Refinancing

[thebruce44]

I just called Countrywide (now Bank of America) to see about possibly refinancing my 30 yr fixed 6.25% mortgage. They said I could refinance to 4.75% (APR 4.9%) which would end up lowering my monthly payment by $130. Obviously very good news.

 

The bad part is that the refinancing fee would be $4,300. This seems excessive to me, as I think my original fees were around $1,500 when I first set up the loan.

 

Does anyone have any suggestions or agree one way or another? This is all fairly confusing to me, but I am thinking I should at least look at what other options are out there. Or would it be even more expensive to go with another lender who would have to start a loan from scratch? I think my best bet would be to enter my info into Lendingtree.com like I did two years ago when I bought my condo.

 

Thanks for any advise.

[Invader3K]

You'd have to hold onto the house for almost three years to make the re-financing even worth it. So I guess it comes down to how long you realistically think you'll be at that house.

 

I'm not expert, but I guess I'd at least shop around? $4300 just seems really high, especially given the current housing market.

[PeaveyFury]

Assuming that rate is for another 30 year loan, the rate is a bit lower than I've seen for other 30-years, but those closing costs are double to triple what others charge (my closing costs back in Feb. were ~1500). Still, if you're planning on staying there for a while, it'll still save you money to refinance. If you're planning on moving in the next 1-4 years as Invader said, though, you'd probably end up in the hole.

 

Are you sure that quote didn't involve points? Again, since the rate is a bit low and closing costs are high, that makes me wonder.

[blatzlight]

I have had two very close friends get 4.35 30yr fixed in the last 2 wks on their mortgages. If you have the right credit you can get a great loan.

[thebruce44]

I don't think that rate is too hard to come by, but it just isn't worth it for those closing costs. I guess my real question is, would there be a disadvantage to refinancing with another company?

 

And that quote did involve points, but I am sorry to say I am not quite sure what that means. I need to talk to my dad as he has his brokers license and usually helps me out with stuff like this. Thanks for the advise everyone.

[PeaveyFury]

A quick and easy definition of points (with a handy 'is it worth it' calculator):

 

http://www.bankrate.com/calculators/mortgages/mortgage-point-adviser.aspx

[JJHardy7]

Assuming that rate is for another 30 year loan, the rate is a bit lower than I've seen for other 30-years, but those closing costs are double to triple what others charge (my closing costs back in Feb. were ~1500).

 

Was that a re-fi? If it was, that was a pretty good deal.

[brewers4eric]

My experience with mortgages is limited to one, but you will want to shop around as much as you can. Lower rates with the big companies sometimes come at the cost of customer service. Odds are that you will need to make some changes at least a couple of times over 30 years.

 

Our local bank has offered to drop a percentage point off our mortgage for $300. In our case, it would take 7 months off of the term of our loan. The question we have to ask ourselves now is whether or not there is a $300 investment that we could make today that would pay off better in 10 years. I'll let you know how it turns out in 2019.

[Patrick425]

I have had two very close friends get 4.35 30yr fixed in the last 2 wks on their mortgages. If you have the right credit you can get a great loan.

Regardless of their credit scores, that seems extremely low. The lowest rates I have seen lately have been aroune 4.75 (and usually the advertised rate is the lowest rate they offer to people with excellent credit). I'm not doubting you, but I'm guessing they had to pay points on that. If not, I'm curious as to where they got it.

 

I refinanced a couple of months ago at 4.875 with no points for 30 years. Closing costs were around 1,300. If you live in the Milwaukee area and are looking to refinance, State Central Credit Union always seems to have the best deals (when you combine rates, points, and closing costs)....and no, I don't work there.

