Refinance 30yr - 4.75%?

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Topic Author
rocketsrule
Posts: 18
Joined: Wed Jul 10, 2019 1:32 pm

Refinance 30yr - 4.75%?

Post by rocketsrule » Fri Jul 12, 2019 10:19 am

Just moved into a new place in Jan with a 30yr - 4.75% rate just to get things closed quickly. I am about 6-7 months in and trying to figure if I should refinance to a 30yr again then just pay the extra saving back to principal. The other idea is get it down to a 20-25yr which would equate around the same monthly.

Value - 415,000
Loan left - $325000
P+I = 1,711
With Escrow + HOA = $2,729.77

15 yr - Rates approx 3.25-3.4%
20 yr - Rates approx 3.6 - 3.75%
30 yr - Rates approx 3.75-3.8

I spoke to LoanDepot today and they gave me this. The fee's seems really high but the rate is pretty low. I updated the spreadsheet they sent with more accurate info.

Thoughts? I don't want to have to bring money to closing unless it's for escrow and I will then get that money back.

I don't understand this... Cash to/from Borrower $ 6,948.04

What am I missing as the total monthly payment actually is more on this.?

What is the "other fee " on here of $227?

Also is PMI a minimum to years and hard to have fall off?

LOAN Depot $2779
Current:$2734


https://i.imgur.com/Azzz7yn.png
Last edited by rocketsrule on Wed Jul 17, 2019 2:55 pm, edited 7 times in total.

sergio
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Re: Refinance 30yr - 4.75%?

Post by sergio » Fri Jul 12, 2019 10:26 am

I'd seriously consider it for a 1% reduction in interest. What is the time to break even? What I wouldn't do it take the 20 year for those rates.

MichCPA
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Joined: Fri Jul 06, 2018 9:06 pm

Re: Refinance 30yr - 4.75%?

Post by MichCPA » Fri Jul 12, 2019 10:29 am

rocketsrule wrote:
Fri Jul 12, 2019 10:19 am
Just moved into a new place in Jan with a 30yr - 4.75% rate just to get things closed quickly. I am about 6-7 months in and trying to figure if I should refinance to a 30yr again then just pay the extra saving back to principal. The other idea is get it down to a 20-25yr which would equate around the same monthly.

15 yr - Rates approx 3.25-3.4%
20 yr - Rates approx 3.6 - 3.75%
30 yr - Rates approx 3.75-2.8
At 4.75% you spend 88k of interest per 100k financed. (Assumes no payoff)
At 3.8% (I am assuming 2.8% was a typo), you spend 68k per 100k financed.

Going with a 3.25% saves you about 5k over paying of the 30 at 3.8% in 15 yrs.

Definitely refinance, but you need to decide if the $250 mo of smaller minimum payments (per 100k) are worth the 5k per 100k in interest.

Sorry about the 'per 100k' but those are the best numbers I can give without knowing actual mortgage value.

snailderby
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Joined: Thu Jul 26, 2018 11:30 am

Re: Refinance 30yr - 4.75%?

Post by snailderby » Fri Jul 12, 2019 10:32 am

We are currently in the process of refinancing our house. If you can refinance for <$1750 in total costs (lender costs + third-party costs + transfer taxes), and if you plan to stay in your house for >2 years, I would probably do it.

Topic Author
rocketsrule
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Joined: Wed Jul 10, 2019 1:32 pm

Re: Refinance 30yr - 4.75%?

Post by rocketsrule » Fri Jul 12, 2019 10:40 am

MichCPA wrote:
Fri Jul 12, 2019 10:29 am
rocketsrule wrote:
Fri Jul 12, 2019 10:19 am
Just moved into a new place in Jan with a 30yr - 4.75% rate just to get things closed quickly. I am about 6-7 months in and trying to figure if I should refinance to a 30yr again then just pay the extra saving back to principal. The other idea is get it down to a 20-25yr which would equate around the same monthly.

15 yr - Rates approx 3.25-3.4%
20 yr - Rates approx 3.6 - 3.75%
30 yr - Rates approx 3.75-2.8
At 4.75% you spend 88k of interest per 100k financed. (Assumes no payoff)
At 3.8% (I am assuming 2.8% was a typo), you spend 68k per 100k financed.

Going with a 3.25% saves you about 5k over paying of the 30 at 3.8% in 15 yrs.

Definitely refinance, but you need to decide if the $250 mo of smaller minimum payments (per 100k) are worth the 5k per 100k in interest.

Sorry about the 'per 100k' but those are the best numbers I can give without knowing actual mortgage value.
I updated numbers

Big Dog
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Re: Refinance 30yr - 4.75%?

Post by Big Dog » Fri Jul 12, 2019 10:47 am

I would do a no-cost refi so you can do it again if rates drop later.

MotoTrojan
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Re: Refinance 30yr - 4.75%?

