Refinance Mega Thread

[bgh11]

Thinking about making another run at this, and could use suggestions

Current quicken loan 15 year mortgage is $140k at 3.25. Home value approx $340k. In TX

That is just too small a balance to make numbers work. But what about doing a cash out and going to about $250k. If I could get a 30 year at 2.5% or lower, even with some fees, that could be attractive.

Quicken loans won't do another quote without doing another hard pull.
Lender fi doesn't do cash outs.
Seems like Better is useless unless you have written quote from someone else.

Any suggestions? Where to start?

what about a local lender or credit union?

[nic3456]

Can someone help explain the Lenders Title Insurance? - in July/Aug I did a refi in OH for $283K and the lenders title insurance was $540. I'm now doing a cashout refi with a loan balance of $330K. I've got 3 quotes so far and they are all ~$1100 (including Radian).

Is changing the loan amount that impactful? I always thought it was $x per $1,000

[Shikoku]

Can someone help explain the Lenders Title Insurance? - in July/Aug I did a refi in OH for $283K and the lenders title insurance was $540. I'm now doing a cashout refi with a loan balance of $330K. I've got 3 quotes so far and they are all ~$1100 (including Radian).

Is changing the loan amount that impactful? I always thought it was $x per $1,000

I believe higher the loan, higher the lenders title insurance. It is like insuring inexpensive and expensive car.

[BrandonBogle]

Can someone help explain the Lenders Title Insurance? - in July/Aug I did a refi in OH for $283K and the lenders title insurance was $540. I'm now doing a cashout refi with a loan balance of $330K. I've got 3 quotes so far and they are all ~$1100 (including Radian).

Is changing the loan amount that impactful? I always thought it was $x per $1,000

Is Ohio one of the states with a reissue discount? If so, is it like NC that up to the prior amount is at the reissue rate, but any excess is at the full rate? Perhaps they are quoting you the full rate for the full amount?

[Johny]

Morning folks. I am in process of a cash out refi with Watermark... 30 year @ 2.5% about $2500 closing costs.

I wanted to get Bogleheads opinion on if it ever make sense to pay off a car loan with funds receieved from a cash out refi? Current car loan balance is $24k @ 3.79%.

Thanks!

[BrandonBogle]

Morning folks. I am in process of a cash out refi with Watermark... 30 year @ 2.5% about $2500 closing costs.

I wanted to get Bogleheads opinion on does it ever make sense to pay off a car loan while doing a cash out refi? Current car loan balance is $24k @ 3.79%.

Thanks!

IMO no, unless you overpay your new mortgage by at least the full amount you were paying for the car previously. So if the new mortgage’s payment is $500 and the old car loan was $1,000, you pay at least $1,500 on the new mortgage. Otherwise, you are extending the auto loan term to three decades versus less than half a decade like now.

[Futbolista]

Morning folks. I am in process of a cash out refi with Watermark... 30 year @ 2.5% about $2500 closing costs.

I wanted to get Bogleheads opinion on if it ever make sense to pay off a car loan with funds receieved from a cash out refi? Current car loan balance is $24k @ 3.79%.

Thanks!

Assuming it doesn't increase your 2.5% or cause paperwork hassles I would do it. I think it's a simple math equation of 2.5% v. 3.79%. But it doesn't make a big difference. On an annual basis you'd only be saving $14 for every $1000 you paid off.

[2quiker]

Can people post the rate they are getting and with what lenders please, I am trying to look into refi.

[Shikoku]

Morning folks. I am in process of a cash out refi with Watermark... 30 year @ 2.5% about $2500 closing costs.

I wanted to get Bogleheads opinion on if it ever make sense to pay off a car loan with funds receieved from a cash out refi? Current car loan balance is $24k @ 3.79%.

Thanks!

I will do it because I will be glad to borrow money at 2.5% and keep it until I kick the bucket!

[anon_investor]

Morning folks. I am in process of a cash out refi with Watermark... 30 year @ 2.5% about $2500 closing costs.

I wanted to get Bogleheads opinion on does it ever make sense to pay off a car loan while doing a cash out refi? Current car loan balance is $24k @ 3.79%.

Thanks!

