How low can we go? 30 yr fixed at 3.75% with no fees...

[shadyoc]

Anyone ever heard of a 5/5 ARM?  2.875% on a loan up to $2m.
https://www.fpcu.org/mortgage-rates

 

[woodburyowner]

The refi finally hit my FICO score.  36 point drop.

Why would a refi drop your FICO score?  I've never seen this happen on my credit reports.

 

[shadyoc]

Does anyone know how to explain Initial/Annual/ Life Rate Change Caps?

I saw a 7/1 ARM with a 5% / 2% / 5%https://www.dcu.org/loans/mortgage-arm.html

Let's say your rate starts at 3.375% for the first 7 years.  Then in the 8th year, it can go up to 3.375% + 5% = 8.375% ?
It says in year 9, it can go another 2%.
But the lifetime max is 5%, which you already hit in the first adjustable year.  So that doesn't make sense.

I have seen 2% / 2% / 5% but not 5% / 2% / 5%

 

[daedalus]

Why would a refi drop your FICO score?  I've never seen this happen on my credit reports.

Why wouldn't it?  It's a hard pull and a new loan with no payment history.  You're saying you have loans that don't show up on your credit reports? 

 

[usctrojancpa]

Does anyone know how to explain Initial/Annual/ Life Rate Change Caps?

I saw a 7/1 ARM with a 5% / 2% / 5%https://www.dcu.org/loans/mortgage-arm.html

Let's say your rate starts at 3.375% for the first 7 years.  Then in the 8th year, it can go up to 3.375% + 5% = 8.375% ?
It says in year 9, it can go another 2%.
But the lifetime max is 5%, which you already hit in the first adjustable year.  So that doesn't make sense.

I have seen 2% / 2% / 5% but not 5% / 2% / 5%

The maximum rate that your loan could ever be is 8.375%, that's the cap.  So if rates continue to go up past the rate in year 8, your rate would stay at 8.375%.

 

[sgip]

FICO hit is for "new credit" - refi, car loan, etc. Any new credit trade line will considerably reduce your score for 60-90 days.

800 reduced to 750? Meh. No one but you cares. It's really nothing.

740 to 710? No real biggie unless your buying a house. That new Viking kitchen appliance you just financed at -0- percent is adding .50 in rate to your home loan.

710 - 680?  Expecting zero percent financing on your new Range Rover? No soup for you! How does 5% sound? Wait 90 days and once your score improves you'll get the better deal.

My .02c

Soylent Green Is People

 

[shadyoc]

Does anyone know how to explain Initial/Annual/ Life Rate Change Caps?

I saw a 7/1 ARM with a 5% / 2% / 5%https://www.dcu.org/loans/mortgage-arm.html

Let's say your rate starts at 3.375% for the first 7 years.  Then in the 8th year, it can go up to 3.375% + 5% = 8.375% ?
It says in year 9, it can go another 2%.
But the lifetime max is 5%, which you already hit in the first adjustable year.  So that doesn't make sense.

I have seen 2% / 2% / 5% but not 5% / 2% / 5%

The maximum rate that your loan could ever be is 8.375%, that's the cap.  So if rates continue to go up past the rate in year 8, your rate would stay at 8.375%.

Isn't a 5/5 arm better than a 7/1 arm in every way?  Lower rate and only adjusts once every 5 years.

 

[usctrojancpa]

Does anyone know how to explain Initial/Annual/ Life Rate Change Caps?

I saw a 7/1 ARM with a 5% / 2% / 5%https://www.dcu.org/loans/mortgage-arm.html

Let's say your rate starts at 3.375% for the first 7 years.  Then in the 8th year, it can go up to 3.375% + 5% = 8.375% ?
It says in year 9, it can go another 2%.
But the lifetime max is 5%, which you already hit in the first adjustable year.  So that doesn't make sense.

I have seen 2% / 2% / 5% but not 5% / 2% / 5%

The maximum rate that your loan could ever be is 8.375%, that's the cap.  So if rates continue to go up past the rate in year 8, your rate would stay at 8.375%.

Isn't a 5/5 arm better than a 7/1 arm in every way?  Lower rate and only adjusts once every 5 years.

Just a different risk profile loan.  I had a 5/5 ARM with PenFed and the rate adjusts based upon a 5-year CMT rate (very close to the 5-year bond rate) at 5-year CMT plus 2% and only adjusts every 5 year by a maximum 2% with a 5% lifetime cap.  The regular 7/1 ARM loans adjusts in year 8 and the rate is based upon 1-year LIBOR plus 2.25%.  The 1-year LIBOR rate is lower than the 5-year CMT rate.

 

[woodburyowner]

Why would a refi drop your FICO score?  I've never seen this happen on my credit reports.

Why wouldn't it?  It's a hard pull and a new loan with no payment history.  You're saying you have loans that don't show up on your credit reports? 

I have done close to 10 new loans/refis and I never noticed such a large drop in my credit score (and I monitor my credit religiously).  Maybe 5-10 points, but 36 just sounds like a lot.

 

[usctrojancpa]

Why would a refi drop your FICO score?  I've never seen this happen on my credit reports.

