It only took 3 weeks of cyber bitch-slapping for Hadji to show up. Typical. Always a better party going on somewhere else. Anyhow, I confess that the only reason for Isabella to be on the list was to take a jab at Hadj. I hope it didn't connect or hurt. Please believe me that I have always thought that it is a beautiful name for your little girl. You are right, though, it is not a good name for the Johnson's or the Goldman's or the Rosenthal's. I feel uniquely qualified to critique names, as I come from a long line of crappily named people. I am Brian, son of Penelope, daughter of Iola. Also, I am son of Lou, son of Beula. I am the Crappy Name Poster Child. The point of the whole list was to vent my disgust at the trailer park crack whores. "Connor, honey, you and MacKenzie go over and see if Austin and MiKayla want some Fruit Roll-Ups. They're playing in Logan's daddy's old Sirocco, you know, the one that got beat by the Celica."
Consider the following a Public Service Annoucement. (You know, I like to give a little something back to the community. Right.)
In light of the much anticipated Fed Funds Rate cut by Greenspan and Co., I figured I'd address all refinance concerns once and for all. First, let's understand some very important terms. I just mentioned one of them: The Fed Funds Rate. This is the rate at which banks lend each other money OVERNIGHT. Each other, not you or me. Them. The Fed Funds Rate has as much to do with Mortgage Interest Rates as does the price of Purina Monkey Chow in New Rochelle. That is why the last 6 times Mr. Greenspan has "Cut Interest Rates", nothing has happened to Mortgage Interest Rates. Our rates are more largely influenced by the daily yield of the 10-year Treasury Bill and sometimes the 5 and 30. These are all subject to the direct influence of the performance of the stock market. It is an inverse relationship based on the theory of "flight to quality." Stock market does bad, conditions are good for downward pressure on rates, and vice versa. Next, Interest Rate. (Not to be confused with APR, or Annual Percentage Rate. The APR is the product of the Interest Rate and any associated Closing Costs. That is why the APR is ALWAYS higher that the Interest Rate.) The Interest Rate is what helps determine your payment. Interest Rates can and do change every day, sometimes a few times per day. Interest Rates are largely determined by individual investors (Banks) who are competing to get the highest rate for the lowest yield while watching the stock and bond market at the same time. What does all this have to do with you? Not much really. It's just most people eventually ask which hole I pull rates out of.
Q: "So, when should I refinance?"
A: Tough to say. The easy answer is: when the costs are covered by the savings within, at the most, 3 years. But, everyone is different. Let's say someone's Interest Rate (NOT APR) is currently at 7.00% Well, most 30-Year Fixed Rates are at about 7.125%. Although I don't currently see any pressure on rates to go up, I don't see enough to go down to the point where I think it would be wise to refinance this person on the surface. BUT. Big but, each situation is different. There may be reasons for this person to refi. For example: Let's say he owes $255,000 at 7.00% on a property which is now worth $291,500. When he bought the house 3 years ago, the sales price and appraisal were $275,000. He put 5% Down and got a loan of $261,250.
His current house payment looks something like this:
$261,250 @7.00%
Princ & Int= $1740.
PMI = $170.
Total= $1,910
(All I really care about is the P&I and the PMI. The rest, taxes and insurance, remain constant.)
The goal of refinancing this pretenious ass-clown would be to eliminate the PMI. So, let's say the property appreciated for a modest 2% increase each year, or 6% higher, so now it is worth $291,500. If he still owes $255,000 this gives him a Loan to Value of 87%. That is 7% too high, he still has to pay PMI. But only if he's an idiot. I would tell this guy to get 2 loans. One for 80% of the Value of the home, or $233,200 and a Second Loan for the remaining $21,800. My way, his new combo of payment would look something like this:
$233,200 @7.125%
P&I = $1,571
PLUS his new Second of $21,800 @9.125%
P&I =$177.
TOTAL First and Second with NO PMI= $1,748
I just saved this Douche Bag $162 per month. Plus, this method gives him more "potentially" tax-deductible interest and he's building equity faster. His wife loves the extra money and I'm a hero/genius.
