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Should you do a ‘cash-in’ refi?; St. Louis Mortgage Interest Rate Update

Over the past years, many of Americans pulled money out their homes through “cash-out” refis.  Today, many of my clients are bringing cash into their refinance transactions.  Money is flowing in the opposite direction.

You might consider bringing cash to close your refinance to:

1.  Lower your mortgage rate:  If your LTV is close to the 80% Loan to Value (LTV) threshold, then bringing money to the table to push your LTV below 80% can get the borrower a better rate.

The same cash-in technique works for refinances on a Jumbo loan ($417,000 for single-family homes).  Bringing in money to get out of a Jumbo bracket and into a Conventional loan can save a half percentage point or more. This technique works on a home purchase too.

2.  Avoid PMI:  Reducing your principal balance to an 80% LTV eliminates the burden of PMI.   This can also works for a purchase too.

3.  Pay off your mortgage faster: Putting cash in to limit the increase of your new payment when refinancing a 30-year loan into a 20-, 15-, or even 10-year mortgage is smart. Payments will be higher, but the interest savings can be huge over the life of the loan.

Other Variables to consider:

1.  Recouping your closing costs.  Is there a real benefit to refinancing when considering the cost to refinance VS. the actual savings of the refinance?

2.  Credit Scores:   One of the key variables determining interest rates is credit scores. Lower/marginal credit scores do not get the best rates.

3.  Limited amount of cash available:   Liquidity.  If you have limited cash available, it’s not worth sacrificing reserves should misfortune strike.

St. Louis MORTGAGE INTEREST RATES for August 3, 2011:

  • Conventional 30-Year Fixed 4.375%/ 4.750% APR
  • Conventional 15-Year Fixed 3.500%/ 3.725% APR
  • Conventional 5/1 ARM 3.125%/ 2.900% APR
  • FHA/VA 30 Year Fixed 4.250%/ 4.730% APR
  • Jumbo 5/1 ARM 3.125%/ 3.000% APR
  • Jumbo 15 yr Fixed 3.625%/ 3.915% APR
  • Jumbo 30 yr Fixed 4.750%/ 5.005% APR

*The above mortgage rates are based upon an 80% LTV, o/o single family with FICO scores of 720.

Paramount Mortgage is a locally owned Mortgage Banker; we just celebrated our 40th anniversary. Great rates and programs are secondary to what is most desired in a lender relationship. The most sought-after aspects in this industry cannot be easily translated onto paper…learn more about us here.

For more information or if you have questions on mortgage rates you may contact me by phone at my direct line, (314) 372-4319, email at rfishel@paramountmortgage.com or you can visit our company website at http://www.paramountmortgage.com.

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