Post by MotoTrojan » Fri Jul 12, 2019 10:49 am

20 year doesn’t seem worth it but only you can decide what the extra liquidity is worth.

mariezzz
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Re: Refinance 30yr - 4.75%?

Post by mariezzz » Fri Jul 12, 2019 2:56 pm

Whether you should refinance in part depends on how long you intend to stay. If there's a chance you're going to move within a few years, that would affect how much you want to pay for closing costs of the refinance (how likely are you to want to move to take a better job? How secure is your current job?). To get a lower rate, you usually have higher costs.

If you haven't looked at aimloan.com, I'd suggest that. Aimloan tends to be fairly competitive on 15 year rates; less so on 30 year. You enter some basic information about house value, desired loan, and zip code, and then you see possible rates. On that page, there are links to "see more X-year fixed rates" so you can compare how rates & closing costs vary (for Aimloan). It would be nice if more lenders made this sort of information readily available. Seeing that helped me decide which rate to go with - I figured out how long I'd have to stay in the house to make one rate less expensive than another. The difference in total interest paid for rates about .25% apart is pretty minuscule, as someone else already mentioned.

I haven't seen a 20 year rate that's really worth reducing repayment period from 30 years to 20 years; from what I've seen, you have to go to a 15 year rate to get a significant reduction in interest rate.

4.75% is a fairly high rate - I'm surprised you couldn't get something lower when you closed the first time. Do you pay PMI? I assume not. From the numbers you entered, you're just a little above the 20% downpayment threshold to avoid PMI. If your refinance appraisal comes in lower, you may be told you have to pay PMI unless you can come up with a little more cash.

Be aware a no-cost refinance only refers to closing costs. If you refinance, you typically have to pay again for buyer's title insurance.

Big Dog
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Re: Refinance 30yr - 4.75%?

Post by Big Dog » Fri Jul 12, 2019 3:01 pm

Be aware a no-cost refinance only refers to closing costs. If you refinance, you typically have to pay again for buyer's title insurance.
Maybe that's a local state issue? I've done several no-cost refis in (SoCal in) the past years (as the rates kept dropping), and all expenses -- including any title insurance -- were rolled into the new balance.

Bacchus01
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Re: Refinance 30yr - 4.75%?

Post by Bacchus01 » Fri Jul 12, 2019 3:13 pm

You’ll save ~$3250 in year one in a 30 and another $1600 for a 15.

No doubt you should refinance. I’d go 15 if you can swing it, but the spread on the 20 is not worth it.

Bacchus01
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Re: Refinance 30yr - 4.75%?

Post by Bacchus01 » Fri Jul 12, 2019 3:13 pm

Big Dog wrote:
Fri Jul 12, 2019 3:01 pm
Be aware a no-cost refinance only refers to closing costs. If you refinance, you typically have to pay again for buyer's title insurance.
Maybe that's a local state issue? I've done several no-cost refis in (SoCal in) the past years (as the rates kept dropping), and all expenses -- including any title insurance -- were rolled into the new balance.
Then there wasn’t “no cost”

Glockenspiel
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Re: Refinance 30yr - 4.75%?

Post by Glockenspiel » Fri Jul 12, 2019 3:45 pm

rocketsrule wrote:
Fri Jul 12, 2019 10:19 am
Just moved into a new place in Jan with a 30yr - 4.75% rate just to get things closed quickly. I am about 6-7 months in and trying to figure if I should refinance to a 30yr again then just pay the extra saving back to principal. The other idea is get it down to a 20-25yr which would equate around the same monthly.

Value - 415,000
Loan left - $325000

15 yr - Rates approx 3.25-3.4%
20 yr - Rates approx 3.6 - 3.75%
30 yr - Rates approx 3.75-3.8
I'd absolutely refinance to a new 30-year at 3.75%. You should quickly pay back the costs, if you're planning on living there for more than a few years. You maintain maximum flexibility with a 30-year and can pay more principal if you want, or not, and just invest the savings.

ohai
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Re: Refinance 30yr - 4.75%?

Post by ohai » Fri Jul 12, 2019 3:47 pm

1% is crazy. You should definitely refinance that sh.

chevca
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Re: Refinance 30yr - 4.75%?

Post by chevca » Fri Jul 12, 2019 3:52 pm

Refinance for sure if you can shave a full point or more off your rate. Go with the 15 year if you can afford that monthly payment easily. If not, go with the 30 year. You're only half a year into the current mortgage. Don't worry for a second about starting another 30 year mortgage. You barely started the one you have.

barnaclebob
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Re: Refinance 30yr - 4.75%?

Post by barnaclebob » Fri Jul 12, 2019 5:01 pm

It will almost guaranteed to be a good time to refi if you are at 4.75%. I just locked in a 15yr at 3.375%, current loan is 20yr 4.125% that I originally got in Dec 2017. Break even time was about a year since I didn't even need to get another appraisal (<40% LTV)

Big Dog
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Re: Refinance 30yr - 4.75%?