IMO no, unless you overpay your new mortgage by at least the full amount you were paying for the car previously. So if the new mortgage’s payment is $500 and the old car loan was $1,000, you pay at least $1,500 on the new mortgage. Otherwise, you are extending the auto loan term to three decades versus less than half a decade like now.

+1. Also check to see if your car loan has a prepayment penalty.

[need403bhelp]

Generally speaking, yes. The settlement agent is supposed to get a tax certification. Typically, if that is due within 60 days, the settlement agent will have that collected and it will be added to your closing disclosures if it is not already in your loan estimate. Having or not having an escrow does not play a role with this, but I’m sure it will vary by lender and settlement agent how they do it too. In the end, this shouldn’t matter as your tax bill would be due soon and you would be paying it anyways?!?

In my area, the bill is “due” Sept 1, but there is no penalty until January 2nd. So a settlement agent or lender may take the tact that the bill isn’t really due until over 60 days, or they may go by the “due” date on the initial bill.

Sorry to hijack. I think this was mentioned previously somewhere in this thread, but I can't find it.

How much cash can I receive at closing before it is considered a "cash-out" refinance?

Is this state specific?

Thank you!

2K. It is not state specific.

So, for future reference, I just learned the above is NOT true.

At least _one_ state (mine) doesn't allow any cash back at closing for rate/term refinance loans.

So break even goes from 12 years to 8.5...

Can you post the name of the state as a public service? This is the first time I heard that it is not allowed in a state even though both Fannie Mae and Freddie Mac allow this as shown in their documents I posted on August 28th in this thread. When I got 2k cash out, they designated my loan as "limited cash-out" instead of "rate and term refinance."

I will not confirm or deny my location , but looks like BrandonBogle may have been spot on re the state in his reply just above yours.

Looks like everyone (except me and Google at least per my searches) was aware of this limit, so they’ll use reduce principal by the amount (obviously, the $2500 AmEx credit falls outside this rule as I’ve gotten it previously).

Interestingly, they’re allowed to send me a check if there was a mistake/correction AFTER closing, which happened in my last refi. Looks like I should have kept quiet about the incorrect title insurance pricing so I could’ve gotten part of the money after closing. With that said, better not to test our state’s limits either and get stuck with a cash out refi with what I understand has a 2 or 3% state tax also.

[need403bhelp]

So, for future reference, I just learned the above is NOT true.

At least _one_ state (mine) doesn't allow any cash back at closing for rate/term refinance loans.

So break even goes from 12 years to 8.5...

Welcome to Texas's 50(a)(6) rule:

http://www2.bancorp.com/marketing/Retai ... sh_Out.pdf

1) New loan amount pays off existing lien and provides even $1 cash to borrower and existing lien is non-50(a) (6), then new lien is a 50 (a) (6) loan. If existing lien is 50 (a) (6) then new lien is a 50 (a) (6).
...
5) New loan amount pays off existing lien and funds, prepaids and or closing costs and if existing lien is a non-50(a) (6), then new lien is non-50(a) (6) transaction.

Note #1 saying "even $1k cash to borrower". So it is best said that up to $2,000 may be provided to the borrower without becoming a cash-out refi, but never more than $2k.

Hi Brandon, note it say “even $1 cash to borrow” NOT “even $1k cash to borrower.”

So literally NO cash is allowed at closing.

WIth that said, after my last refinance, they corrected some minor error and I ended up getting a check for ~$40, which means ~$30 back as I paid $10 or so at closing. It looks like this is okay, but I guess its too late to test it with the (mandated by state law) Title Insurance pricing which was incorrect on my closing disclosure and which I pointed out before realizing maybe I should let it go until after closing and get a check back for the difference.

[BrandonBogle]

Hi Brandon, note it say “even $1 cash to borrow” NOT “even $1k cash to borrower.”

So literally NO cash is allowed at closing.

Whoops! I did mean $1, but my fingers and my mind weren’t on the same page lol. I’ll edit my post. Thanks!

[presto987]

Can someone help explain the Lenders Title Insurance? - in July/Aug I did a refi in OH for $283K and the lenders title insurance was $540. I'm now doing a cashout refi with a loan balance of $330K. I've got 3 quotes so far and they are all ~$1100 (including Radian).

