Steerpike

Anyone have a sense of where interest rates are going over the next three months - specifically, mortgage rates?

I'm probably going to be out of work in 3 months. So if I'm going to refi, I need to do it while I'm still employed. I got a quote today, it was at about the same rate that I'm currently paying (4.8 fixed). If they are likely to drop in the next three months, I will wait for a better deal. Otherwise, I may jump in now (even though the rate is no better, there are other reasons that make it a worthwhile prospect).

helwardman

Third tent on the right..............

NC Penguin

Maybe this will help:
http://www.bankrate.com/brm/calc_vml/refi/refi.asp

Also, I've heard (on the radio) that if you don't plan to live in your home in the long term, refinancing is probably not worth your while.

RoadWarriorFromLP

While my psychic powers are limited, it is clear at this moment that governments are aggressively cutting their overnight rates. At some point, at least some of these cuts should be passed on to borrowers, so it is fair to guess that rates will decline.

That being said, you already have an optimal rate. Refinancing for the sake of getting a lower one is likely futile. If you are trying to pull out equity, then take the plunge now, so that you have time to do it before the job situation goes against you.

Steerpike

The other 'incentive' for me to refi is that my balance is now much lower than it was when the original loan was cast, and if I refi, the new (required) payments will be much lower since the loan is being re-cast at 15 years. Specifically - Original loan was $280k @ 4.8% for 15 yrs = monthly minimum required pmt of $2,201. Current balance = $ 128k; New loan of $128k @4.8% for 15 yrs = monthly minimum required pmt of $1,004. So that drops 'what I must pay' from $2,201 to $1,004, which may help because I want to minimize use of savings over the next year since all my savings are 'in the market' and have lost ~40% so far.

I also have a 'second' (equity line) with a balance, and I may consolidate that into the new loan. The 'second' is currently even lower, though - 3.49% (it is adjustable, set to prime MINUS 0.51%).

I believe I have time to wait; my company is not going out of business, just restructuring/selling off bits, and there is a defined timetable for these events; 3 months should be a pretty predictable window.

Thanks for helping me think this through; I just need to bounce it off some folks!

RoadWarriorFromLP

If you are concerned about your liquidity due to an expected job loss, then I would take your 15 year loan and turn it into a 30, to lower the payment further. Of course, that would result in a higher rate, and you will have to live with it for awhile.

I'd also try to pull some equity out, if possible. When times are tough, cash is more valuable than a low debt balance. Just so long as you can continue to make the payments, that might make more sense for your situation. You don't want to run out of cash, no matter what.

Obviously, this assumes that you maintain a tight budget and don't blow the extra money that you may pull out or save on the payment change, but you already knew that, of course...

Bob

Is your company larger than 75 folks? If so, by california law, they have to post how many lay offs they'll make 60 days before they make them, there's a website that lists these company layoffs but I can't remember the link, saw it this morning incidentally.

As for the rates, can't help, but feeling is, it probably will do down marginally, but it might not be worth doing if it is so marginal and there are any fees attached to refinancing and certainly don't consolidate, you'll always be the loser in that game.

Steerpike

Thanks. I thought about the 30 yr option too; currently they are offering same rate (4.8%) but with an extra .5 point.

Liquidity is my concern. I've always been quite careful, and had about 6 years of living expenses 'in reserve' in case of an extended job loss (even though I've only been out of work for 6 weeks in 25 years). So I've always felt quite immune to job loss ... but - (and I'm kicking myself so hard about this!) I foolishly wasn't paying attention over the past two years (this last job has been an all-consuming affair!) and left my money sitting in the market. Let that be a lesson to me! So my 6 year reserve is now more like a 3 year reserve (on paper), and the thought of having to turn 'on paper' into reality breaks my heart !

The equity line - the one at 3.49%, currently - has $150k of available balance so I think I can view that as being an alternative to taking equity out - no point paying interest on funds I don't need right now.

I think I'll start watching rates and look for trends, and take action sooner rather than later.

RoadWarriorFromLP

I would recommend that you not depend upon this line continuing to be there. HELOC's are getting slashed left and right, so you can't necessarily depend upon it being there. If you want the cash from it, take it now. As in yesterday. Just be careful of getting caught in the medium-term with a variable rate loan.

Best of luck to you. Keep your head and your skills sharp, things will work out.

Steerpike

Funny you should mention that! I'm in the middle of a $40k 'repair' to my house, and I wrote a check on the HELOC to the contractor. It bounced!! Turns out, I was using an old check with the wrong a/c # on it, but - it did make me wonder!

So even existing HELOC's are getting cut, eh? I guess it is not surprising.

Giantaxe

Helocs are typically getting cut where the loan to value of first + heloc is high. Given the size of your first, I doubt you are in much danger of a cut.

Giantaxe

In theory. However, companies going down the tubes frequently aren't bothered with the niceties of the WARN requirements. After all, fining them for non-compliance or getting back pay when they're going into bankruptcy isn't likely a successful venture.

Bob

true, but depending on how large the company is, it does open them up for a large vaseline job if it's just a cost cutting excercise rather than a going under jobby, so would be in their interests to comply...

Giantaxe

The civil penalties are so minor though that they often don't. $500 fine per day plus employees can sue for up to 60 days pay. Often companies will either just pay severance and give no notice or they figure that some people won't sue.

RoadWarriorFromLP

Without knowing the specifics, it's hard to say.

Still, these days, I would assume the worst. Credit limits are being cut for a lot of reasons, and it is risky to depend upon the amount of a line remaining unchanged.