Post by Big Dog » Fri Jul 12, 2019 9:10 pm

Bacchus:

a no-cost refi is another way of saying no out of pocket costs. All expenses are just rolled into the loan. Regardless, teh point is the same. For a slightly higher rate, OP can just sign some paperwork and not have to cut a check. That way if rates decline again, just refi again. Paying points/expenses out of pocket at time of refi makes this strategy much less attractive.


https://www.forbes.com/sites/moneybuild ... e5f5be2f5d

Bacchus01
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Re: Refinance 30yr - 4.75%?

Post by Bacchus01 » Fri Jul 12, 2019 10:51 pm

Big Dog wrote:
Fri Jul 12, 2019 9:10 pm
Bacchus:

a no-cost refi is another way of saying no out of pocket costs. All expenses are just rolled into the loan. Regardless, teh point is the same. For a slightly higher rate, OP can just sign some paperwork and not have to cut a check. That way if rates decline again, just refi again. Paying points/expenses out of pocket at time of refi makes this strategy much less attractive.


https://www.forbes.com/sites/moneybuild ... e5f5be2f5d
Exactly, so quit calling it a no-cost refi when that doesn't exist.

mariezzz
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Re: Refinance 30yr - 4.75%?

Post by mariezzz » Sat Jul 13, 2019 1:12 am

Big Dog wrote:
Fri Jul 12, 2019 3:01 pm
Be aware a no-cost refinance only refers to closing costs. If you refinance, you typically have to pay again for buyer's title insurance.
Maybe that's a local state issue? I've done several no-cost refis in (SoCal in) the past years (as the rates kept dropping), and all expenses -- including any title insurance -- were rolled into the new balance.
So, in fact, you paid for the costs of refinancing.

People need to be really careful and completely understand what a lender means. It sounds like you understood your closing costs were being rolled into the new balance.

Another approach is the buyer pays a higher interest rate, but the lender pays some of those closing costs. The higher interest rate is the way those closing costs are being paid. Aimloan is really upfront about this - as I explained in my post above, they show you each rate and what your 'required' costs are. They don't refer to this as a 'no-cost refi'.

I wish the regulators would get really tough on the use of the term 'no cost'. Lenders instead need to be saying 'roll the closing costs into your balance' or be explicit (like Aimloan is) that you're trading lower out-of-pocket costs for a higher interest rate.

stm
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Re: Refinance 30yr - 4.75%?

Post by stm » Sat Jul 13, 2019 4:41 am

mariezzz wrote:
Fri Jul 12, 2019 2:56 pm
4.75% is a fairly high rate - I'm surprised you couldn't get something lower when you closed the first time. Do you pay PMI? I assume not. From the numbers you entered, you're just a little above the 20% downpayment threshold to avoid PMI. If your refinance appraisal comes in lower, you may be told you have to pay PMI unless you can come up with a little more cash.
As someone that closed on a house in Feb, I can attest to the hump in interest rates at that time frame. Before the stock market went off the rails in Dec, rates climbed steadily before dropping slightly in Feb/March. If OP had locked in a rate anytime in the previous few months, it's quite possible to be at 4.75; my quotes were around 4.375 - 4.5%. Glad that builder was late and ended up at 4.25% in Feb, but already considering refinancing.

fleckmc
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Re: Refinance 30yr - 4.75%?

Post by fleckmc » Sat Jul 13, 2019 5:39 am

You can limit your risk if you don't know how long you are going to stay in the house and still lower your payment. Tell the lender that you want to refinance but you will pay no closing costs. You have to be very clear about paying no closing costs (I used the phrase "I will not bring any money to closing and I will not accept closing costs be added to my loan balance"). I want to be clear now, do not accept them adding the dollar amount to your loan balance. When we refinanced our situation was just like yours (going from 4.75 to 3.75). By not paying closing costs they offered 3.875. I know people will say "you are still paying closing costs, they just made the rate a little higher and rolled it into the duration of the loan". You are correct, if I stay in the house for the life of the loan.. If I don't, I just lowered my rate by 0.875 and was not out any money.

Jags4186
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Re: Refinance 30yr - 4.75%?

Post by Jags4186 » Sat Jul 13, 2019 6:05 am

Just a reminder that you can still do a 3.875% no cost refinance.

For those who above have pointed out that there is no “no cost” you are correct. You can do a higher rate with a lender credit or a lower rate with higher closing costs. 3.875% was high enough to cover about $2600 in closing costs and put $700 in my pocket. Going down to 3.75% would have forced me to pay about $1400 out of pocket to close.

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rocketsrule
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Re: Refinance 30yr - 4.75%?