THAT is why although the rate may not in fact be lower, there are ways to accomplish the same objective. Now, it may "cost" $1,500 - $2,000 to refi, but, this person would skip one month of payments by refinancing anyway, plus, they'd get back all the money in their current escrow account. Even taking the $2,000 cost into account, this would pay for itself in a little over a year. I wouldn't talk somebody out of this.
This concludes the Test of the Emergency Refinance Lesson. If this had been an actual Refinance Emergency, you would have been instructed to do you own damn math, Lenny. Call with any tough questions.
Consider the following a Public Service Annoucement. (You know, I like to give a little something back to the community. Right.)
In light of the much anticipated Fed Funds Rate cut by Greenspan and Co., I figured I'd address all refinance concerns once and for all. First, let's understand some very important terms. I just mentioned one of them: The Fed Funds Rate. This is the rate at which banks lend each other money OVERNIGHT. Each other, not you or me. Them. The Fed Funds Rate has as much to do with Mortgage Interest Rates as does the price of Purina Monkey Chow in New Rochelle. That is why the last 6 times Mr. Greenspan has "Cut Interest Rates", nothing has happened to Mortgage Interest Rates. Our rates are more largely influenced by the daily yield of the 10-year Treasury Bill and sometimes the 5 and 30. These are all subject to the direct influence of the performance of the stock market. It is an inverse relationship based on the theory of "flight to quality." Stock market does bad, conditions are good for downward pressure on rates, and vice versa. Next, Interest Rate. (Not to be confused with APR, or Annual Percentage Rate. The APR is the product of the Interest Rate and any associated Closing Costs. That is why the APR is ALWAYS higher that the Interest Rate.) The Interest Rate is what helps determine your payment. Interest Rates can and do change every day, sometimes a few times per day. Interest Rates are largely determined by individual investors (Banks) who are competing to get the highest rate for the lowest yield while watching the stock and bond market at the same time. What does all this have to do with you? Not much really. It's just most people eventually ask which hole I pull rates out of.
Q: "So, when should I refinance?"
A: Tough to say. The easy answer is: when the costs are covered by the savings within, at the most, 3 years. But, everyone is different. Let's say someone's Interest Rate (NOT APR) is currently at 7.00% Well, most 30-Year Fixed Rates are at about 7.125%. Although I don't currently see any pressure on rates to go up, I don't see enough to go down to the point where I think it would be wise to refinance this person on the surface. BUT. Big but, each situation is different. There may be reasons for this person to refi. For example: Let's say he owes $255,000 at 7.00% on a property which is now worth $291,500. When he bought the house 3 years ago, the sales price and appraisal were $275,000. He put 5% Down and got a loan of $261,250.
His current house payment looks something like this:
$261,250 @7.00%
Princ & Int= $1740.
PMI = $170.
Total= $1,910
(All I really care about is the P&I and the PMI. The rest, taxes and insurance, remain constant.)
The goal of refinancing this pretenious ass-clown would be to eliminate the PMI. So, let's say the property appreciated for a modest 2% increase each year, or 6% higher, so now it is worth $291,500. If he still owes $255,000 this gives him a Loan to Value of 87%. That is 7% too high, he still has to pay PMI. But only if he's an idiot. I would tell this guy to get 2 loans. One for 80% of the Value of the home, or $233,200 and a Second Loan for the remaining $21,800. My way, his new combo of payment would look something like this:
$233,200 @7.125%
P&I = $1,571
PLUS his new Second of $21,800 @9.125%
P&I =$177.
TOTAL First and Second with NO PMI= $1,748
I just saved this Douche Bag $162 per month. Plus, this method gives him more "potentially" tax-deductible interest and he's building equity faster. His wife loves the extra money and I'm a hero/genius.
THAT is why although the rate may not in fact be lower, there are ways to accomplish the same objective. Now, it may "cost" $1,500 - $2,000 to refi, but, this person would skip one month of payments by refinancing anyway, plus, they'd get back all the money in their current escrow account. Even taking the $2,000 cost into account, this would pay for itself in a little over a year. I wouldn't talk somebody out of this.
This concludes the Test of the Emergency Refinance Lesson. If this had been an actual Refinance Emergency, you would have been instructed to do you own damn math, Lenny. Call with any tough questions.
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