Do you think intrest rates are going to drop more

[jenloveschip2001]

Right now I can get a fixed rate 30yr mortgage for 5.1%. My current mortgage has a 6.5% on a 30yr fixed. Should I refinance or should I wait and see if they drop some more? I have heard they could get as low as 3.5%. We have only paid on our mortgage for 2 years.
I would also like some input on this idea I had. This may get long. We owe $81200 on our home. I am pretty sure that our home is worth $110,000. There is a house identical to ours on the market for $109,000 and ours has a detached garage and that one didn't. So we were thinking about refinancing and pulling the equity out because we would have enough equity to pay off my car. That would get rid of a $333 payment a month and our house payment would actually stay the same because with the lowerr intrest rate our payment would be the same. If we did this all the debt after income taxes get here would be our truck that we owe $7200 on. If I take the car payment and snowball it on the truck it will be paid off in no time. Then we are debt free but the mortgage. Then we can snowball the car payment $333 plus the truck payment $190 plus our regular mortgage payment of $654 on the house. We would be paying $1177 a month on the house. Because we would be doing a Va refinance we can only pull out a percentage of our equity so our new balance on the mortgage would be around $98000. Our intrest rate on the car is 6.75%. Another reason I thought this might be a good idea because if we did this we could make it really easy on a 40 hr week. My husband has always had overtime but I'm afraid that things could slow down and then we would have problems staying afloat if he doesn't get overtime. What do you think good idea or bad idea? And should I wait a little longer to see if the rates drop?

[jenloveschip2001]

Oh I forgot to mention that we still have 4 1/2 more years of $333 car payments if we don't pay it off early.

[MomToTwoBoys]

I'm not a fan of waiting for the market to crash any more than it has for a drop in an interest rate. Most interest rates are operating at near-record lows and while it may seem like a good time to refinance, banks are still pretty sketchy with handing out credit because of job losses.

As for the equity to pay off your car by pulling it out of your house, I'd talk to a financial advisor that deals with equity and loans. What about selling the vehicle and taking something that's paid in cash instead?

[jenloveschip2001]

We are like $5000 in the hole on the vehicle. It is a nissan altima with 61000 miles on it so I am hoping that it should last a very long time. I plan on driving it t'll the wheels fall off. If I did sell it I would do what I mentioned above then sell it and take what it brings and pay off the $7200 truck and drive the truck because we have three vehicles right now. I do like having the three vehicles because if one tears up we have one to fall back on without leaving one of us without a vehicle. The third vehicle is a 97 nissan pickup. It is our beater. It has quite a bit of body damage and over 200000 miles so it is not really worth selling it, and you just never know when it might die on us. It is paid for. We are not in a tight situaton right now, I'm just trying to brainstorm ways to really get that snowball rolling. I just don't want to sell a vehicle and put us in a sitution where we have to go back into debt to get another one. By keeping what we have I figure it will be several years before we have to worry to much about getting another vehicle. And if one breaks down he can drive the other one till it's fixed. I don't want to be in a sitution were we are desprate to find another vehicle and then end up going back into debt. The other vehicle is a 01 Dodge Ram. I like it because it has the quad cab so we can fit everybody and one other person in it so it is very good if the kids have friends over. We hit a deer a couple of years ago in my van and the other vehicle didn't do us much good because we all can't fit into the little nissan pickup and I can't drive it because it is a stick so If I needed to go somewhere I had to have my mom who lives 45 min away bring her car so I could bring the kids with me or babysit so dh could take me in the truck. It was not fun on anybody.

[IntlMom]

all I can say is that I hope they either drop a bit more, or stay super low....we will need to buy a house when we move in the next few months to CA, and with the price of houses out west, we will need all the help we can get!

[Greebo]

Right now I can get a fixed rate 30yr mortgage for 5.1%. My current mortgage has a 6.5% on a 30yr fixed. Should I refinance or should I wait and see if they drop some more? I have heard they could get as low as 3.5%. We have only paid on our mortgage for 2 years.

They might just as well go up, so I'd take advantage of the rates now while they're low. In the stock market, waiting for the best possible price instead of taking a pretty good one is how most people lose money. Same thing with mortgages.

I would also like some input on this idea I had. This may get long. We owe $81200 on our home. I am pretty sure that our home is worth $110,000. There is a house identical to ours on the market for $109,000 and ours has a detached garage and that one didn't. So we were thinking about refinancing and pulling the equity out because we would have enough equity to pay off my car.

So you'ld rather owe more on where you live to owe less on your car? Ummmm...reconsider that thinking...

That would get rid of a $333 payment a month and our house payment would actually stay the same because with the lowerr intrest rate our payment would be the same.