Post by rocketsrule » Tue Jul 16, 2019 9:09 am

stm wrote:
Sat Jul 13, 2019 4:41 am
mariezzz wrote:
Fri Jul 12, 2019 2:56 pm
4.75% is a fairly high rate - I'm surprised you couldn't get something lower when you closed the first time. Do you pay PMI? I assume not. From the numbers you entered, you're just a little above the 20% downpayment threshold to avoid PMI. If your refinance appraisal comes in lower, you may be told you have to pay PMI unless you can come up with a little more cash.
As someone that closed on a house in Feb, I can attest to the hump in interest rates at that time frame. Before the stock market went off the rails in Dec, rates climbed steadily before dropping slightly in Feb/March. If OP had locked in a rate anytime in the previous few months, it's quite possible to be at 4.75; my quotes were around 4.375 - 4.5%. Glad that builder was late and ended up at 4.25% in Feb, but already considering refinancing.
I went with a higher rate as they were able to control the close a lot quicker on the new property (builder owned). I also got all new high end appliances which were not going to be included anyway for using their own lender. It was worth it + the under 30 day close.

I got locked in in December so missed some of the drops

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rocketsrule
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Re: Refinance 30yr - 4.75%?

Post by rocketsrule » Tue Jul 16, 2019 9:16 am

fleckmc wrote:
Sat Jul 13, 2019 5:39 am
You can limit your risk if you don't know how long you are going to stay in the house and still lower your payment. Tell the lender that you want to refinance but you will pay no closing costs. You have to be very clear about paying no closing costs (I used the phrase "I will not bring any money to closing and I will not accept closing costs be added to my loan balance"). I want to be clear now, do not accept them adding the dollar amount to your loan balance. When we refinanced our situation was just like yours (going from 4.75 to 3.75). By not paying closing costs they offered 3.875. I know people will say "you are still paying closing costs, they just made the rate a little higher and rolled it into the duration of the loan". You are correct, if I stay in the house for the life of the loan.. If I don't, I just lowered my rate by 0.875 and was not out any money.
good point. We will probably be here 10+ years and have no plans on moving for a long time!

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rocketsrule
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Re: Refinance 30yr - 4.75%?

Post by rocketsrule » Tue Jul 16, 2019 9:16 am

Jags4186 wrote:
Sat Jul 13, 2019 6:05 am
Just a reminder that you can still do a 3.875% no cost refinance.

For those who above have pointed out that there is no “no cost” you are correct. You can do a higher rate with a lender credit or a lower rate with higher closing costs. 3.875% was high enough to cover about $2600 in closing costs and put $700 in my pocket. Going down to 3.75% would have forced me to pay about $1400 out of pocket to close.
With whom did you close with at that rate without closing costs?

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rocketsrule
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Re: Refinance 30yr - 4.75%?

Post by rocketsrule » Wed Jul 17, 2019 11:10 am

chevca wrote:
Fri Jul 12, 2019 3:52 pm
Refinance for sure if you can shave a full point or more off your rate. Go with the 15 year if you can afford that monthly payment easily. If not, go with the 30 year. You're only half a year into the current mortgage. Don't worry for a second about starting another 30 year mortgage. You barely started the one you have.
Can anyone provide input on this from Loan Depot?
https://imgur.com/6915mnp

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willthrill81
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Re: Refinance 30yr - 4.75%?

Post by willthrill81 » Wed Jul 17, 2019 11:37 am

Unless you were planning moving in the next couple of years, refinancing is a no-brainer.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

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rocketsrule
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Re: Refinance 30yr - 4.75%?

Post by rocketsrule » Wed Jul 17, 2019 11:41 am

willthrill81 wrote:
Wed Jul 17, 2019 11:37 am
Unless you were planning moving in the next couple of years, refinancing is a no-brainer.
Thanks. What are you thoughts on the link I posted? Fees seems high but payments and rate is low

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willthrill81
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Re: Refinance 30yr - 4.75%?

Post by willthrill81 » Wed Jul 17, 2019 11:45 am

rocketsrule wrote:
Wed Jul 17, 2019 11:41 am
willthrill81 wrote:
Wed Jul 17, 2019 11:37 am
Unless you were planning moving in the next couple of years, refinancing is a no-brainer.
Thanks. What are you thoughts on the link I posted? Fees seems high but payments and rate is low
A $1,595 origination fee looks high to me as well, but 3.5% is very competitive for a 30 year mortgage right now. Overall, it looks good to me.

I'd definitely recommend that you put down a little more to get the LTV from the current 80.482% to below 80% so that you can very likely avoid the $33.40 of private mortgage insurance.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

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rocketsrule
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Re: Refinance 30yr - 4.75%?

Post by rocketsrule » Wed Jul 17, 2019 2:19 pm

willthrill81 wrote:
Wed Jul 17, 2019 11:45 am
rocketsrule wrote:
Wed Jul 17, 2019 11:41 am
willthrill81 wrote:
Wed Jul 17, 2019 11:37 am
Unless you were planning moving in the next couple of years, refinancing is a no-brainer.
Thanks. What are you thoughts on the link I posted? Fees seems high but payments and rate is low
A $1,595 origination fee looks high to me as well, but 3.5% is very competitive for a 30 year mortgage right now. Overall, it looks good to me.

