VA Loan: 7.25% vs. 6.75% with points (15 months breakeven)

[beforhim]

We are looking to lock in today and not able to decide which makes more sense.

7.25% with 0 points or 6.75 with a 15 month breakeven. Basically, it comes down to are we going to refinance in under 15 months, if not buying points makes sense.

Other than guessing the market, isn't it less stressful knowing that if the rates don't drop in the next 15 months, we are better of buying points now and not try to time the market?

 

[cristiano316]

@beforhim Tough call. With a 15 month break even, I would say that you might be leaving money on the table, but between waiting for the interest rates to drop and refinance process, you’re not at risk of leaving a whole lot on the table.

Meanwhile, if rates stay stubbornly high for a while…

 

[greegiecee]

@beforhim Keep shopping for a better rate. If you're willing to pay points, you can get a rate below 6%. Zero points, you can still nab a rate about 6.5% (depending on your credit).

 

[beforhim]

@greegiecee Might be too late to shop around, we are already in contract, awaiting the appraisal to close.

 

[pinkdonut]

@beforhim That’s not too late- definitely shop around “hey we’re about 1 week out from closing and this is what my lender is offering, can you beat it and stick to the closing timeline?”
Or take those offers back to the current lender and ask them to match or beat them or you will walk- it’s pretty common
I’m quoted 6.35 on Thursday with 0 points

 

[ailanthus777]

@beforhim Please tell me you didn't sign this. 7.25 was what I locked in mid last year, and my refinance now is looking to be 6.25

 

[no_pride]

@beforhim I mean if they’re telling you your 0-point option is 7.25% it likely means you’re buying a rate at full retail price with at least 3 points built into that margin.

Why aren’t you working with a broker instead?