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

[The Motor Court Company]

I rather lock in as low as interest rate as possible, then doing potentially infinite refis as the interest rate resets. Obviously when the music chair stops, you can pay down the principal all at once. But then a lot of money is tied to the house.

Since you are paying less interest, more can be funneled into principal payments.  That's what I'm thinking.  Yes dangerous for people not financially mature, or stretching their budget to afford a home price out of their range, but if you have the funds to pay your principal down to zero, shouldn't the lowest interest/month product be first choice?

 

[irvinehomeowner]

2nd con is if for some reason the LIBOR jumps above 4% (unlikely but possible).

Is there a prepayment penalty?

For someone like ps9 who can manage their funds, this is probably a good match, and for anyone who may sell before the 10 years are up.

I wonder how stringent the qual process is.

 

[The Motor Court Company]

that's my point. When LIBOR jumps, you can pay back the principal but a lot of money will be in the house. At that point you better wish the house will appreciate faster than other investment vehicles.

locked in a cheaper rate also gives you flexibility.  you can turn the house into a rental and have tenants pay the mortgage for you. lower monthly payment = easier to break even.

2nd con is if for some reason the LIBOR jumps above 4% (unlikely but possible).

Is there a prepayment penalty?

For someone like ps9 who can manage their funds, this is probably a good match, and for anyone who may sell before the 10 years are up.

I wonder how stringent the qual process is.

 

[Irvinecommuter]

that's my point. When LIBOR jumps, you can pay back the principal but a lot of money will be in the house. At that point you better wish the house will appreciate faster than other investment vehicles.

locked in a cheaper rate also gives you flexibility.  you can turn the house into a rental and have tenants pay the mortgage for you. lower monthly payment = easier to break even.

2nd con is if for some reason the LIBOR jumps above 4% (unlikely but possible).

Is there a prepayment penalty?

For someone like ps9 who can manage their funds, this is probably a good match, and for anyone who may sell before the 10 years are up.

I wonder how stringent the qual process is.

A couple of thoughts

1)  I'm not as much of a gambler on rates as most others here.  With the rates so low, I think it makes a heck of a lot of sense to lock in the rates for the next 30 years and forget about it.  Yes, I can save some money in the short term but rates are very likely to go up in the next year or two...then I  have another 28 years to stress about.

2)  I think I/O and adjustable rate loan make a lot more sense for investment properties or if you are flipping homes.  For my primary residence, I will lock in the rate and know exactly much I need to allocate a month.

 

[irvinehomeowner]

A pro is obviously better cashflow.

The LIBOR rate is a strange index as it doesn't reflect US economy as much. Is it so low right now because of the turmoil in Europe? Do you expect it to stay that way for the next 10 years?

 

[ps99472]

I doubt I'll take it to the full 10 years, I'm thinking 1, 2 years tops.  Just for comparison to a 5/1 ARM at 2.5% versus this 1 month LIBOR ARM IO at 1.75%, if rates are stable I'll save about $400 per month in interest. 

Wanna take your monthly mortgage below a thousand?  Cheaper than Montessori

 

[irvinehomeowner]

Is this another 55% LTV loan?

Unlike you, my 99%er status has a much higher LTV but if you go first, tell me how the process is and I'll follow.

Even at IO, my mortgage will probably still be higher than TWO Montessori tuitions (thank goodness those days are over).

 

[rkp]

I doubt I'll take it to the full 10 years, I'm thinking 1, 2 years tops.  Just for comparison to a 5/1 ARM at 2.5% versus this 1 month LIBOR ARM IO at 1.75%, if rates are stable I'll save about $400 per month in interest. 

Wanna take your monthly mortgage below a thousand?  Cheaper than Montessori

5/1 ARM includes principal payments.  Your real savings is about $40 per month per $100K borrowed. 

I am with others.  For my primary, I want to be stress free.  For my investments, this makes a ton of sense.

 

[ps99472]

I'll look into it after my refi closes, the example loan in the pic I uploaded shows a 70% LTV, also need to factor in impounds, if any.  Probably have to add on closing fees, if you tack on a 1/4% to account for a no cost refi, will decrease monthly interest savings to about $275-300

 

[ps99472]

I doubt I'll take it to the full 10 years, I'm thinking 1, 2 years tops.  Just for comparison to a 5/1 ARM at 2.5% versus this 1 month LIBOR ARM IO at 1.75%, if rates are stable I'll save about $400 per month in interest. 

Wanna take your monthly mortgage below a thousand?  Cheaper than Montessori

5/1 ARM includes principal payments.  Your real savings is about $40 per month per $100K borrowed. 