No, because you would be paying PMI. $81.2k at 6.5% is $513.24/month. $81.2k at 5.1% is $440.88/month. $110,000 at 5.1% is $597.24/month. Now I think you are probably estimating your new payment on the loan alone and comparing it to your current payment which will include taxes and insurance, which is not the right way to compare.

If you refi and pull out equity you WILL pay more per month overall, just on the amount borrowed, and on top of that, you'll pay about $80/month more for PMI, bringing your total to $670/month PLUS tax and insurance.

Refinance, but do not take out more equity. Put the extra money you save towards your debt snowball. Do not put your house at more risk to pay off a car which is going to wear out. Think long term.

[Trishagirl]

We are refinancing our home now to a 15 yrs loan our's was 7.25% and now it will be 5.25% and we have to pay 1 point not bad. My dh was hesitant on the same thing should we wait to see if it get's lower. I don't think it will but it could. You can wait and see, it's your call.

[redhead68]

I'm with Greebo on this one. Please reconsider taking out equity. Why not re-finance to get the lower payment and then plow the savings into paying off the car faster?

Also, regarding the cars: it may seem like a good idea to keep a "what if" vehicle, but it would probably cost less to rent a car than it costs to insure that third vehicle. Even cars that sit in the driveway 99% of the time cost you money.

[jenloveschip2001]

It just seems like right now that it is going to take forever to get that car paid off. It seemed like a good idea to keep me motivated because it is encouraging to be able to say that if we done that we could be debt free other than the house this year. Then all our focus would be on beefing up our savings and paying on the house. I know it is never a good idea to pay for a car for 30 yrs but I also think about how nice is would be to only have one fixed payment a month.Were doing good with getting rid of our debt it just seems I am running out of steam. I know I have to be patient. That just isn't one of my good quailties.

[Iansmommy]

We just refi'd at 4.625% for a 20 yr a few weeks ago and I noticed that they have now gone up to 5%. I really don't know if they are going to go much lower.

[fixer]

It just seems like right now that it is going to take forever to get that car paid off. It seemed like a good idea to keep me motivated because it is encouraging to be able to say that if we done that we could be debt free other than the house this year. Then all our focus would be on beefing up our savings and paying on the house. I know it is never a good idea to pay for a car for 30 yrs but I also think about how nice is would be to only have one fixed payment a month.Were doing good with getting rid of our debt it just seems I am running out of steam. I know I have to be patient. That just isn't one of my good quailties.

Trust me, your patience will be rewarded. While it looks as if rates are tending lower, I would take the sure thing now. The longer you wait, the longer you are paying a higher interest rate. I know making one payment is attractive but, if you refi and put the difference to the auto loan it will be gone in no time. As you get older, the years will fly by. Stay focused on the long-term and you will be in a successful position before you know it.

[Telephus44]

No comment on taking out $$ to pay off the car, but I also have a 30 year fixed at 6.5% that we are planning on refinancing soon to lock in a lower rate. Right now we can get 4.625 with 2 points or 5.125 with no points with a local bank. I really doubt that rates are going much lower, but that's only my opinion.

[Gunny_Frost]

Hi,

I had also read about the rates possibly going down to 3.5%. After speaking with (3) seperate brokers and a bit of digging on the net, it turns out that that potential program is only for "new" home purchases and not refinancing.

Seems our government wants some of the existing homes that are on the market to get bought.

I was able to lock in 5% on a 15yr note, and will close the begining of March when I get back to the states.

Good luck,

[mommy4ever]

Another thing to think about. You owe on that car for 4 years. 48 payments. if you roll it into the mortgage you'll be paying on it for 20 or 30 years. The interest you pay will be way more than that car was worth. As a 4 year loan you'll pay approx $2300-2500 in interest. If you refinance at 5.1% the current mortgage, interest you'll pay on the house is: approx $76000, if you up the mortgage to 98000 you're looking at: 92000 in interest, the difference, the car will cost you: the initial 16000 PLUS 16000 in interest.

I'm not a fan of putting debt on the mortgage. In some cases, that is a good thing, but for the most part, it is not.

[kmonokwe]

I'm with everyone else. The re-fi sounds great - do it. But don't pull out equity just to help keep yourself motivated. The money you'll save each month on your house payment can get rolled into your snowball - it may not be as big a difference right now, but it will make a difference! Mommy4ever's point about interest is very good, too. That car isn't worth interest on a 30-year mortgage!

Your patience with your debt snowball will pay off! Don't get discouraged. Just by pursuing a debt snowball, you are way ahead of the majority of the population! Keep up the good work!