How are folks getting such low mortgage rates?

[RedmondStash]

I keep seeing people on these boards quote mortgage rates of like 2.75% or maybe 3.5% for 30-year fixed mortgages. How and where are you getting those rates?

Last month, we looked into refinancing our mortgage, but the rates our mortgage broker quoted were ~4% to 4.5% for a 30-year fixed. Spouse & I both have excellent credit (>800 for both) and no other debt.

Current mortgage only has $30k left at 5.5%, so it's a toss-up as to whether it's worth it to just kill it. The main thing stopping us is that our home equity to investments ratio is already heavy on equity. If we let the mortgage run its course, it'll be done by late 2019. The mortgage payments are not that high, and mostly go to principal now.

We thought about a cash-out refi, but at 4% to 4.5%, we weren't enthused. I'd be more enthused if we could get under or around 3%.

So how did you do it?

[TabbyCat]

I think what's getting advertised is a bit skewed from reality. Our lender quoted us 3.7%, then it became apparent that that required a $4-6k fee, depending on the ending APR, to "buy the points" which we opted out of to lock in 4%. They really didn't want us to do that though - lots of pressure to "sign now, we'll lock in your rate and remove the fee later, just sign now." We held out.

[Wile E. Coyote]

Refinanced in December 2012.  No buying down rates, just a god time to refinance.

[Lski'stash]

Well, mine is from Lake Michigan Credit Union. LMCU.org

They have rates of 3.75% for a 30 year fixed, 3.65% for a 20 year fixed, and 3.165% for a 15 year fixed. My husbands and my credit scores not quite where yours is (770's), but we got those rates.

[RedmondStash]

Thanks, all. We've done well with this mortgage broker before -- she did our original purchase and two refinances -- but she's switched companies a couple of times, and I'm not sure if the place she works now offers competitive rates or charges reasonable fees.

It sounds like the rates she's quoting aren't out of line with what's available now because rates just aren't as rock-bottom low as they were. We didn't discuss buying down the rate, though I may ping her about what that would cost.

[rothwem]

FHA loans have lower interest rates.  I'm at 3.25% for 30 years fixed, it would've been 2.75% for a 15 year.  The issue with an FHA loan is all the PMI, which bumps the EFFECTIVE APR to low 4%.  Its all a wash in the end. 

[BarkyardBQ]

Credit union mortgage. 2.875 for 15y REFI. Didn't buy points, just the fees, and took the loan amount down to the nearest 0's.

We timed it against the 10Y Treasury Yield. I believe it was at 1.87 when we applied, locked it in.

[RedmondStash]

Credit union mortgage. 2.875 for 15y REFI. Didn't buy points, just the fees, and took the loan amount down to the nearest 0's.

We timed it against the 10Y Treasury Yield. I believe it was at 1.87 when we applied, locked it in.

Sounds like credit unions are the way to go. Too bad I don't belong to one anymore. :\

But that's okay. We were on the fence about the refi anyway; we're not sure we're going to be in this house for more than a couple of years more.

Thanks, all.

[tomsang]

It may have something to do with the loan being so small.  If you are doing a no fee loan, they roll the fees into APR.  That is a way high rate for a 30 year fixed rate mortgage.  Maybe you should go pull out a few hundred thousand out of your equity and invest it:)

[RedmondStash]

It may have something to do with the loan being so small.  If you are doing a no fee loan, they roll the fees into APR.  That is a way high rate for a 30 year fixed rate mortgage.  Maybe you should go pull out a few hundred thousand out of your equity and invest it:)

Believe me, we're considering it. But given that we're likely to move in the next few years, the timing just doesn't seem ideal, given the fees. We'll probably just take out a big mortgage on our next house -- assuming we can still get one when we're FIRE. :)

[TabbyCat]

Wow, interesting rates from the credit unions. We're still closing our deal but are considering refinancing sometime in the first year to switch to VA or another route if better. We would pay some double closing costs if we did, but we're in a hot market and felt we had to go conventional (25d close, vs 45d close VA) just to get something. Even if we don't refi we are happy, just looking into it as an option. A big part of me wants to just pay down the mortgage asap (7-10yrs), but as the stock market picks up, we'd do better to keep the live of the loan with a good rate and invest instead.

[Spitfire]

Mine is 3.5% for 15 years on a purchase in September 2015. The broker had an in-house direct lender option for people with good credit so that was the lowest rate I could get, with his company anyway. I called him for a second opinion when my original broker (spouse of my realtor lol) gave me a rate of 4.25% for the same 15 years. Some companies just have terrible rates and there isn't much the broker can do about it.

[RedmondStash]

Some companies just have terrible rates and there isn't much the broker can do about it.

Yeah, I wondered if that's what was going on with our broker. Pity; I really like her.

Wow, interesting rates from the credit unions.

Seriously. Credit unions. Who knew? :)

We're probably going with a HELOC instead of a traditional refi: no closing costs/fees, 2.24% intro rate for a year, and then 3.105% (variable) if we borrow $100k or more up front, or an incrementally higher rate if we borrow less. It's a gamble, pulling equity out of our home, but the odds seem good for an annual stock/bond market return of >3.105% spread out over the next few years, and we won't take out more than we can afford to gamble with.

This money stuff can be stressful! I know it's a good calculated risk, but it's still daunting, especially after spending so long with the sole goal of paying off every penny of mortgage debt. It'll all settle down in a few weeks after we get used to the idea, but math and emotion are two very different beasts.

Thanks for the info, all.