, or the cost difference is significant.

Once the application is in, you'll also find that many Jumbo quotes are for "true jumbos" - any loan over $625,500 - not simply "loans over $417,000". It's an important distinction to ask about.

The lenders may also require an auto pay from the bank offering those terms. For example, you can walk into a Wells Fargo and get those rates as listed on-line through Zillow directly from the bank. It might take 90 days to close, but you'll get the deal. You can go on-line to lender ABCDEFG, and get that rate, but you have to auto pay with a Wells Fargo account. 

ARM loans are so competitive today and with 2/2/5 caps, they make great sense. A 3.0% 7/1 ARM no cost jumbo refi (estimating for example purposes...) is a far better deal than a 4.375% 30 fixed.  7 years at 3.0 with a possible 8th year at 5, 9th year at 7.0% etc, you break even in a bit over 10 years. This assumes you're going to see significantly higher rates.

If we start seeing mortgage rates over 7% for ARM loans, I don't care if you have a 3.50% 30 fixed, the economy will be in such peril that anyone and everyone could find themselves caught in a home price deflationary swirl, leading to a repeat of 2006-2008. The question then is, does rate in years 10-30 make a difference? For some people it does, and that's OK. For other's there are great options out there.
 
i have a 30 year fixed at 3.75, i redid the amort over the first five years of the loan using the 5/1 ARM rate 2.65% (making sizable lump sum payments at the end of every year for the first five years under both scenarios). after the first five years, i will have paid an extra 19K in interest (net of tax benefits) under the fixed 30 year vs the 5/1 ARM. Saving 19K over the first five years wasnt worth the peace of mind of having the flexibility of the 30 year. Im planning on paying off the loan in the first 10 years, so at most i would save 40K over 10 years (interest will be lower in years 6-10). but id rather have the flexibility of the 30 year fixed in the event that a life changing event happened and derailed my 10 year plan.
 
Tyler Durden said:
qwerty said:
i have a 30 year fixed at 3.75, i redid the amort over the first five years of the loan using the 5/1 ARM rate 2.65% (making sizable lump sum payments at the end of every year for the first five years under both scenarios). after the first five years, i will have paid an extra 19K in interest (net of tax benefits) under the fixed 30 year vs the 5/1 ARM. Saving 19K over the first five years wasnt worth the peace of mind of having the flexibility of the 30 year. Im planning on paying off the loan in the first 10 years, so at most i would save 40K over 10 years (interest will be lower in years 6-10). but id rather have the flexibility of the 30 year fixed in the event that a life changing event happened and derailed my 10 year plan.
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5 years better than chairman mao and josef stalin?


I think the important distinction you have above is that you always knew that you wanted to pull up and move prior to that 30 year period ending.  Not everyone has that desire - for example, i took out a loan on my first home in 2001, and took out a 30 year fixed.  I just refinanced it for a 15 year fixed at 4.125, since i know the tenant will pay it off.


I don't have the time to round up every loose end that the loan processors, underwriters and bank ask for.  So i would rather have the peace of mind of the fixed rate, and re-fi as it becomes prudent.
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yeah the plan is to move to SD at some point and i dont like having debt. just something about having debt outstanding that drives me nuts.  i dont always do the best thing from a pure financial perspective, if i did i wouldnt have gotten married and had a kid. so the plan is to have the house paid at 46 the we dont have to be slaves to anyone from then on.
 
ARM loans are definitely not for everybody.  You need to be financially savvy and take that saved capital and invest it active to obtain a higher return.  You also have to periodically evaluate the credit markets and where you think the index that drives the adjustment (1-year LIBOR rate) is going to be going in the intermediate term.  You also have to consider how long you expect to be in a home (on average people sell their homes in 6-7 years so a 7-year ARM is perfect for that situation).  I'm a bit less risk adverse than most people so I'm willing to tolerate the interest rate risk as long as I'm getting compensated for it.  Having a 30-year fixed loan is nothing more than paying for additional insurance and for some people it's worth for the extra piece of mind.
 
USCTrojanCPA said:
ARM loans are definitely not for everybody.  You need to be financially savvy and take that saved capital and invest it active to obtain a higher return.  You also have to periodically evaluate the credit markets and where you think the index that drives the adjustment (1-year LIBOR rate) is going to be going in the intermediate term.  You also have to consider how long you expect to be in a home (on average people sell their homes in 6-7 years so a 7-year ARM is perfect for that situation).  I'm a bit less risk adverse than most people so I'm willing to tolerate the interest rate risk as long as I'm getting compensated for it.  Having a 30-year fixed loan is nothing more than paying for additional insurance and for some people it's worth for the extra piece of mind.
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You could pay more per month.
 
Irvinecommuter said:
USCTrojanCPA said:
ARM loans are definitely not for everybody.  You need to be financially savvy and take that saved capital and invest it active to obtain a higher return.  You also have to periodically evaluate the credit markets and where you think the index that drives the adjustment (1-year LIBOR rate) is going to be going in the intermediate term.  You also have to consider how long you expect to be in a home (on average people sell their homes in 6-7 years so a 7-year ARM is perfect for that situation).  I'm a bit less risk adverse than most people so I'm willing to tolerate the interest rate risk as long as I'm getting compensated for it.  Having a 30-year fixed loan is nothing more than paying for additional insurance and for some people it's worth for the extra piece of mind.
Click to expand...

You could pay more per month.
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I'm willing to take that risk for the benefit that I'm getting today (lower monthly payment and more of my payment goes towards the principal).  Time value of money is important for me as inflation is higher than it's reported to be.  Besides, I can easily get a 4-5% annual return on the savings from the lower payments so if for the slight chance that rates do skyrocket I'll just pay down or pay off the loan.  I never got an ARM loan without having a Plan B if rates spike.  ;)
 
USCTrojanCPA said:
I'm willing to take that risk for the benefit that I'm getting today (lower monthly payment and more of my payment goes towards the principal).
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That's one of big things I like about an ARM that I didn't know about until I looked at an amortization table... paying down the principal faster.
 
irvinehomeowner said:
USCTrojanCPA said:
I'm willing to take that risk for the benefit that I'm getting today (lower monthly payment and more of my payment goes towards the principal).
Click to expand...
That's one of big things I like about an ARM that I didn't know about until I looked at an amortization table... paying down the principal faster.
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that is not ARM specific, that is just a function of the lower interest rate.
 
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