Is changing the loan amount that impactful? I always thought it was $x per $1,000

Are you sure the quotes of $1100 aren’t including settlement? It’s just pure title insurance?

[baseball2horse]

Otherwise, the best offer I have is a no cost 30-year at 3% with no appraisal. Since Better.com (who is currently uncompetitive) will consider matching an LE no more than 1 day old, I'm thinking I wait through tomorrow to see who else I hear from. Depending on what the best offer is, contact Better.com and see if they will beat the no-more-than-1-day-old LE, that way I have an improved rate locked in. If I get better offers down the road, I can again ask Better.com to beat them or walk.

Does this seem like a reasonable plan? Are they issues (like have to pay for an appraisal) or a depsoit that I'm not considering?

It sounds like you may have already done this, but I would open the application with Better today so things can settle on getting you assigned to a loan officer, and then tomorrow follow up with a competing offer. That way you don’t spend time tomorrow getting spun around to find someone.

That said, Better, if they beat an offer, will typically be by $100 nowadays. So you may want to just stick with LenderFi when they get you the loan estimate.

Although Better's offer will beat your cost by 100, and they'll include their appraisal, 550, as one of their costs. And then if your appraisal also gets waived by better, their end costs will be lower by 650 dollars. Which might make it worth.

(At least that's what happened when I got them to beat a loan estimate that didn't include an appraisal, and then in final closing my appraisal also got waived making my total costs 650 less than the original loan estimate I brought to them)

[BrandonBogle]

Otherwise, the best offer I have is a no cost 30-year at 3% with no appraisal. Since Better.com (who is currently uncompetitive) will consider matching an LE no more than 1 day old, I'm thinking I wait through tomorrow to see who else I hear from. Depending on what the best offer is, contact Better.com and see if they will beat the no-more-than-1-day-old LE, that way I have an improved rate locked in. If I get better offers down the road, I can again ask Better.com to beat them or walk.

Does this seem like a reasonable plan? Are they issues (like have to pay for an appraisal) or a depsoit that I'm not considering?

It sounds like you may have already done this, but I would open the application with Better today so things can settle on getting you assigned to a loan officer, and then tomorrow follow up with a competing offer. That way you don’t spend time tomorrow getting spun around to find someone.

That said, Better, if they beat an offer, will typically be by $100 nowadays. So you may want to just stick with LenderFi when they get you the loan estimate.

Although Better's offer will beat your cost by 100, and they'll include their appraisal, 550, as one of their costs. And then if your appraisal also gets waived by better, their end costs will be lower by 650 dollars. Which might make it worth.

(At least that's what happened when I got them to beat a loan estimate that didn't include an appraisal, and then in final closing my appraisal also got waived making my total costs 650 less than the original loan estimate I brought to them)

Keep in mind Better will try their beat of the quote based on what's in the Loan Estimate. If jco's loan estimate from LenderFi already has the appraisal waived on there, then it needs to be submitted to Better before they apply a waiver. If jco submits a loan estimate with after Better applies their waiver, then no extra discount is had.

In fact, if the competing LE has an appraisal on there that would eventually be waived and Better already waived the appraisal, then you actually end up worse off. This isn't too big a deal with having Better compete early in the process, but applies more in having them compete later in the process (perhaps with a second competing LE), as they may have already applied an appraisal waiver by then.

That said, in a scenario like this, it doesn't hurt to push whomever at Better does the new pricing why they counted the appraisal in that when they know an appraisal would be waived.

So let's hope jco's LE has an appraisal listed and the Better application doesn't have a waiver on it when submitting the LE.

Edited to make the point easier to follow.

[mrmicro]

Thanks to this thread, I have been able to negotiate some good rates. I am confused about APR though.
From my understanding, we have a No cost loan if Interest rate == APR.

In the Loan Estimate, I am seeing a negative closing cost (J=-852) but my APR is still showing as higher than my interest rate. Should I be concerned? The loan officer did not have a convincing argument other than your costs are negative and it will get corrected during closing.

[leviathan]

Otherwise, the best offer I have is a no cost 30-year at 3% with no appraisal. Since Better.com (who is currently uncompetitive) will consider matching an LE no more than 1 day old, I'm thinking I wait through tomorrow to see who else I hear from. Depending on what the best offer is, contact Better.com and see if they will beat the no-more-than-1-day-old LE, that way I have an improved rate locked in. If I get better offers down the road, I can again ask Better.com to beat them or walk.