Why wouldn't it?  It's a hard pull and a new loan with no payment history.  You're saying you have loans that don't show up on your credit reports? 

I have done close to 10 new loans/refis and I never noticed such a large drop in my credit score (and I monitor my credit religiously).  Maybe 5-10 points, but 36 just sounds like a lot.

Ditto, I got a loan purchase my Tustin Ranch house and refi'ed one of my rental properties this year and my credit score moved less than 5 points.  It's also important to see if your credit usage on your credit card was up, even if you pay your credit card bill in full every month it will bring your score down.  Credit % utilization from the balance on your credit cards to the total available credit balance will have a big impact on your credit score.

 

[sgip]

FICO models change often. Its possible the score drop is due to a recalibration of the vendors model. Also, you may run your score via a Mortgage Credit Report at 736, then see your score at Experian at 700. Experians score may be filtered as a Credit centered score model.

My .02c

 

[OCVillager]

Thanks

 

[daedalus]

I have done close to 10 new loans/refis and I never noticed such a large drop in my credit score (and I monitor my credit religiously).  Maybe 5-10 points, but 36 just sounds like a lot.

So refis DID affect your score? 

Ditto, I got a loan purchase my Tustin Ranch house and refi'ed one of my rental properties this year and my credit score moved less than 5 points.  It's also important to see if your credit usage on your credit card was up, even if you pay your credit card bill in full every month it will bring your score down.  Credit % utilization from the balance on your credit cards to the total available credit balance will have a big impact on your credit score.

My revolving credit usage is between 1 and 3% right now, depending on the reporting agency, which is about average.  A 36 point (~4%) drop for taking out a loan that size doesn't seem out of whack to me, though I know I don't have the BSD low risk profile you guys in the OC have.    We'll see where it is in 90 days, per SGP's comments. 
Just to be clear, this is the 900 point FICO scale score that Citi offers, though I doubt it differs much from the 850 point FICO scale score.  Both scaled fairly close just prior to the refi.

 

[shadyoc]

Does anyone know how to explain Initial/Annual/ Life Rate Change Caps?

I saw a 7/1 ARM with a 5% / 2% / 5%https://www.dcu.org/loans/mortgage-arm.html

Let's say your rate starts at 3.375% for the first 7 years.  Then in the 8th year, it can go up to 3.375% + 5% = 8.375% ?
It says in year 9, it can go another 2%.
But the lifetime max is 5%, which you already hit in the first adjustable year.  So that doesn't make sense.

I have seen 2% / 2% / 5% but not 5% / 2% / 5%

The maximum rate that your loan could ever be is 8.375%, that's the cap.  So if rates continue to go up past the rate in year 8, your rate would stay at 8.375%.

Isn't a 5/5 arm better than a 7/1 arm in every way?  Lower rate and only adjusts once every 5 years.

Just a different risk profile loan.  I had a 5/5 ARM with PenFed and the rate adjusts based upon a 5-year CMT rate (very close to the 5-year bond rate) at 5-year CMT plus 2% and only adjusts every 5 year by a maximum 2% with a 5% lifetime cap.  The regular 7/1 ARM loans adjusts in year 8 and the rate is based upon 1-year LIBOR plus 2.25%.  The 1-year LIBOR rate is lower than the 5-year CMT rate.

Would you say one is better than the other over a 10 year period, assuming both lifetime max is 5%?  I believe the 5/5 is lower interest rate to start compared to the 7/1.

 

[potsticker]

What's the consensus today? Are rates still rising or staying flat? Rates seem to have 'normalized' a bit in the first two weeks of January. I can lock a rate for 120-180 days with WF - but it'll cost me, but I'll receive one free float down in the last 60 days. Or, I can continue to let it ride.

 

[BruinDoc]

What's the consensus today? Are rates still rising or staying flat? Rates seem to have 'normalized' a bit in the first two weeks of January. I can lock a rate for 120-180 days with WF - but it'll cost me, but I'll receive one free float down in the last 60 days. Or, I can continue to let it ride.

Definitely lock and sleep well at night...and the float down is nice to have as well. It's a win/win. I'm fairly conservative though. It also depends on how much WF is charging for your lock. What's your risk tolerance?

 

[eyephone]

What's the consensus today? Are rates still rising or staying flat? Rates seem to have 'normalized' a bit in the first two weeks of January. I can lock a rate for 120-180 days with WF - but it'll cost me, but I'll receive one free float down in the last 60 days. Or, I can continue to let it ride.

Let it ride!

 

[potsticker]

They want $1,600 or so. I have a high risk tolerance and my gut tells me rates will be flat through Q1. Additionally, I'm starting to think a 5/1 ARM might be a better choice than 30yr fixed. 3.5%-3.75% for 60 months might be better than a 4.125%-4.25%, especially as I'll likely sell or refi within 5-7 yrs.

 

[qwerty]

How do you know you will be able to refi in 5 years?

 

[potsticker]

How do you know you will be able to refi in 5 years?

That's the risk in getting a lower interest rate up front. Realistically, if the high likelihood is that I'll sell or refi within 5 years, I'm not sure it makes sense to pay more each month for 30-yr security.