Refinance a mortgage or not?

[turboturist]

We have 3 years left on a 7 year term.

Our interest rate was locked in at 4.16% when we started.

Should we refinance and lock it in long term at the rates we are seeing now or take a chance that they are through the roof in 3 years when it comes time to renew?

My dilemma is we are getting to the point in the term where we start paying more on the principle and less interest. So we have spent the last 4 years paying more interest and less principle now to give them all that money burns my ass but if the interest goes way up then your ****ed anyway????

Advice, thoughts or suggestions anyone?

[theboss]

nothing you can do about money you already paid on your mortgage..paying the interest is unfortunatley the nature of the beast when it comes to mortgages...i think they are pretty low now..if you can lock in for less than 4.16% awesome..they are only going to go up....i am using a variable mortgage and its CRAZY low right now.....and have alot of room to move before i need to lock in...i just got lucky i guess for now.

[RagingRandy]

I just locked into a 10 year @ 5%. That is low enough for me. I had 2-3 years left on a 7 year as well. I also have 10 years left on the mortgage so it all worked out. They tried to nail me with early cancellation fees. I told them if that was the case I was going to shop it around. They saw the error in their ways.

If inflation hits and they use interest rates to control it, 10% will be a bargain. Do the math. Saving in the short term and risking in the long term is not good for this type of investment. This is your home. Security should be a high concern.

[Tiamat]

Yes, they predict hyperinflation. In the late 70's, early eighties, I believe it hit almost 25%. If someone gets caught with that, it's bye bye house probably.

[guest]

I just locked into a 10 year @ 5%. That is low enough for me. I had 2-3 years left on a 7 year as well. I also have 10 years left on the mortgage so it all worked out. They tried to nail me with early cancellation fees. I told them if that was the case I was going to shop it around. They saw the error in their ways.

If inflation hits and they use interest rates to control it, 10% will be a bargain. Do the math. Saving in the short term and risking in the long term is not good for this type of investment. This is your home. Security should be a high concern.

may i ask where you got the 10yr? my bank is being a ****er about the prepayment penalty.

thx.

[ironwill]

TT, figure out your penalties, then find out how much less your payment will be at new rate....take that savings over 36 months left on mtge and just add it up....Im in the same boat...we are locked in at 5.6 percent for another 3 yrs...the penalties are around 10 gramnd, id only save 8 grand on the lower interest rate over 3 yrs....So id lose 2 gs over 3 yrs, but have a smaller pmnt...The other thing you can do is get the lower rate, keep pmnts the same as they are today, then you will pay more principal and end up slightly ahead over many yrs...4.16 is good IMO....
We are buying a second home and can get variable in the low 2s, or lock in at 3.5.....sigh...the second home will have a lower mtge interest rate...

The other thing you may be able to do is find a broker looking for business, sometimes they will pay the penalty to draw your business....Thats the route we are going to try next...ill ask for 2 mtges with them if they take on my old one at a newer rate...i love negotiating.....i slayed the mexicans in Puerto vallarta....lolol...NOT...im a sucker...:ji

[RagingRandy]

may i ask where you got the 10yr? my bank is being a ****er about the prepayment penalty.

thx.

I am with Scotia. They are morons to deal with. You just need to play hardball. When dealing with banks you need to let them know that you are doing them a favour by using their services and they should be happy to have you as a customer. The banks like to make you think they are the ones doing you the favour. By doing this they put themselves in the drivers seat. You need to reverse their thought process.

What I did was ask them what the penalty was going to be because I wanted to factor it in when I shopped the mortgage around to brokers. 2 days later they called me with the 5% offer. It was actually lower than the posted rate at the time.

[Bowlcut]

Interest rates are going to have to go much higher than they are now. All of this "liquidity", read printed money, is going to start circulating and when it does expect price inflation.

How long is your amortization period?

[notbig]

5% for 10 years seems high. To the op , I suggest u call a mortgage broker asap.I went variable and am at 1.40% now and have been below 2% for almost a year.....

[guest]

I am with Scotia. They are morons to deal with. You just need to play hardball. When dealing with banks you need to let them know that you are doing them a favour by using their services and they should be happy to have you as a customer. The banks like to make you think they are the ones doing you the favour. By doing this they put themselves in the drivers seat. You need to reverse their thought process.

