Posted:
#1
I figured I'd throw this out to anyone who might be more knowledgable than I am. I know absolutely nothing about mortgage rates and what drives them. I am in the process of re-financing. This is my current situation:
I have a 30 year fixed at 6.125%
My options are to re-finance in a 15 year fixed at 4.5% (0.5 point credit towards origination fee)
OR
Refinance in a 30 year fixed at 5.0% no credit.
I can afford to make the payments on the 15-year mortgage, but would obviously not have as much money to invest otherwise.
I ran an analysis and based on my rough calculation, my break-even point if I was to go with the 30 year, after 15 years would be about a 7% return.
Basically, what I am wondering is, do you guys think mortgage rates will continue to drop? I'm only 28, so I don't know all of this, but could it really drop below 4.50%? Also, over time, do you think the 30 year fixed would drift closer to the 15 year rates, or will there always be that 50 point spread between the two? I would be happy locking in my guaranteed 7% return on this money as I am already invested through my Roth and 401K. However, if this spread was to decrease, and I could get a 30 year at about 4.75% somewhere down the road, I think it would knock my break-even point closer to 5.7%, and I would go with the 30 year.
One final question. I am doing this through Wachovia. I think they are charging me out of the a$$ in closing costs, but I was hoping someone could help me out with this. On approximately a $300K loan, they are charging me about $5k in closing costs. Is that too high? How do I go about negotiating and getting them to get rid of the "document preparation fee" and the "settlement fee" etc.?
Thanks in advance for any help you all could give me.
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