I'd definitely recommend that you put down a little more to get the LTV from the current 80.482% to below 80% so that you can very likely avoid the $33.40 of private mortgage insurance.
Updated the spreadsheet to be more accurate
Thoughts? I don't want to have to bring money to closing unless it's for escrow and I will then get that money back.

I don't understand this... Cash to/from Borrower $ 6,948.04


https://i.imgur.com/Azzz7yn.png

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willthrill81
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Re: Refinance 30yr - 4.75%?

Post by willthrill81 » Wed Jul 17, 2019 2:31 pm

rocketsrule wrote:
Wed Jul 17, 2019 2:19 pm
willthrill81 wrote:
Wed Jul 17, 2019 11:45 am
rocketsrule wrote:
Wed Jul 17, 2019 11:41 am
willthrill81 wrote:
Wed Jul 17, 2019 11:37 am
Unless you were planning moving in the next couple of years, refinancing is a no-brainer.
Thanks. What are you thoughts on the link I posted? Fees seems high but payments and rate is low
A $1,595 origination fee looks high to me as well, but 3.5% is very competitive for a 30 year mortgage right now. Overall, it looks good to me.

I'd definitely recommend that you put down a little more to get the LTV from the current 80.482% to below 80% so that you can very likely avoid the $33.40 of private mortgage insurance.
Updated the spreadsheet to be more accurate
Thoughts? I don't want to have to bring money to closing unless it's for escrow and I will then get that money back.

I don't understand this... Cash to/from Borrower $ 6,948.04


https://i.imgur.com/Azzz7yn.png
That is how much you would have to bring to closing. You may want to ask if that can get wrapped into the loan if you don't want to bring money to the table.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

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rocketsrule
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Re: Refinance 30yr - 4.75%?

Post by rocketsrule » Wed Jul 17, 2019 2:37 pm

willthrill81 wrote:
Wed Jul 17, 2019 2:31 pm
rocketsrule wrote:
Wed Jul 17, 2019 2:19 pm
willthrill81 wrote:
Wed Jul 17, 2019 11:45 am
rocketsrule wrote:
Wed Jul 17, 2019 11:41 am
willthrill81 wrote:
Wed Jul 17, 2019 11:37 am
Unless you were planning moving in the next couple of years, refinancing is a no-brainer.
Thanks. What are you thoughts on the link I posted? Fees seems high but payments and rate is low
A $1,595 origination fee looks high to me as well, but 3.5% is very competitive for a 30 year mortgage right now. Overall, it looks good to me.

I'd definitely recommend that you put down a little more to get the LTV from the current 80.482% to below 80% so that you can very likely avoid the $33.40 of private mortgage insurance.
Updated the spreadsheet to be more accurate
Thoughts? I don't want to have to bring money to closing unless it's for escrow and I will then get that money back.

I don't understand this... Cash to/from Borrower $ 6,948.04


https://i.imgur.com/Azzz7yn.png
That is how much you would have to bring to closing. You may want to ask if that can get wrapped into the loan if you don't want to bring money to the table.
Is that for the escrow however and I'll pretty much get that amount back (refund) from my current escrow account?

This is where I get confused. I don't want to pay any points or out of pocket.

Another bank was 3.75 through Costco with $650 loan origination. Do typically all the other costs stay the same across banks?

Like, why would I go with a 3.75 with lower closing costs vs this one?

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willthrill81
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Re: Refinance 30yr - 4.75%?

Post by willthrill81 » Wed Jul 17, 2019 2:41 pm

rocketsrule wrote:
Wed Jul 17, 2019 2:37 pm
willthrill81 wrote:
Wed Jul 17, 2019 2:31 pm
rocketsrule wrote:
Wed Jul 17, 2019 2:19 pm
willthrill81 wrote:
Wed Jul 17, 2019 11:45 am
rocketsrule wrote:
Wed Jul 17, 2019 11:41 am

Thanks. What are you thoughts on the link I posted? Fees seems high but payments and rate is low
A $1,595 origination fee looks high to me as well, but 3.5% is very competitive for a 30 year mortgage right now. Overall, it looks good to me.

I'd definitely recommend that you put down a little more to get the LTV from the current 80.482% to below 80% so that you can very likely avoid the $33.40 of private mortgage insurance.
Updated the spreadsheet to be more accurate
Thoughts? I don't want to have to bring money to closing unless it's for escrow and I will then get that money back.

I don't understand this... Cash to/from Borrower $ 6,948.04


https://i.imgur.com/Azzz7yn.png
That is how much you would have to bring to closing. You may want to ask if that can get wrapped into the loan if you don't want to bring money to the table.
Is that for the escrow however and I'll pretty much get that amount back (refund) from my current escrow account?