Does this seem like a reasonable plan? Are they issues (like have to pay for an appraisal) or a depsoit that I'm not considering?

It sounds like you may have already done this, but I would open the application with Better today so things can settle on getting you assigned to a loan officer, and then tomorrow follow up with a competing offer. That way you don’t spend time tomorrow getting spun around to find someone.

That said, Better, if they beat an offer, will typically be by $100 nowadays. So you may want to just stick with LenderFi when they get you the loan estimate.

Although Better's offer will beat your cost by 100, and they'll include their appraisal, 550, as one of their costs. And then if your appraisal also gets waived by better, their end costs will be lower by 650 dollars. Which might make it worth.

(At least that's what happened when I got them to beat a loan estimate that didn't include an appraisal, and then in final closing my appraisal also got waived making my total costs 650 less than the original loan estimate I brought to them)

Keep in mind Better will try their beat of the quote based on what's in the Loan Estimate. If jco's loan estimate from LenderFi already has the appraisal waived on there, then a waiver by Better won't affect things. Thus, hopefully jco's LE has the appraisal listed for some extra savings.

BrandonBogle, with all the respect, I disagree with you on this. In my experiences, Better matches A+B+C+E-LenderCredit regardless of what's in the Loan Estimate

[presto987]

Otherwise, the best offer I have is a no cost 30-year at 3% with no appraisal. Since Better.com (who is currently uncompetitive) will consider matching an LE no more than 1 day old, I'm thinking I wait through tomorrow to see who else I hear from. Depending on what the best offer is, contact Better.com and see if they will beat the no-more-than-1-day-old LE, that way I have an improved rate locked in. If I get better offers down the road, I can again ask Better.com to beat them or walk.

Does this seem like a reasonable plan? Are they issues (like have to pay for an appraisal) or a depsoit that I'm not considering?

It sounds like you may have already done this, but I would open the application with Better today so things can settle on getting you assigned to a loan officer, and then tomorrow follow up with a competing offer. That way you don’t spend time tomorrow getting spun around to find someone.

That said, Better, if they beat an offer, will typically be by $100 nowadays. So you may want to just stick with LenderFi when they get you the loan estimate.

Although Better's offer will beat your cost by 100, and they'll include their appraisal, 550, as one of their costs. And then if your appraisal also gets waived by better, their end costs will be lower by 650 dollars. Which might make it worth.

(At least that's what happened when I got them to beat a loan estimate that didn't include an appraisal, and then in final closing my appraisal also got waived making my total costs 650 less than the original loan estimate I brought to them)

Keep in mind Better will try their beat of the quote based on what's in the Loan Estimate. If jco's loan estimate from LenderFi already has the appraisal waived on there, then a waiver by Better won't affect things. Thus, hopefully jco's LE has the appraisal listed for some extra savings.

BrandonBogle, with all the respect, I disagree with you on this. In my experiences, Better matches A+B+C+E-LenderCredit regardless of what's in the Loan Estimate

Yes, I agree with baseball2horse and leviathan. I had this happen to me with Better matching LF. Because LF’s LE had no appraisal but Better’s did, I was able to make an extra $550 when Better waived the appraisal.

[newbiead]

Can somebody summarize what do we need to check once the Refi is closed with respect to making sure the lien from previous lender is gone? ( I know I have seen this somewhere on the thread but I am unable to find it now )

[chet96]

He currently is at 3.75% with lender paid PMI so he isn't really sure what his current PMI really is. LenderFI doesn't offer lender paid PMI but they did adjust his appraisal significantly higher and waived the appraisal. They now have him at about an 85% LTV. They list PMI as $71/mo which seems very low on about 450k loan. When asked how it was calculated and could it change they responded it should be "fairly accurate." They said he shouldn't do lender paid PMI at sub 90% LTV as it'll drop off so quickly. Will it drop off without a new appraisal confirming the home's value? I don't want to put my friend into what looks like a great situation only to find out his current payments with lender paid PMI would actually be less than the new ones if his PMI is calculated incorrectly.