What I did was ask them what the penalty was going to be because I wanted to factor it in when I shopped the mortgage around to brokers. 2 days later they called me with the 5% offer. It was actually lower than the posted rate at the time.

scotia is probably one of the most competitive. i have a buddy that is a mortgage broker and his mention afforded some leverage. unfortunately they are not seeming to budge on my prepayment penalty. the problem is that i have an existing mortgage and i needed a builders loan for a new home on the same property. if i go to a competitor i may get a lower rate or sweeter deal but my first draw would only cover the payout of the original lender. i have also figured that, even with the penalty, it will be cheaper to payout and wrap it all into one mortgage when construction is done than it would be to blend it.
when i go in to finalize this deal i will be mentioning that scotia waived the penalty for 'my friend' :D and why the hell cant they do that too as they are going to have me for another 5-10yrs!

[guest]

5% for 10 years seems high. To the op , I suggest u call a mortgage broker asap.I went variable and am at 1.40% now and have been below 2% for almost a year.....

5% is not high for 10yrs from what i've seen, not everyone offers a ten either. i would lock in on a 10yr if i could get one for 5% at my current bank.

variables are super low right now......10yrs are not.....makes you wonder what the bank is expecting;)

[notbig]

..interesting, I did not know that. I am glad my broker said go var....

[Bowlcut]

5% is not high for 10yrs from what i've seen, not everyone offers a ten either. i would lock in on a 10yr if i could get one for 5% at my current bank.

variables are super low right now......10yrs are not.....makes you wonder what the bank is expecting;)

http://www.cibc.ca/ca/rates/index.html

Those are the CIBC rates.

As for future rates they have already risen significantly since January. I think USA conventional 30 year was as low as 4.3% and now it is up to 5%.

http://www.cnbc.com/id/30968861

The only way rates will stay low is if the Fed keeps buying US government debt which then causes rampant inflation.

[Gettin'r'round]

How are you locking in for 7yrs @5%? Personally I've never done over 5yrs and done ok so far. I got 4.96% for 5yrs just when the subprime mess was starting to unfold. 4months later rates were up 1% with oil @$140/barrel and interest rates were look to explode! How quick things can go south.

Interest rates within the next 4-6years are going to be sickeningly high. I'm paying as much as I can into my mortgage at the moment so I'll be almost paid off by the time my mortgage is over. If you can, even an extra $10/week increase in your weekly payment will shave thousands off, especially if your principle is high. Try to find a calculator or set on up with excel. You'll see the $'s you save right before your eyes. I had $5k in one of those new tax free accounts. I did the math and took it out and put it toward my mortgage. It dropped my weekly interest portion of my mortgage by $5/week= $1040 saved over the rest of the 4yr term. Actually it's a bit higher as my payment stayed the same so the $1040 saved was applied to the principle, ~$200 extra interest saved!

I looked at trying to refinance but it looked like a hundred $ or so savings for a BIG upfront 3 month penalty, umm no. Maybe if I was paying 5.96%, but 4.96% and the latest 5yr is 3.49% is not enough of a spread.

[theboss]

scotia has some good rates... check the homepage..

http://www.scotiabank.com/cda/index/0,,LIDen_SID19,00.html

[ironwill]

10 yr scotia....5.2 percent.....we just got preapproved to buy 2nd home.....not 10 yrs though, maybe we should...we are going to decide....

rates going up mon or tuesday is my thought.....:D

[meathead]

5% is not high for 10yrs from what i've seen, not everyone offers a ten either. i would lock in on a 10yr if i could get one for 5% at my current bank.

variables are super low right now......10yrs are not.....makes you wonder what the bank is expecting;)


As long as you have a good credit score any good morgage broker can get you a 5% closed for 10 years or even lower.
Banacek, talk to a morgage broker... its free for you so you have nothing to loose and everything to gain.

[meathead]

For anyone in BC I highly recommend this mortgage broker company (no affiliation on my part what so ever)

The guy who I used is named Jared Dreyer. Its free and you don't have to haggle with the banks. Don't forget their are lending institutes that aren't banks as well and you can get even better rates going with them, the brokers do all the shoping around for you.
Here's a link:

http://www.dreyergroup.ca/corporate/our-team/jared-dreyer-mortgage-broker.html

They got me a 10 year closed @ 5% 3 years ago so you might be able to get even better if your credit score is good.

[kyle]

Your best bet is with a mortgage broker. They can shop around and will always get you the best deals. The Broker I work with has access to around 20 or 30 different lenders.

[cyberfitnessguru]

4.16% is a very good rate, might want to ride that one out.