Refinance A Construction Loan

Interest rates are at all time lows right now and we’re considering refinancing our original construction loan. When we built the house four years ago we used a construction loan to help finance the construction. The construction loan was a adjustable rate mortgage with the first 7 years fixed. The rate was 5.875% and it will remain at that rate for another 3+ years.

Considering how low rates have gone I’ve started shopping around for a new 30 year fixed rate loan to refinance out of the original construction loan.  Currently I’m finding rates in the 5.125% to 4.875% range for a 30 year fixed mortage with zero points.

The interesting part of all this is hearing all the new fees and regulations that have popped up over the last couple of years. As one banker put it to me today we are all paying a price for the sins of the past banking industry. There is a 0.25% fee being added to fixed mortgages by the fine folks at FannieMae (presumeably to cover insurance on loans). Banks are being much more strict on limits that require escrow accounts to cover taxes and insurance. And it’s very unlikely that you’ll be getting a mortgage without significant equity in your property.

Having said that I hope we can refinance our existing construction loan to a 30 year fixed mortgage in the coming months. Preferably somewhere around 4.75% with any luck!