This is where I get confused. I don't want to pay any points or out of pocket.

Another bank was 3.75 through Costco with $650 loan origination. Do typically all the other costs stay the same across banks?

Like, why would I go with a 3.75 with lower closing costs vs this one?
You can crunch the numbers to see how much you would save, but saving $945 in the origination fee is very likely not worth a .25% higher rate. Most of the other costs will likely be very similar with other institutions.

I would contact this lender and see if it's possible for you to have the costs wrapped into the mortgage so you don't have to bring money to the table.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

Topic Author
rocketsrule
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Re: Refinance 30yr - 4.75%?

Post by rocketsrule » Wed Jul 17, 2019 2:49 pm

willthrill81 wrote:
Wed Jul 17, 2019 2:41 pm
rocketsrule wrote:
Wed Jul 17, 2019 2:37 pm
willthrill81 wrote:
Wed Jul 17, 2019 2:31 pm
rocketsrule wrote:
Wed Jul 17, 2019 2:19 pm
willthrill81 wrote:
Wed Jul 17, 2019 11:45 am


A $1,595 origination fee looks high to me as well, but 3.5% is very competitive for a 30 year mortgage right now. Overall, it looks good to me.

I'd definitely recommend that you put down a little more to get the LTV from the current 80.482% to below 80% so that you can very likely avoid the $33.40 of private mortgage insurance.
Updated the spreadsheet to be more accurate
Thoughts? I don't want to have to bring money to closing unless it's for escrow and I will then get that money back.

I don't understand this... Cash to/from Borrower $ 6,948.04


https://i.imgur.com/Azzz7yn.png
That is how much you would have to bring to closing. You may want to ask if that can get wrapped into the loan if you don't want to bring money to the table.
Is that for the escrow however and I'll pretty much get that amount back (refund) from my current escrow account?

This is where I get confused. I don't want to pay any points or out of pocket.

Another bank was 3.75 through Costco with $650 loan origination. Do typically all the other costs stay the same across banks?

Like, why would I go with a 3.75 with lower closing costs vs this one?
You can crunch the numbers to see how much you would save, but saving $945 in the origination fee is very likely not worth a .25% higher rate. Most of the other costs will likely be very similar with other institutions.

I would contact this lender and see if it's possible for you to have the costs wrapped into the mortgage so you don't have to bring money to the table.
I don't know what the other fee is. Also I heard the PMI is a minimal of two years and sometimes hard to take off.
Mortgage Insurance $ 33.40
Other $ 227.84

Also my monthly payment according to this statement is more than I pay now when you tally things up so I have no clue what I'm missing.

New Total: 2,779.80
Current: $2734.02

Principal & Interest $ 1,499.81
Property Taxes $ 911.33
Homeowners Insurance $ 107.42
Mortgage Insurance $ 33.40
Other $ 227.84
Total Monthly Payment $ 2,779.80
Monthly Payment Details
MONTHS PER MONTH TOTAL
Homeowners Insurance 6 $107.42 $644.52
Property Taxes 12 $911.33 $10,935.96
Total Prepaids & Reserves $10,429.73
Escrow Reserve Deposits
Debts to be Paid Off $ 325,920.00
Prepaids & Reserves $ 10,429.73
Closing Costs $ 5,219.55
Discount/Lender Credits $ (621.24)
Total Loan Amount $ 334,000.00

Topic Author
rocketsrule
Posts: 18
Joined: Wed Jul 10, 2019 1:32 pm

Re: Refinance 30yr - 4.75%?

Post by rocketsrule » Thu Jul 18, 2019 10:54 am

willthrill81 wrote:
Wed Jul 17, 2019 2:41 pm
rocketsrule wrote:
Wed Jul 17, 2019 2:37 pm
willthrill81 wrote:
Wed Jul 17, 2019 2:31 pm
rocketsrule wrote:
Wed Jul 17, 2019 2:19 pm
willthrill81 wrote:
Wed Jul 17, 2019 11:45 am


A $1,595 origination fee looks high to me as well, but 3.5% is very competitive for a 30 year mortgage right now. Overall, it looks good to me.

I'd definitely recommend that you put down a little more to get the LTV from the current 80.482% to below 80% so that you can very likely avoid the $33.40 of private mortgage insurance.
Updated the spreadsheet to be more accurate
Thoughts? I don't want to have to bring money to closing unless it's for escrow and I will then get that money back.

I don't understand this... Cash to/from Borrower $ 6,948.04


https://i.imgur.com/Azzz7yn.png
That is how much you would have to bring to closing. You may want to ask if that can get wrapped into the loan if you don't want to bring money to the table.
Is that for the escrow however and I'll pretty much get that amount back (refund) from my current escrow account?

