Mortgage Refi, How To, Should I?

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armeliusc
Posts: 196
Joined: Wed Dec 21, 2011 9:40 am

Mortgage Refi, How To, Should I?

Post by armeliusc » Thu Oct 12, 2017 8:51 am

Hello,
I am considering refinancing my current 30-year mortgage at 4.375% which has only been ~6 months old. I am browsing bankrate.com and it seems that I can get a better rate nowadays. Since I've never done this before, I am wondering about a few things:

- How does one shop for a refi? Should I just start calling the lender there? Does it matter who the lender is / what their reputation? I've never heard any of those companies before and I don't even know how to assess them. For example, Sebonic Financial shows up at the top for most of the term I am looking at, are they OK?
- Should I do refi in my situation? What are some gotchas I should be aware of?

Thanks
AC

JBTX
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Joined: Wed Jul 26, 2017 12:46 pm

Re: Mortgage Refi, How To, Should I?

Post by JBTX » Thu Oct 12, 2017 9:25 am

I’ve done several Refis. Whether it makes sense depends on the new rate and the applicable fees.

In my case after a couple of difficult refis with chase (one completed in about 3 months the other abandoned after about 2 months ) I ended up going with quicken loans. Both of my refis have been in about 3 weeks beginning to end. QL is probably not the lowest rate out there but some of these outfits may be throwing out teaser rates you aren’t likely to get.

Whether or not it is worth it to refi to another 30 year is hard to say without knowing specifics. If you choose to go 15 year you can lower your rate quite a bit more, probably in the 3.0% plus or minus. Obviously your monthly payment will go up With the shorter duration. Any refi is going to have upfront fees that are rolled into the value of your new loan. Those fees vary dramatically state to state depending on what the state requires. You will have to figure out how many months of interest savings it takes to cover those fees. If it is more than 4 or 5 years max then it probably isn’t worth doing. Typically you can lower your rate with higher fees (points). Whether or not that is worth doing depends on how long you are staying in your house. You also may be able to get a no fee loan, but the rate will be higher to compensate for the fees.

rotorhead
Posts: 383
Joined: Wed Mar 17, 2010 3:59 pm
Location: Florida

Re: Mortgage Refi, How To, Should I?

Post by rotorhead » Thu Oct 12, 2017 9:39 am

OP, I think in your case with a mortgage that's only 6 months old you might not realize much if any savings; especially after the fees of the new mortgage are factored in. A quick look at Bankrate.com shows 30-yr re-fi rates at just below 4% in my area.

http://www.bankrate.com/mortgage.aspx?t ... =Zero&cs=0

I don't think that's enough difference to offset the cost of going through re-fi.

Plug in your zipcode to see what's available in your area

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sunny_socal
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Re: Mortgage Refi, How To, Should I?

Post by sunny_socal » Thu Oct 12, 2017 9:41 am

For online lenders I've had good luck with aimloan.com and amerisave.com. The customer service is somewhat impersonal but they get the job done and they have great rates.

For the absolute best rates _and_ customer service I recommend finding a local mortgage broker. You can find a true no-cost refi with this approach (ie. there are still various "closing costs" but the lender will offer a large kick back to the broker, sufficient to cover those costs.)

armeliusc
Posts: 196
Joined: Wed Dec 21, 2011 9:40 am

Re: Mortgage Refi, How To, Should I?

Post by armeliusc » Thu Oct 12, 2017 9:46 am

JBTX wrote:
Thu Oct 12, 2017 9:25 am
QL is probably not the lowest rate out there but some of these outfits may be throwing out teaser rates you aren’t likely to get.
Could you elaborate why you think this 'teaser rate' is not likely to get? (honest question). So on a lark I put in a quick online info request and Sebonic called me with 3.75% for 30-year fixed, or 3.625% for 20-year fixed, with ~$500 appraisal and ~$1500 title fee (can be rolled into new loan).

I am looking at several different other websites (aimloan.com, amerisave) and they look similar.

Just a bit more info, I am not interested in paying for points at this moment. I have no escrow and would keep it that way. I will at minimum pay what I am currently paying to the new loan (so as not to resetting back to all of 30 years). With the rates above, I am debating whether to do another 30-year with (likely) possibility of extra payment, or 20 year. The rate and minimum payment for a 15-years fixed at this point looks like a stretch for us. Doable, but a real stretch, especially with kids going into (private) preschool and possibility of private (pre-K - 5), and with my net take home is ~$5700 after maxing one 401K and HSA (DW is not working currently).