I am unfamiliar with PMI, but as a guess, I suspect he will have to pay until he reaches 78% LTV based on the estimated value. But I honestly don’t know if an appraisal would be waived in a scenario like this. If it isn’t, there is risk that LenderFi is incorrect in their guess and LTV won’t be 85%.

It's usually 80% you can request removal with a new appraisal, or automatically when you are scheduled to reach 78% by the payoff schedule. So in other words - another appraisal is required unless he want to wait the full term of the PMI. (Other lenders pay differ - but that is how mine is written and complies with federal law). I've tried to get them to waive appraisal and they won't.

[Johny]

Quick question for everyone.

Had one lender tell me off the record to do a no cost cash out refi with a higher rate since I want to take out a good amount of cash. Then after 1 month payment he can refer me to one of his buddies who does quick refi's and can get me refi'd (non cash out refi) at these crazy low rates and settle in for the long haul. He said the new refi with his buddy would be 2 week refi not the 45-60 days that is happening now.

Is this a good idea?

[BrandonBogle]

Thanks to this thread, I have been able to negotiate some good rates. I am confused about APR though.
From my understanding, we have a No cost loan if Interest rate == APR.

In the Loan Estimate, I am seeing a negative closing cost (J=-852) but my APR is still showing as higher than my interest rate. Should I be concerned? The loan officer did not have a convincing argument other than your costs are negative and it will get corrected during closing.

Lender credits aren’t included in the APR calculation sadly, so it is quite possible to have a “no cost” loan and an APR higher than the rate. Also, consider that the prepaid interest from closing to month-end counts in the APR, dirtying things further. All other things being equal, the close to month-end you close, the lower the APR. The regulations around this calculation really need to be revamped to make it easier to establish its goal of making it simple to compare various lender offers.

It sounds like you may have already done this, but I would open the application with Better today so things can settle on getting you assigned to a loan officer, and then tomorrow follow up with a competing offer. That way you don’t spend time tomorrow getting spun around to find someone.

That said, Better, if they beat an offer, will typically be by $100 nowadays. So you may want to just stick with LenderFi when they get you the loan estimate.

Although Better's offer will beat your cost by 100, and they'll include their appraisal, 550, as one of their costs. And then if your appraisal also gets waived by better, their end costs will be lower by 650 dollars. Which might make it worth.

(At least that's what happened when I got them to beat a loan estimate that didn't include an appraisal, and then in final closing my appraisal also got waived making my total costs 650 less than the original loan estimate I brought to them)

Keep in mind Better will try their beat of the quote based on what's in the Loan Estimate. If jco's loan estimate from LenderFi already has the appraisal waived on there, then a waiver by Better won't affect things. Thus, hopefully jco's LE has the appraisal listed for some extra savings.

BrandonBogle, with all the respect, I disagree with you on this. In my experiences, Better matches A+B+C+E-LenderCredit regardless of what's in the Loan Estimate

Yes, I agree with baseball2horse and leviathan. I had this happen to me with Better matching LF. Because LF’s LE had no appraisal but Better’s did, I was able to make an extra $550 when Better waived the appraisal.

Presto87 just agreed with what I said, and s/he says they agree baseball2horse and leviathan, so I’m confused on what people are saying?

If a loan estimate presented has A + B + C + E - Lender Credits on it, Better will try to beat/match those regardless of if B includes an appraisal. The gotcha is when Better has already determined to waive an appraisal and the competing LE lists an appraisal, as they generally do not compare the costs as if the other lender would waive the appraisal.

So basically, what you want is for Better to match while they are planning on an appraisal.

[jbrown394]

Hello all,

I very much appreciate it if you could help out a newbie here. This is my first refinance (when I bought the house a year ago, we just went with the lender recommended to us).

Here is my current situation. I applied to four online lenders last week.

- Lender 1: Contacted me the same night, I was told that they have a float down option and could adjust the rates if they go down. I submitted the required documents and signed a bunch of standard forms and got locked @2.5% for 15-years (no fees, but I should pay for the interest as I am skipping a payment).

- Lender 2: We talked the day after I applied, they did not have float down, but offered what I considered a better rate at the time @2.25% for 15-years (no fee, but I still have to pay for interest) and suggested that I lock as soon as possible which I agreed (again submitted the required documents and signed the forms).