This is where I get confused. I don't want to pay any points or out of pocket.

Another bank was 3.75 through Costco with $650 loan origination. Do typically all the other costs stay the same across banks?

Like, why would I go with a 3.75 with lower closing costs vs this one?
You can crunch the numbers to see how much you would save, but saving $945 in the origination fee is very likely not worth a .25% higher rate. Most of the other costs will likely be very similar with other institutions.

I would contact this lender and see if it's possible for you to have the costs wrapped into the mortgage so you don't have to bring money to the table.
Had them do a new comparison without escrow as well.

https://i.imgur.com/1UXzkiU.png

User avatar
willthrill81
Posts: 11803
Joined: Thu Jan 26, 2017 3:17 pm
Location: USA

Re: Refinance 30yr - 4.75%?

Post by willthrill81 » Thu Jul 18, 2019 11:45 am

rocketsrule wrote:
Thu Jul 18, 2019 10:54 am
willthrill81 wrote:
Wed Jul 17, 2019 2:41 pm
rocketsrule wrote:
Wed Jul 17, 2019 2:37 pm
willthrill81 wrote:
Wed Jul 17, 2019 2:31 pm
rocketsrule wrote:
Wed Jul 17, 2019 2:19 pm

Updated the spreadsheet to be more accurate
Thoughts? I don't want to have to bring money to closing unless it's for escrow and I will then get that money back.

I don't understand this... Cash to/from Borrower $ 6,948.04


https://i.imgur.com/Azzz7yn.png
That is how much you would have to bring to closing. You may want to ask if that can get wrapped into the loan if you don't want to bring money to the table.
Is that for the escrow however and I'll pretty much get that amount back (refund) from my current escrow account?

This is where I get confused. I don't want to pay any points or out of pocket.

Another bank was 3.75 through Costco with $650 loan origination. Do typically all the other costs stay the same across banks?

Like, why would I go with a 3.75 with lower closing costs vs this one?
You can crunch the numbers to see how much you would save, but saving $945 in the origination fee is very likely not worth a .25% higher rate. Most of the other costs will likely be very similar with other institutions.

I would contact this lender and see if it's possible for you to have the costs wrapped into the mortgage so you don't have to bring money to the table.
Had them do a new comparison without escrow as well.

https://i.imgur.com/1UXzkiU.png
That would allow you to meet your goal of not bringing money to closing, but I'm not sure if the .125% higher rate is worth it.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

mariezzz
Posts: 761
Joined: Mon Oct 02, 2017 11:02 pm

Re: Refinance 30yr - 4.75%?

Post by mariezzz » Fri Jul 19, 2019 10:54 am

I think you're confused because you're not taking the time to really understand what the fees at closing are for. You don't really understand the difference between money you pay to get the loan itself, vs. money that is escrowed for taxes, insurance (and the latter is money you would be paying regardless, so it's not really a cost of the loan - although it does need to be paid at the time the loan closes). Note that when you closed on your current loan, you also paid money into escrow, and that would be returned to you when the new loan closes.

You're also not understanding the tradeoff between getting a lower interest rate but paying higher upfront fees, vs. paying lower upfront fees, but paying a higher interest rate, and the difference in cost to you over time of these 2 options. Further below, I've provided some details that may help you understand.

Be sure you understand the terms of your current loan ... can you pay it off at any time without penalty? That's usually the case, but read your mortgage documents carefully.
I don't know what the other fee is. Also I heard the PMI is a minimal of two years and sometimes hard to take off.
Mortgage Insurance $ 33.40
Other $ 227.84

Also my monthly payment according to this statement is more than I pay now when you tally things up so I have no clue what I'm missing.

New Total: 2,779.80
Current: $2734.02

Principal & Interest $ 1,499.81
Property Taxes $ 911.33
Homeowners Insurance $ 107.42
Mortgage Insurance $ 33.40
Other $ 227.84
Total Monthly Payment $ 2,779.80
Monthly Payment Details
MONTHS PER MONTH TOTAL
Homeowners Insurance 6 $107.42 $644.52
Property Taxes 12 $911.33 $10,935.96
Total Prepaids & Reserves $10,429.73
Escrow Reserve Deposits
Debts to be Paid Off $ 325,920.00
Prepaids & Reserves $ 10,429.73
Closing Costs $ 5,219.55
Discount/Lender Credits $ (621.24)
Total Loan Amount $ 334,000.00
Honestly, the list above is flat out confusing. No one can compare loans using something like that. The lenders (in my opinion) try to make it difficult. I'd look at AimLoan's online estimates - they make it far more clear.

Don't go with anything that requires PMI (mortgage insurance)- it didn't sound like you had that on the first loan.
What precisely is the 'other' category - that is pretty expensive. Is that a homeowners association fee? (If yes, put that in the bucket you put taxes & insurance - see next section).

