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Habspatrol

Habspatrol

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Staff member
This is probably a dumb question... but stupid is as stupid does.

We bought a house in March at 3.125% and our mortgage company is already sending us promos to remortgage at "historically low rates." Apparently in the 1.875%/2.952% range. I obviously get that a lower mortgage rate is beneficial... but there's a reason that the mortgage company is promoting it right? It's obviously beneficial to them... so is it really that beneficial to us?
 
There are only two reasons a bank/mortgage company will call you. They want to collect an administrative fee, or they want to lock you in for another 4-5 years. Locking in at a lower rate is always worth looking at, just be aware of any outside costs (admin fees, home appraisal etc..). Those additional costs can often be waived, and even home appraisals are not always necessary - but both will never be offered unless you bitch about them, or threaten to shop around.
 
Is it fixed or variable? If it’s fixed there is likely a penalty for breaking early. So you have to factor that in.

They probably also want you to borrow more.

But it’s worth exploring.
 
How much is left on your current term?

Depending on that they may be willing to eat the penalty to get you locked into a longer term even at a lower rate.

CIBC for example is offering 1.65 open flex variable for 5 years. If the option is there to convert to fixed at anytime (rates trend to rise) then thats a good deal
 
It's reading tea leaves of course, but I'd avoid variable rate mortgages like the plague over the next 2-3 years (unless, like Arty said, there's an option to convert to fixed at no penalty, at the drop of any hat). Central banks definitely want to inflate out of this current problem but there's real questions about how much inflation consumers can take on and interest rates are their big tool to keep that in some sort of reasonable range. I'm seeing 6% or higher inflation projections for 2022 in the US all over the place.

It's very easy to look at the super low interest rate environment of that last 10 years and assume that to be normal, but even in this financialization era normal is typically in the 3-6% range (US fed rate, not mortgage rates). If someone was pitching a decent 10 yr mortgage rate right now I would strongly consider it.
 
I think I've heard things work differently over there, but over here it's pretty much 30 year fixed or 15 year fixed or variable with a higher payment. I refi-ed my place soon after buying it for nothing out of pocket basically and a fair amount shaved off my payment, so if it's coming from a legit bank, I think you just ask them how much it's going to cost you (sometimes nothing if you are a valued relationship of the bank), and go for it if it saves you something material on your monthly.

I'm in the process of looking to sell and buy again right now and am looking into rates and lenders, but in a different way. There seem to be a lot of nontraditional buying and financing options out there from new startups that seem legit. Bankrate keeps advertising really low rates. Some outfit called Flyhomes has a new way of handling the buying and selling process for current owners. Even Zillow tried its hand at buying up homes in a quick and easy way with the intent to flip them, but failed miserably to its own (and its employees') detriment. But anyway, the area of mortgages and refi's seems like one of the next big things to get disrupted soon.
 
LeafOfFaith said:
I think I've heard things work differently over there, but over here it's pretty much 30 year fixed or 15 year fixed or variable with a higher payment.
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That's amortized term, not payment term. 30 year amortization is how many years they're breaking down the cost of the loan over prior to applying their interest math. Payment term is the length of time you're committing to that lender, at the agreed upon payment terms (weekly, bi, monthly...interest rate terms, etc). So you can amortize over 30 years, but you're only committing to the specific payment terms for typically 5 years and then you can renegotiate with your lender, go to market for better terms, etc.
 
Thanks everyone for your input so far. I believe (shame on me for not fully understanding) we're on a 30 year fixed mortgage and like I said, 3.125%.

So basically... unless we can get a lower rate for 30 years and no penalties/extra costs, it wouldn't make sense to remortgage?
 
MindzEye said:
It's reading tea leaves of course, but I'd avoid variable rate mortgages like the plague over the next 2-3 years (unless, like Arty said, there's an option to convert to fixed at no penalty, at the drop of any hat). Central banks definitely want to inflate out of this current problem but there's real questions about how much inflation consumers can take on and interest rates are their big tool to keep that in some sort of reasonable range. I'm seeing 6% or higher inflation projections for 2022 in the US all over the place.

It's very easy to look at the super low interest rate environment of that last 10 years and assume that to be normal, but even in this financialization era normal is typically in the 3-6% range (US fed rate, not mortgage rates). If someone was pitching a decent 10 yr mortgage rate right now I would strongly consider it.
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So most likely they want to talk us into a variable rate... and collect so admin fees in the process.
 
Pretty sure this means that it can't change, correct?

Again, shame on me for not knowing 100% but I know these fuckers have a way of fuckin you somehow.
 

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Habspatrol said:
Take my wife, please!
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200w.gif
 
MindzEye said:
That's amortized term, not payment term. 30 year amortization is how many years they're breaking down the cost of the loan over prior to applying their interest math. Payment term is the length of time you're committing to that lender, at the agreed upon payment terms (weekly, bi, monthly...interest rate terms, etc). So you can amortize over 30 years, but you're only committing to the specific payment terms for typically 5 years and then you can renegotiate with your lender, go to market for better terms, etc.
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I was saying a 30 year fixed payment would be lower than a 15 year fixed or variable.
 
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