- Lender 3: We talked today (about four days after I applied), his offer is very similar to lender 2, but they also waived the appraisal. He was pushing me to lock but I thought if I already have a similar offer from lender 2, it would be better for me to wait for a few more days to see if the rates might come down.

- Lender 4: Has not contacted me yet.

Now my questions:

- What exactly happens next ? The way I have understood it, there will be around three weeks processing time and then once done, a notary comes and I should sign the final documents, is that it ?

- When exactly I should negotiate ?! Everything has happened very quickly so far.

- Have I made a mistake to lock the rate with two lenders ? Eventually I will get the loan from one of them, should I pay any fees/fines to the other ? I suppose they incur some fees, there will be some people working on my application, so after three weeks processing time if I tell them that I don't want to move forward with them, what happens ?

- Most of the messages on this thread, already assume the reader knows some of the basics, are there any pointers that I can read to understand this process better ? Any helpful tips ? What should I have done differently ?

- How long can I wait before I have to lock the rate ? Does anybody see the possibility of the rates coming down further (I understand, nobody can predict the future, but what are the speculations ?).

Thanks a lot in advance for your insights !

When you say "no Fees", make sure your Closing Costs (A+B+C+E-Lender Credits) = $0 or some credits to you.
If you did not pay any fee to lock, you can walk away. Lender may blacklist you for future application tho. If they asked you to pay for anything along the away and you walked away, your lost.

Thanks, yes, I have already checked the no fee part and it is fine. Any answer to my other questions is very much appreciated !

[BrandonBogle]

When you say "no Fees", make sure your Closing Costs (A+B+C+E-Lender Credits) = $0 or some credits to you.
If you did not pay any fee to lock, you can walk away. Lender may blacklist you for future application tho. If they asked you to pay for anything along the away and you walked away, your lost.

Thanks, yes, I have already checked the no fee part and it is fine. Any answer to my other questions is very much appreciated !

Now my questions:

1. What exactly happens next ? The way I have understood it, there will be around three weeks processing time and then once done, a notary comes and I should sign the final documents, is that it ?
2. When exactly I should negotiate ?! Everything has happened very quickly so far.
3. Have I made a mistake to lock the rate with two lenders ? Eventually I will get the loan from one of them, should I pay any fees/fines to the other ? I suppose they incur some fees, there will be some people working on my application, so after three weeks processing time if I tell them that I don't want to move forward with them, what happens ?
4. Most of the messages on this thread, already assume the reader knows some of the basics, are there any pointers that I can read to understand this process better ? Any helpful tips ? What should I have done differently ?
5. How long can I wait before I have to lock the rate ? Does anybody see the possibility of the rates coming down further (I understand, nobody can predict the future, but what are the speculations ?).

1. Indeed that is pretty much it. You may get asked for additional documentation or updated copies as things progress. For instance, let's say 45 days ago there was a $10k deposit in your bank account that is included in the statement you sent the lenders. They may ask for documentation to track back where that deposit came from. There may be other questions that come up similar to what you've had to understand your "profile" as a borrower. It usually isn't anything too difficult, just annoying.
2. There isn't so much "negotiation" vs. making them compete. Unless you are dealing with LenderFi, feel free to continue having other lenders make you offers. Feel free to send them the offer you've locked, asking them to beat it. If you get one that beats it, send it to the lender you're locked with (assuming it isn't LenderFi) and see what they say. You can always switch to the new lender.
3. No, it is prudent. However, if you have already paid an appraisal deposit, tell one of them to hold off on ordering the appraisal for now. Once it is ordered, any deposit you've paid is gone.
4. Be prepared to watch over things to make sure they get done. Don't just sit back and assume it will get done (correctly). Also, don't worry if your payoff is larger than anticipated or the loan amount is higher than payoff (assuming as you say, you've verified D + E - J = 0 or less). That just means some of the stuff like escrow is being financed or some cash is being pulled out and paid to you. What you want to make sure is that the numbers add up correctly with whatever the new lender lists as the payoff amount, and that the payoff amount is sufficiently large to erase your old mortgage.
5. Generally, a loan estimate is good for 1-2 weeks until you have to give them an Intent to Proceed, or else your application is withdrawn. However, if you don't lock it, even the same day the offer could change depending on how the market is doing. So if you ever come across an offer you like, lock it. The upside to floating is not worth the downside in most cases.