You need to think in terms of separate buckets.
Property taxes and homeowners insurance are things you're going to end up paying - they're not fundamentally money that is being paid to get the loan itself. Yes, needing to pay them at closing can be an issue if cash flow is tight, but they belong in a separate bucket.
(If cash flow is the issue, ask yourself if you can free up cash flow somehow. For example, I could put retirement contributions on hold for a few months, and then increase them after that, so my year-end contribution was the same. This is fine, as long as you're disciplined, and get them back on track. But be sure you don't do anything that would cause you to lose out on employer match - often, you can't make the match up in later months, so contribute what you need to to get the employer match.)

The assumption is you're getting a lower interest rate by paying higher costs related to the loan itself up front.
When you're comparing rates vs. money you have to pay to get each loan: figure out what the difference in your monthly payment is based on principal and interest ONLY (ignore taxes and homeowners insurance). Then figure out the difference in the actual cost of the loan (again, ignore taxes and homeowners insurance). Then, figure out how many months it will take you to recoup the difference, comparing 2 loans based on principal & interest payments at each interest rate. If you plan on staying in the house long enough to recoup the extra you pay up front, then paying a little more to the lender is worthwhile to get the lower interest rates.
There are websites that will walk you through this in more detail. I just figured it out using the amortization function in excel. An amortization formula or website (https://www.amortization-calc.com/) will tell you your monthly payment for just principal and interest.

-=0-0-0-0-0-0-0-0
AimLoan gives you the following detail for a refinance on a home worth 425,000, and a loan of 326,000.

I chose this option: 15-Year Fixed Rate 3.250% Rate / 3.321% APR (principal & interest payment = 2290.70; if you escrow taxes & homeowoners insurance, that will add to the payment; many lenders require this, or if you don't, will charge you a higher interest rate).

(I entered a specific zip code, 92122; the actual information below may vary depending on what zip code you entered.)

(I have the lines below indented, but that indentation is disappearing when I post this. I've added an * before the lines which aren't indented.)
On the closing costs tab, before you enter your tax information
*Guaranteed Lender Fees/(Credits) $538.60
---Guaranteed Lender Fee $995.00
---Guaranteed Lender Credit ($456.40)
*3rd Party Services We Select $587.50
---Guaranteed Appraisal Fee $478.00
---Guaranteed Credit Report Fee $40.00
---Guaranteed Flood Cert Fee $5.50
---Guaranteed Tax Service Fee $64.00
*3rd Party Services You May Select $1,195.00^^
---Title - Guaranteed Settlement Agent Fee $550.00
---Title - Lender's Title Insurance $645.00
*Recording Fees $246.00
*Total Lender & 3rd Party Costs $2,567.10

+++++++
on another tab, you enter your taxes: I used the values you specified. That produces the following information.

Mortgages to be paid with this loan $326,000.00
* Guaranteed Lender Charges $995.00
---Guaranteed Lender Fee $995.00
*Guaranteed Lender Credit ($456.40)
*3rd Party Services We Select $587.50
---Guaranteed Appraisal Fee $478.00
---Guaranteed Credit Report Fee $40.00
---Guaranteed Flood Cert Fee $5.50
---Guaranteed Tax Service Fee $64.00
*3rd Party Services You May Select $1,195.00^^ (comment: see note at bottom - fees are guaranteed if you use AimLoan's provider)
---Title - Guaranteed Settlement Agent Fee $550.00
---Title - Lender's Title Insurance $645.00
*Recording Fees $246.00
*Prepaids $435.41
---Prepaid Interest $435.41
==== Comment: the 'escrow' section represents money you'll pay, regardless of what loan you choose ; it's not a cost of the loan itself. ===
*Escrow Account Initial Deposit $7,370.99
---Homeowner's Insurance $991.68
---Property Taxes $6,379.31
====

*Your new loan amount ($326,000.00)
*Estimated cash required to close $10,373.50

Closing costs based on information you provided and subject to change until you have completed an application and locked your rate. Upon completion of your online application, you will be provided with an online Loan Estimate (official federal disclosure). Upon receipt of online approval, you will be given the opportunity to lock in your rate and guaranteed closing costs.
^^ Fees for third party service providers are guaranteed as shown, including Appraisal, Credit Report, Flood Cert, Tax Service, and all Government Charges and Taxes. Settlement Agent and Lenders Title Insurance are guaranteed if you use the national service provider we contract with to provide these services in your state.

+++++++
**different tab**
At a 3.250% interest rate, the APR for this loan type is 3.321%. The monthly payment schedule would be:

179 payments of $2,290.70 at an interest rate of 3.250% (this doesn't include escrow for taxes, insurance)
1 payment of $2,290.75 at an interest rate of 3.250%

This payment schedule is based on a $326,000 loan on a $425,000 property in San Diego county, CA.

If an escrow account is required or requested, the actual monthly payment will also include amounts for real estate taxes and homeowner's insurance premiums.

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