DU Mortgage Debtors: What effect would a 4.5% rate have on your situation?

[Kurt_and_Hunter]

Whatever your current mortgage is, what effect would it have on you if it simply dropped to 4.5%.

(The question is of most interest to those in financial stress. Current re-fi rates are below 4.5% but many of those who would most benefit are those who cannot easily qualify to re-fi. Also of keen interest to folks who got "no doc" re-fis during the boom which were typically high-rate.)

How much more would you have to spend each month? Would you spend any of it? Etc.

[Liberal_in_LA]

1. I'd save $150 or more a month, I think

[DFW]

2. None and none

I suspect that most people are in a different situation...........

[old mark]

3. Not much. Our monthly payment is so low, it was not worth the cost to re-finance it.

We will be paid off by January or so anyway, and it turns out our house is about worth at least 50% more than we paid for it...


mark

[sinkingfeeling]

4. Less than $150 a month.

[Davis_X_Machina]

5. None. I could re-fi at that right now...

...except I wouldn't qualify. FICO.

The rate isn't the whole picture, not by a long shot.

[hedgehog]

6. We started out 26 years ago with a 12.5% mortgage. We've refinanced

a couple times to get the payment down, and finally took out a 10 year mortgage at 5% that we will clear a couple of years from now. Part of the reason we're still paying the mortgage is that when we refinanced, we borrowed a little extra to pay off other loans. If our mortgage payment had been this low from the start, we'd have paid it off 15 years ago and never needed to take out any other loans!

[zipplewrath]

7. More of my payment would go towards principal

Just dropping the interest rate doesn't change anything. It would probably shorten the term of the loan however. Alternately, you could adjust the rate, and reset the time over which the payments were spread. This could either lower the payments, or accelerate the rate of repayment.

Some people might see a reduction in payments because they are also paying for insurance and taxes which get adjusted annually, so their mortgage company would probably drop the amount of their monthly payment, but probably not until around January.

I suspect you are asking because of the suggestion that Fannie and Freddie offer a interest rate reduction as part of a stimulus effort. That would be vastly more effective if it was a full refinance such that the 30 year clock would be reset. Folks would have half a shot at ultimately paying it off, and they'd do so at one of the lowest interest rates imaginable.

[slackmaster]

8. About $12 less per month in interest

:hi:

[Fuzz]

9. We're at 5 right now, so not that much.

[corkhead]

10. it would be HUGH!

I am not planning on moving any time soon so over the life of my mortgage it would be the equivalent to a write down of many many thousands of $

[leftofcool]

11. none and none

[sandnsea]

12. It would mean everything for those stuck with ARMs

They are giving people 4.5% mortgages, but the problem is that they're doing interest only and ARMs again, so everybody will be right back in the same mess in 5 years.

[Roland99]

13. I would save $130/mo. That's about 2 weeks' worth of gas and tolls for me and my gf

[Statistical]

14. Why would I want my mortgage to go up a half point?

:)

[Wickerman]

15. Re-fied last year so no real impact

after paying closing. Wrapped the savings into principle paymants to lower the term of th eloan.

I think most who can refi, have.

[Name removed]

16. Deleted message

Message removed by moderator. Click here to review the message board rules.

[MindPilot]

17. About ten or fifteen bucks

[madrchsod]

18. my adjustable dropped to 3.5% ....

and i saved about 75 dollars. the bank is making around 2% on my loan.

[madville]

19. Not much difference really, already fixed at 4.75%

The bigger issue is people went above and beyond their means with little/no room for error. Many should not have been approved for financing to begin with(the banks, government and buyer are all at fault in this one). Real Estate got crazy expensive fast and people were panic buying with easy financing. There is also the extreme shortage of affordable housing in good locations but hopefully prices will continue to fall.

They should limit lending to fixed-rate conventional loans, with at least 10% down required, the down payment shows someone is capable of budgeting and saving and handling the responsibility of a home mortgage.

[SoCalDem]

20. Eons ago, it took 20% down and PITI could not be more than 25% of ONE income (takehome)

wife's income (or second smaller income) was not included in the eligibility..Defaulting was hard to do back then.

[hobbit709]

21. Diddly on mine.

The actual payment on the mortgage is only $290/mo. the next $290 goes to escrow for taxes and insurance. Plus it's almost paid of-about 6 months to go.