[Johny]

Alright got an official LE from watermark and need some advice please. This is for a cash out refi ($100k - 53% LTV). Currently have a 15 year 2.99%. This is our forever home no moving for the foreseeable future.

Option 1: 30 year 2.875% no cost loan. 100% cash out monies receieved.

Option 2: 30 year 2.5% with $4500 to close. Will be taken from our cash out monies to pay closing costs.


LO mentioned he would do Option 1 to get full cash out monies and said come back to him in 6 months to refi and lock in a lower rate. My question to this is who knows what the rates will be in 6 months and also effective Dec 1st 2020 there will be a 0.5% refi fee correct?

Any thoughts?

[BrandonBogle]

Option 1: 30 year 2.875% no cost loan. 100% cash out monies receieved.

Option 2: 30 year 2.5% with $4500 to close. Will be taken from our cash out monies to pay closing costs.


LO mentioned he would do Option 1 to get full cash out monies and said come back to him in 6 months to refi and lock in a lower rate.

Personally, I would agree with the LO. Even if rates go up within the next 6 months, it likely won’t be too significant of a price change (but that’s just a guess). The $4,500 you would have spent now may still get you to closing on 2.5% then. If not, the extra cost will likely pale compared to long-term savings.

So yeah, I personally would go the route of cash-out with no cost and refi once eligible for a rate-and-term refi.

[Johny]

Thanks Brandon! I was leaning that way as well. Appreciate the feedback I am going to get this ball rolling.

[mrmicro]

Thanks to this thread, I have been able to negotiate some good rates. I am confused about APR though.
From my understanding, we have a No cost loan if Interest rate == APR.

In the Loan Estimate, I am seeing a negative closing cost (J=-852) but my APR is still showing as higher than my interest rate. Should I be concerned? The loan officer did not have a convincing argument other than your costs are negative and it will get corrected during closing.

Lender credits aren’t included in the APR calculation sadly, so it is quite possible to have a “no cost” loan and an APR higher than the rate. Also, consider that the prepaid interest from closing to month-end counts in the APR, dirtying things further. All other things being equal, the close to month-end you close, the lower the APR. The regulations around this calculation really need to be revamped to make it easier to establish its goal of making it simple to compare various lender offers.

Although Better's offer will beat your cost by 100, and they'll include their appraisal, 550, as one of their costs. And then if your appraisal also gets waived by better, their end costs will be lower by 650 dollars. Which might make it worth.

(At least that's what happened when I got them to beat a loan estimate that didn't include an appraisal, and then in final closing my appraisal also got waived making my total costs 650 less than the original loan estimate I brought to them)

Keep in mind Better will try their beat of the quote based on what's in the Loan Estimate. If jco's loan estimate from LenderFi already has the appraisal waived on there, then a waiver by Better won't affect things. Thus, hopefully jco's LE has the appraisal listed for some extra savings.

BrandonBogle, with all the respect, I disagree with you on this. In my experiences, Better matches A+B+C+E-LenderCredit regardless of what's in the Loan Estimate

Yes, I agree with baseball2horse and leviathan. I had this happen to me with Better matching LF. Because LF’s LE had no appraisal but Better’s did, I was able to make an extra $550 when Better waived the appraisal.

Presto87 just agreed with what I said, and s/he says they agree baseball2horse and leviathan, so I’m confused on what people are saying?

If a loan estimate presented has A + B + C + E - Lender Credits on it, Better will try to beat/match those regardless of if B includes an appraisal. The gotcha is when Better has already determined to waive an appraisal and the competing LE lists an appraisal, as they generally do not compare the costs as if the other lender would waive the appraisal.

So basically, what you want is for Better to match while they are planning on an appraisal.

Thanks BrandonBogle, that explanation helps with my worries of APR > Interest rates w.r.t. any hidden fees. Strange that some lenders are still able to show APR == interest rate even with lender credits and prepaid interest and some aren't.

[nic3456]

Option 1: 30 year 2.875% no cost loan. 100% cash out monies receieved.

Option 2: 30 year 2.5% with $4500 to close. Will be taken from our cash out monies to pay closing costs.