[TSack27]

Seems as the consensus is $4300 is on the very high extreme, but from my experiences I thought even the $1300-$1500 numbers being reported seemed a little high. Not sure what cities everyone is reporting from or how much has changed in the past couple of months, but up in the Central/Northcentral part of the state I was able to get my initial financing through one of the big national banks 6 years ago for ~$800 closing costs, and refinanced 4 years ago through a regional bank for ~$300. I pointed another co-worker's family towards that same regional bank a few months ago and they still got similarly low pricing... if anyone from these parts is interested in more details, you may want to look up Time Federal Savings Bank (and no, I don't work in the industry either).

[MJLiverock]

Off the top of my head I can come up with these fees:

 

An appraisal is going to cost $200-$300 depending on where you live, title insurance may be $400 to $600 depending on value of the home and company used, filing fees with the county will be another $50-$75, flood plain determination is another $25 to $50, some banks charge up to $300 to waive escrow of real estate taxes (others charge nothing), credit reports can cost up to $50, bank fees for doc prep or loan application may add another $200.

 

Some of the really low closing costs cited above sound like a refi done very shortly after the original loan was made by the same bank where they don't have to order a new appraisal or title insurance but rather do a recert of the appraisal and rely on the old title work.

 

Sometimes they include the accured interest on your payoff or the first month of your new loan in the closing costs which can move the dollar amount up as well.

 

Most rates are around 5 to 5.25% right now without points, you can pay points to buy the rate down but then you have to figure out the break even point for you and if it is worth it. Don't forget you can amortize the points you pay on your taxes for each year in addition to the interest expense.

[JJHardy7]

Good points MJLiverock. I think it's also important to keep track of your ending balance on the old loan to the new one. In other words, out of pocket fees might be low, but they may just move that to the principal on the loan. I'm not saying that's a bad thing, but I did a re-fi a few months ago and many offers I had were 'too good to be true'. I didn't want any of my closing costs rolled into my loan.

 

I also found that a lot of offers I had were trying to get the rate lower than I needed and thus charging way too much.

[PrinceFielder28]

I just locked my refinance at 4.875% on a 30 year mortgage. My current loan from 3 years ago was at 6.525. So I'm dropping 1.75% off my interest rate. The total for all the fees combined came to about $1500. So yes that $4300 amount is obscene.

[Patrick425]

Also, two ways to aproach refinancing:

One, to save money monthly for extra spending cash. Or, what we have done is just continue to pay our old mortgage payment. This allows us to pay $155 extra towards principal each month and, if we can continue to do this for the life of the loan, it will allow us to pay the loan off 7 years early and save about $44,000 over the life of the loan.

[RyDogg66]

Most of that 4300 is probably going into the brokers pocket.

[MHgb]

Associated Bank. 4.625% in March. (4.75% - .125%% for opening a checking account at bank (min $100 deposit). $1100 closing costs.

 

Don't fall for the $4300. Try a different bank.

[thebruce44]

I put my info into Lendingtree.com at lunch and already have an offer for 5% 30 year no points with closing costs of $2138. He said the out of pocket closing cost expense would be only $470, so does that mean the rest would get put into the loan?

 

On another note, I think this is probably an obvious answer, but I currently have about $4500 in my escrow account with Countrywide. I am assuming if I refinance, they will just cut me a check of that money they are holding, correct? Then I would just hold on to this for when my property taxes come due this summer.

[wallus]

Bringing this thread back from the dead, I am looking to refinance my mortgage. Any experts have the best spots to do this? I would like to keep the fees to around $0 if possible.

[nate82]

Bringing this thread back from the dead, I am looking to refinance my mortgage. Any experts have the best spots to do this? I would like to keep the fees to around $0 if possible.

Try this website: http://www.bankrate.com/mortgage.aspx

[wallus]

Try this website: http://www.bankrate.com/mortgage.aspx

Thanks Nate. I have looked at that website. Are all of the places on there ones I can trust? I have never done a re-fi before and am not really sure of the process.

[nate82]

Thanks Nate. I have looked at that website. Are all of the places on there ones I can trust? I have never done a re-fi before and am not really sure of the process.

