According to recent media reports, leading Senate Republicans are looking to spice up the economic stimulus plan by pushing 30 year mortgage rates down into the 4% range. Details of the plan aren’t yet available, but:
Presumably, borrowers would be required to meet stringent loan requirements of the kind the lending industry reinstated in the aftermath of the meltdown from subprime mortgages, which required little documentation of income or other evidence of ability to pay.
It’ll be interesting to see how this develops. While we currently have a 15 year mortgage that we’ve been paying down ahead of schedule, it would be awfully hard to turn down a 30 year fixed rate mortgage at 4%. Talk about an inflation hedge!
I would refinance in a heartbeat
I’m signing the closing papers next Friday on a 4.375% 30-year fixed. I had to pay a point up front, but I was able to drop from a rate around 6%, so I’m happy. (The lowest of my three credit scores is 782.)
I hope for everybody out there that rates drop to 4% or lower, but I’ll sure be kicking myself a little!
I just refinanced from a 30 year @ 6.75 (w/ 22 years remaining) to a 15 year @ 4.75. My credit is impeccable, and I’m pretty happy with the results. The two percentage point difference will repay the closing costs in a about a year.
My wife and I also just closed on a 4.97% 30 year fixed. The process was very much like our original purchase 13 months ago. We have a 70/30 LTV (our home value actually increased $16k), 800+ credit score, and only 19 months at current employment but currently laid off. I Just had to show them I had no other debt and a quick call to the boss saying he planned to bring me back eventually. The lay-off benefits are enough to cover the bills.
If the rates drop to 4%, we may have to consider yet another refinance, depending on fees.
My husband and I closed on a 30 yr fixed at 5.375 back in November. We were quite happy with that as we had to close in December and couldn’t wait for further drops (we already had the move date set). Historically those are incredibly low rates. I do hope they continue to drop – I still have a home in another city I’m trying to sell – the lower the rates go the quicker it should sell.
I really think credit score is the sole determining factor in receiving credit. My husband had only been at his job for 2.5 years and I am not working and we had a credit score over 800 – no problems getting the best loan rates. So don’t fret if you don’t totally fit every suggested requirement for a good credit score. Just pay your bills, on time, every time, and keep your debt ratio low and you’ll have a high score. If your debt ratio score isn’t low (or within reason) you won’t be approved for an acceptable terms loan in this economic climate anyway regardless of credit score.
I agree with the other commenters who believe very few people being able to get approved for these very low rates. If you are refinancing, you still may have a problem because the value of your home may have gone down significantly, meaning even if you havd 20% down to begin with, depending how much principal you paid on the loan, you may still need to cough up some cash to refinance with 20% down. This happens to people even when they are not underwater.
Still, with rates this low it is probably worth it to try and refinance.
If this comes around, I’ll definitely refinance on my house. I have a great debt/income ratio though my credit score isn’t completely rock solid… which is actually because I recently paid off large amounts of debt and closed lots of accounts. Ironically this hurts my credit score rather than helps it.
*shrug*
It would be nice to get a loan at 4%. Even better at 3%, but I’m sure that’s when I’d be worried about other things.
Gosh, i thought we were the perfect borrowers — until you mentioned years at current job. yikes, that’s mean. way to punish someone for moving up in their career.
still, i’ll hold off on a refi until i find out if this ends up in the bill. sure would be nice.
I just closed on a 30-year fixed at 4.5. Was hoping to hit the bottom of the market! Even if it does go down to 4, 4.5 is still OK. Michael is spot-on: manual underwriting is back. This was a refi of a house I bought 18 months ago. On the ORIGINAL purchase, I was self-employed and they asked for NO verification of income. On the new refi, I am now a government employee (how stable can you get?), with a credit score over 800 and an LTV of more than 20%, and I still had to jump through flaming hoops to get the rate. Letters from employer, letters from accountant, tax returns, the whole enchilada. It was a real PITA.
I closed last week on a 30yr fixed Par loan of 4.625%.
I left a 7/1 arm and sleeping very well.
The refi experience was equal to buying my first house over 20 years ago. Manual underwriting is back minus the paragraph essays of why you were late on a Visa bill many moons ago.
The point is, I don’t know how many people will be able to qualify for these 4% loans. Excellent credit (above 760) and 80/20 LTV at minimum. SECURE job with at least 5 years of tenure.
Unfortunately, these customers are the minority.