I am with others.  For my primary, I want to be stress free.  For my investments, this makes a ton of sense.

I just look at the interest part of my 5/1 ARM P&I payment.  Comparing apples to apples, right?

 

[rkp]

I doubt I'll take it to the full 10 years, I'm thinking 1, 2 years tops.  Just for comparison to a 5/1 ARM at 2.5% versus this 1 month LIBOR ARM IO at 1.75%, if rates are stable I'll save about $400 per month in interest. 

Wanna take your monthly mortgage below a thousand?  Cheaper than Montessori

5/1 ARM includes principal payments.  Your real savings is about $40 per month per $100K borrowed. 

I am with others.  For my primary, I want to be stress free.  For my investments, this makes a ton of sense.

I just look at the interest part of my 5/1 ARM P&I payment.  Comparing apples to apples, right?

then you have a big loan with 55% LTV, you are def 1%

 

[usctrojancpa]

I doubt I'll take it to the full 10 years, I'm thinking 1, 2 years tops.  Just for comparison to a 5/1 ARM at 2.5% versus this 1 month LIBOR ARM IO at 1.75%, if rates are stable I'll save about $400 per month in interest. 

Wanna take your monthly mortgage below a thousand?  Cheaper than Montessori

What's the LIBOR margin on the 1-month LIBOR ARM IO loan?

 

[ps99472]

I doubt I'll take it to the full 10 years, I'm thinking 1, 2 years tops.  Just for comparison to a 5/1 ARM at 2.5% versus this 1 month LIBOR ARM IO at 1.75%, if rates are stable I'll save about $400 per month in interest. 

Wanna take your monthly mortgage below a thousand?  Cheaper than Montessori

What's the LIBOR margin on the 1-month LIBOR ARM IO loan?

1.625%

 

[usctrojancpa]

I doubt I'll take it to the full 10 years, I'm thinking 1, 2 years tops.  Just for comparison to a 5/1 ARM at 2.5% versus this 1 month LIBOR ARM IO at 1.75%, if rates are stable I'll save about $400 per month in interest. 

Wanna take your monthly mortgage below a thousand?  Cheaper than Montessori

What's the LIBOR margin on the 1-month LIBOR ARM IO loan?

1.625%

Who offers that one?  Alyson?  If so, I'm all over it. 

 

[The Motor Court Company]

checked with the escrow company earlier this afternoon. loan was funded, old lender was paid off and recorded with county office. now my next adventure with Cardinal is to figure out who/where to pay my mortgage; they are selling my mortgage and I will have a different lender to pay back.

so Euro 1.1 billion QE did not do much to the rates. Greek anti austerity party victory did not either. Fingers crossed for the Fed statement tomorrow. Hopefully they don't drop a bomb that will negatively affect mortgage rates.

 

[ps99472]

I doubt I'll take it to the full 10 years, I'm thinking 1, 2 years tops.  Just for comparison to a 5/1 ARM at 2.5% versus this 1 month LIBOR ARM IO at 1.75%, if rates are stable I'll save about $400 per month in interest. 

Wanna take your monthly mortgage below a thousand?  Cheaper than Montessori

What's the LIBOR margin on the 1-month LIBOR ARM IO loan?

1.625%

Who offers that one?  Alyson?  If so, I'm all over it. 

Not sure if she has an IO product, I'll email her.  Found the offer thru a letter Morgan Stanley sent me, found an online copy here:
http://luxuryloftsnyc.com/uploads/3/4/4/1/3441678/libor_loan.pdf

Googlefu came up Morgan Stanley being sued for manipulating LIBOR rates or something, anyone remember that?  From 2012.

 

[Goriot]

10 Year Treasury Down 5% to 1.73% near 52 week low.  Do you think it might go down further with growing deflationary pressure and all the turmoil in the global market? My refi rate on float. 

I might just lock the rate now.

 

[Irvinecommuter]

10 Year Treasury Down 5% to 1.73% near 52 week low.  Do you think it might go down further with growing deflationary pressure and all the turmoil in the global market? My refi rate on float. 

I might just lock the rate now.

Just lock it and forget about it.  There are always what ifs and could bes.  The rate is insanely low now. 

 

[ps99472]

So Morgan Stanley emailed back, it is for jumbo loans only, margin is 1.875% (1.75 for <60%LTV, FICO>740), a no cost refi with enough credits to cover closing costs will increase rates to 2.25%.  No impounds.

Alyson also has an IO product, details to come.

 

[The Motor Court Company]

how does MBS pricing look now? After the Fed statement and another 200 points drop in Dow