The 100% plus mortgages you heard and read about in your junk mail every other day, should be a thing of the past in the next 60 days. Several big players in the second mortgage business went down in flames during the past two weeks. Seems like Wall St. doesn't like junk mortgage bonds anymore. Hang on folks. The ride down is alot faster than the climb up.

-- Bill (bill@microsoft.com), October 23, 1998

Answers

Bill, I know from past postings that you are in the mortgage banking industry. Hang in there, my friend. You are on the front lines where people's lives are gonna be affected seriously, and I know it won't be easy for you (or them). Come here often for support!

-- Melissa (financed@forbin.com), October 23, 1998.

Bill,

Should I be refinancing my home now? from 8.25% 30yr to 6.5% 15 year?

Interested in your opinion.

Mike

-- mike (justmike11@yahoo.com), October 23, 1998.

Yes, you should refinance. No, don't get a 15 year mortgage. The spread between 15 and 30 rates isn't that much .25-.375%. With a 30 year your payment is $100. or so less. (depends on mortgage amount). I recomend 30's to everyone, because you can always add to your payment to reduce principle faster. With a 30 you are not obligated to do this, so if times get tough the extra $100 you pay to reduce it faster can go towards other expenses. A 30 year fixed, with no points or origination should be in the 6.75-7.0 range depending on where you are located. Mortgage credit seems to be getting tighter. If you have good credit you are ok, but those with poor credit need to act fast. Long term rates should continue to drop, but next year is anyones guess.

-- Bill (bill@microsoft.com), October 23, 1998.

Sir Bill (of microsoft.com),

I disagree with your recommendation about 15 and 30 year mortgages:

(Background: we refinanced around 65,000 from a 30 year at 10.5% to a fifteen-year mortgage at 7.5% about 9-10 years ago. So we only have 5 years left and we own the thing outright.)

So why should we have paid the bank the difference in interest for an extra 15 years? On a regular house, that comes to around 125,000 in lost money - the bank gets that much more, you get nothing. (Tax withholding not excluded.)

Difference is so small per month, as you pointed out, that (in my opinion) there is no reason not to get the 15 year mortgage.

Paying extra? Nice idea, but it won't happen in the real world.

-- Robert A. Cook, P.E. (cook.r@csaatl.com), October 23, 1998.

If your "real world" doesn't include the ability to pay an extra $75 on a 30 year each month, obligate yourself to it by getting a 15 year mortgage. If you want flexability in your mortgage payment get a 30 year.

-- Bill (bill@microsoft.com), October 28, 1998.

The rub of external vice internal persuasion....

I prefered the external commitment, others may be different.

-- Robert A. Cook, P.E. (Kennesaw, GA) (cook.r@csaatl.com), October 28, 1998.