Houston Mortgage Rates: 4.375% rate or 4.625% refinance ???

A True Texas Refinance Story:

Recently a client called me about refinancing his Texas home.  Naturally he wanted “the best rate”  because he had excellent credit and a great job.

He was the super-smart kind of guy.  He built spreadsheets. He talked to 5 banks, he compared the rates, watched the mortgage trends.  You get the idea.  He probably played trumpet in his high school band. 

Currently he was at a 30 year fixed but wanted to reduce the term of his loan to perhaps a 20 or 15 year note.

So he called me:

Houston Texas Mortgage

Pretty typical deal.  His Texas home appraised for 200K and he only owed 139K.   Great credit scores.  Great jobs.  Kids were going to college and wanted to pay his home off before they graduated.  (Very smart idea by the way)

At first I showed him the “no point rates”  4.75% for the 30 year.  That’s what www.mylendingplace.com is built around.  Great rates, low fees….

But He wasn’t interested because in his research he found someone online offering 4.5%, with a lot of points.   But after a lot of back and forth I simply crunched the numbers for him and sent him an email with this subject line:

$21.

“” This is the difference between your 4.625% mortgage payment and the 4.375% (sexy rate) is only $21 difference in your payment.  ”"

 BUT— and this is a big but — (J.Lo sized but)…. It would take you (Mr. client) 84 months to pay for these buy down points.  Or said another way.  When you buy the rate down you increase your fees.   To pay for 1.25% points it’s going to take 84 months to recoup the fees.   ($21 saved each month/the fees for the point.)

$21 is the difference between a 4.625% and 4.375%.  Wow.   Is that all?  That’s almost enough to go to the movies.  Scratch that.  That’s enough to go to Sonic—if you don’t take all your kids.  :)

So what is MY point :  Sometimes people end up paying A LOT for their refinances because they get caught up into the  “the lowest rate” game.  They buy points when really they should just roll with the market rate.  Sure it sounds a lot better to say, “I got a 4% rate” but does it really make sense to pay all those closing costs fees?   The higher the fees the longer it takes for you to benefit from your refinance. 

Normally, I shoot for a client to benefit from thier refinance within 12-24 months.   Much longer it might not be such a good idea to refinance.

Give me a  call and let me give you some options.  If buying the rate down makes sense then let’s do it-but most of the time if you look at the numbers, paying points makes you feel good psychologically but  does little to help you financially. 

 :) Want to refinance your home and just want someone to show you the numbers w/o the sales pitch.  Call us.   Or just take a look at our closing costs (above) and then call us.   We would love to help you save money.   With or without points.

www.mylendingplace.com

With current rates at historic lows (the 15 year mortgage/refinance rate is below 4%) this really is a great time to buy or refinance your home.  Need to consolidate bills and want a single, simple tax deductible note at 4-5%.  Call us today!