Posted by JT - IN on June 28, 2001 at 06:46:13:
It seems that your 8% is fairly competetive today. I have seen 7.25 to 7.5% for comparable mtg. Even though prime has dropped, there are market forces at work here, with Treasury auctions, that impact the rate that you are paying, more than prime rate. It is more a case of what institutional investors are willing to tolerate for return on cash invested, that is determining the outcome of your (and others) rate.
Additionally, what type of fees are you paying to refi this mtg? It would seem that if there is much of a fee, (discount pts or admin fees), that this would be counterproductive to receiving a new rate. There would some time period in which to capitalize on the benefits of a new rate, after a refi, due to the total fees paid. eg. If you were to get a 7.5% rate, but had to pay 2 pts to do so, that would be no deal on a 4 yr baloon. It would take you a while to begin any savings on that arrangement, with the savings being amortized vs. the cash upfront on a disc. pt. Doesn’t seem that you are throwing away much here, at 8%.
JT - IN