Most are yes. I currently work at U.S. Bank and I know we have rates that are close to what is on that web page. You might want to check this out just for the reading there is some good information on this page http://www.usbank.com/cgi...cing_your_home.cfm

 

The best part is you can e-mail a representative and they will get back to you rather quickly. I would first shop around though. Use that first website that I had and look at the rates that other banks are offering in your area.

[mothershipconnection]

Only tangentially related, but I decided to vent about it here.

Getting a mortgage SUCKS right now. Mortgage companies seem to pretty much just be covering their butts and holding on to their money. I've had a contract on a house since early June that I still can't close on. The first problem is that they won't allow my wife, her superior credit score, or her income on the application or counted as household income because she's a (legal) foreigner who doesn't have citizenship, just a work visa until her green card is final next spring. Also, all of our debt is in my name, so I have to apply as a single person, with $51K left on my current mortgage and another $50K in student debts.

 

First, they tried to do FHA even though I already have one, which I knew wouldn't work, but the lender apparently didn't - three weeks wasted. Then, they said my wife COULD be on the loan, but then the underwriter said no.

 

My file has been to an underwriter, "days from closing" several times, with about 6 different lenders, and each time they come back with crazy stuff. First, I had to pay off over $3K worth of debt assigned to my ex-wife in our divorce 5 years ago, pay to have a credit supplement, "lease" my current house to my wife so my expenses look lower, provide my W-2's and tax returns for 3 years, pay stubs back 6 months, provide letters from my employer verifying my income THREE TIMES. Then, once a lender was finally satisfied, they were unable to get PMI, so I have to put 20% down. That meant I had to have my dad "gift me" a couple grand that my wife will pay back after closing, provide his bank statement before and after the gift, provide cleared check images on this, as well as my statement before and after the deposit. Prior to this, they suggested that I refinance my current loan from FHA to conventional so that the new loan can be FHA, but that would cost several thousand dollars, which I balked at.

 

It's not like I'm sub-prime our under-employed, my median credit score was 691 before I paid off my ex's collections and had the report updated, and the loan amount on the new house is roughly double my income (and 125% of our combined household income).

 

This has also made selling my current house a nightmare, as several people have been interested, but none of them can get a loan, and keep making offers based on owner-financing, none of which have been attractive enough to lure me in.

[bork]

My current mortgage is through Bank of America. I started the process of refinancing from a 30 to a 20 year loan. Monthly payments would be about the same. But Bank of America was impossible to work with. They had me jumping through all kinds of hoops. So I said forget it. I have excellent credit, so I'm checking into other options now.

[lodiness]

I remember about 2 weeks ago, my bank had a 15 year fixed for about 3.85%. They are a family owned bank, so you actually get to talk to the person that makes a decision on the mortgage. I originally got my loan through WHEDA, and Amcore kept on jacking me around. Finally just called up WHEDA (who my uncle works for) and asked what was up. They said it was approved for over 2 weeks. Some of the banks I've dealt with seem to just jack you around, and never give you a real answer. If you're in the Madison area, I would definitely check out the Bank of Prarie du Sac. Had some sort of account there since I was in about 8th grade, great to work with, and they are competitive on all types of rates.

[LouisEly]

With interest rates as low as they are, the break even point on paying a "point" is probably over 10 years. If you plan on staying in the house the rest of your life it might be worth it, but I think you said you have a condo or are condo shopping.

 

They will try to push the point on you because it is more commission for the mortgage officer/broker. Wells Fargo tried to push it on me as well. If you don't plan on being in a house for at least 10 years it isn't worth it. It just buys down your interest by 0.125%, which also makes it look like you are getting a better deal on the rate.

 

Tell them you don't want to pay the point, but look at a 20-year loan instead. On a $300,000 loan, if that reduces the interest rate from 4.75% to 4.375% the monthly amount is only $300 more but it knocks 10 years of payments off the loan. On a $250,000 loan the difference is only $250/month.