But I'd be glad to hear any suggestions.

Thank you
AC

armeliusc
Posts: 196
Joined: Wed Dec 21, 2011 9:40 am

Re: Mortgage Refi, How To, Should I?

Post by armeliusc » Thu Oct 12, 2017 9:55 am

rotorhead wrote:
Thu Oct 12, 2017 9:39 am
OP, I think in your case with a mortgage that's only 6 months old you might not realize much if any savings; especially after the fees of the new mortgage are factored in. A quick look at Bankrate.com shows 30-yr re-fi rates at just below 4% in my area.
http://www.bankrate.com/mortgage.aspx?t ... =Zero&cs=0
Yes, they are similar with what I see on my zip code, but even on that page, with my current 4.375% vs 3.75% refi for 30 years, if I keep paying the same minimum amount (~$252K current balance) my spreadsheet tells me within 2-3 years I will save about ~$3K of interest, enough to cover the closing cost. Within the lifetime of the loan I will safe ~$55K of interest. Or am I missing something?
sunny_socal wrote:
Thu Oct 12, 2017 9:41 am
For the absolute best rates _and_ customer service I recommend finding a local mortgage broker. You can find a true no-cost refi with this approach (ie. there are still various "closing costs" but the lender will offer a large kick back to the broker, sufficient to cover those costs.)
Thanks; I will check with my local mortgage broker that I didn't end up using with my initial loan (I picked the home builder preferred mortgage company instead to get the incentives).

AC

armeliusc
Posts: 196
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Re: Mortgage Refi, How To, Should I?

Post by armeliusc » Thu Oct 12, 2017 9:59 am

And just to go back to my original / real question: are there risks with doing refinance that I may not be aware of? What if it doesn't go through, for some reason? Is there any risk with my current mortgage, etc?

Thanks
AC

JBTX
Posts: 1255
Joined: Wed Jul 26, 2017 12:46 pm

Re: Mortgage Refi, How To, Should I?

Post by JBTX » Thu Oct 12, 2017 2:04 pm

armeliusc wrote:
Thu Oct 12, 2017 9:46 am
JBTX wrote:
Thu Oct 12, 2017 9:25 am
QL is probably not the lowest rate out there but some of these outfits may be throwing out teaser rates you aren’t likely to get.
Could you elaborate why you think this 'teaser rate' is not likely to get? (honest question). So on a lark I put in a quick online info request and Sebonic called me with 3.75% for 30-year fixed, or 3.625% for 20-year fixed, with ~$500 appraisal and ~$1500 title fee (can be rolled into new loan).
It may be a rate assuming absolute best credit rating, a very heavy down payment or very low loan to value percent, or it may be a rate that assumes some upfront points. If you get a fly by night operation they may not be able to get it done in the rate lock period. Personally I’d rather pay a quarter percent extra to deal with somebody I know will get it done easily and expeditiously.

I am looking at several different other websites (aimloan.com, amerisave) and they look similar.

Just a bit more info, I am not interested in paying for points at this moment. I have no escrow and would keep it that way. I will at minimum pay what I am currently paying to the new loan (so as not to resetting back to all of 30 years). With the rates above, I am debating whether to do another 30-year with (likely) possibility of extra payment, or 20 year. The rate and minimum payment for a 15-years fixed at this point looks like a stretch for us. Doable, but a real stretch, especially with kids going into (private) preschool and possibility of private (pre-K - 5), and with my net take home is ~$5700 after maxing one 401K and HSA (DW is not working currently).

But I'd be glad to hear any suggestions.

Thank you
AC
You can call around but to get an actual quote they typically we run a quick credit check which will have a marginal impact on your credit rating. I know with Quicken Loans they can give you a quote over the phone but will run your credit.

As to risks, not a lot other than the company not getting it done within their rate lock period. If you refi d and sold your home a year later obviously you will eat the fees and see little benefit. There is always a risk that your appraisal comes in lower than what you were orginally quoted, but not likely.

The only real downsides are the up front fees and the hassle if it drags on. My experiences with Chase were terrible. Quicken Loans were pretty effortless and you can do much of the stuff online.

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