Current Status of Mortgage Rates and Refinancing Prospects

By | October 13, 2014

Sometime in January, I contacted Wells Fargo online to inquire about refinancing my mortgage. I started with Wells Fargo since they are currently servicing my loan. I received an email in response, but did not follow up with it as I became super busy. I received a call from a Wells Fargo representative to discuss my refinancing options. On that same day, I emailed a local mortgage lender, who my bosses recommended, regarding their current mortgage rates. I will not be refinancing right now, but I will continue to monitor the mortgage rates and foresee a refinancing in the near future.

Wells Fargo

The representative I spoke with offered some very interesting news when he explained why it took him so long to follow up on his email. Apparently, when the mortgage rates dropped so low in early January, he locked in a lot of people and has been doing the corresponding paper work ever since. There must have been quite a large number of people refinancing in January.

After relaying the necessary information (current rate, remaining principal, purchase price, salary and estimated credit score), the representative was able to offer me a rate of 5.675%. What I found most interesting was the closing cost. He said it would cost me $1,500, which would be rolled into the new loan. This means I would have to pay nothing out of pocket, which is nice since I’m still trying to invest in all of my retirement accounts for 2008.

The man I talked to didn’t seem like a salesman. He laid everything out for me and answered all of my questions. Additionally, he didn’t push me to refinance my loan. In fact, he recommended I wait until the rates go down between 5.25 and 5.375%, which he thinks will happen in the next month.

Penalty for Living in a Condo

I don’t know why, but the Wells Fargo representative said the rates for condo dwellers were higher than rates for houses. Apparently, Fannie Mae and Freddie Mac have performed studies that concluded that people who live in condos are more likely to default on loans. For this reason, Fannie Mae and Freddie Mac are pressuring lenders to increase rates for condos. This increased rate is around 0.3%. Isn’t that just wonderful.

Local Mortgage Lender

After emailing the requisite information necessary to determine my specific rate, I received a reply within a few minutes with the following information:

  • 5.375% (0 points) closing costs of $2,100
  • 5.125% (1 point) closing costs of $4,300

It’s interesting to see one company quote me with a rate of 5.375% and the other with a rate of 5.675%. Normally, I would take this to mean Wells Fargo is trying to scam me with an increased condo rate. I don’t think this is the case, because the local mortgage lender specifically asked how many floors were in my condo building. So from his standpoint, not only did the condo have some sort of increased rate, but the number of floors was a factor in determining the rate.

Final Thoughts

It’s always good to stay up-to-date on the mortgage rates when you’re thinking about refinancing. The rates aren’t as low as the were in January, but they are getting close, at least for the rates that I have been offered. I really liked the Wells Fargo representative and the option to roll the closing costs into my mortgage. Also, I really want to keep my closing costs as low as possible. The Wells Fargo representative told me that he would contact me if the rates dropped into the range where refinancing makes sense. At this point I will monitor the rates on my own, wait for a call from the Wells Fargo representative and stay in touch with the local mortgage lender as a second resource.

Is anybody else looking to refinance? What are the rates that are being quoted to you?

None found.

Leave a Reply

Your email address will not be published. Required fields are marked *