LO mentioned he would do Option 1 to get full cash out monies and said come back to him in 6 months to refi and lock in a lower rate.

Personally, I would agree with the LO. Even if rates go up within the next 6 months, it likely won’t be too significant of a price change (but that’s just a guess). The $4,500 you would have spent now may still get you to closing on 2.5% then. If not, the extra cost will likely pale compared to long-term savings.

So yeah, I personally would go the route of cash-out with no cost and refi once eligible for a rate-and-term refi.

On the the 6 month rule to refi a Cashout - when does that clock start? Application date, funding date, etc?

[FiscallyResponsible]

Thinking about making another run at this, and could use suggestions

Current quicken loan 15 year mortgage is $140k at 3.25. Home value approx $340k. In TX

That is just too small a balance to make numbers work. But what about doing a cash out and going to about $250k. If I could get a 30 year at 2.5% or lower, even with some fees, that could be attractive.

Quicken loans won't do another quote without doing another hard pull.
Lender fi doesn't do cash outs.
Seems like Better is useless unless you have written quote from someone else.

Any suggestions? Where to start?

what about a local lender or credit union?

I am using loan cabin. 410k mortgage plus 100k cash out for 30year fixed... 2.5% with 600 or so lender credit.. Total oan cost upper estimate at 1900 or so.

[BrandonBogle]

Option 1: 30 year 2.875% no cost loan. 100% cash out monies receieved.

Option 2: 30 year 2.5% with $4500 to close. Will be taken from our cash out monies to pay closing costs.


LO mentioned he would do Option 1 to get full cash out monies and said come back to him in 6 months to refi and lock in a lower rate.

Personally, I would agree with the LO. Even if rates go up within the next 6 months, it likely won’t be too significant of a price change (but that’s just a guess). The $4,500 you would have spent now may still get you to closing on 2.5% then. If not, the extra cost will likely pale compared to long-term savings.

So yeah, I personally would go the route of cash-out with no cost and refi once eligible for a rate-and-term refi.

On the the 6 month rule to refi a Cashout - when does that clock start? Application date, funding date, etc?

I imagine it would be funding date as that is the day the refi becomes legally binding to you. Prior to that, you can walk away. Upon that date, you are legally obligated to pay (but as you can see, you can pay it off, whether with a new loan or not, right away).

[postal007]

Just wanted to give another data point here, since this thread is so helpful.

State: CA
Loan Amount: $565k
LTV: ~40%
Current Rate: 2.85% (First Republic) on a 30 year fixed

I had just refied earlier this year with First Republic, but rates kept dropping, so was looking for a no-cost refi on another 30-year fixed. Of the lenders I contacted, here's what I got on Friday:

Owning: 2.625%, no cost
LenderFi: 2.75%, no cost. Followed up today and said they can't match Owning offer on a no-cost
Loan Depot: 2.825%, $500 costs. Reaching out soon to ask for a match
Better: Uncompetitive. Told me to take the Owning offer and run for the hills.

I'm planning to forward the Owning LE to First Republic soon to see if they can do some kind of loan modification, but trying out a few other lenders to see if I can get it lower before I do.

Have you (or anyone else) looked at Interactive Mortgage? They are showing 2.5% no cost for 30-year up to the super conforming limit. Seems like one of the best rates out there, but I haven't heard any reviews.

I have not, but since you asked I reached out to them and confirmed a 2.5% rate on my numbers. I'm going to go through application process today.

[Johny]

Is this 6 month cash out rule only for the same lender? Or after a month or so after the cash out refi, you can find a new lender to do a regular refi?

[Johny]

Thinking about making another run at this, and could use suggestions

Current quicken loan 15 year mortgage is $140k at 3.25. Home value approx $340k. In TX

That is just too small a balance to make numbers work. But what about doing a cash out and going to about $250k. If I could get a 30 year at 2.5% or lower, even with some fees, that could be attractive.

Quicken loans won't do another quote without doing another hard pull.
Lender fi doesn't do cash outs.
Seems like Better is useless unless you have written quote from someone else.

Any suggestions? Where to start?

what about a local lender or credit union?

I am using loan cabin. 410k mortgage plus 100k cash out for 30year fixed... 2.5% with 600 or so lender credit.. Total oan cost upper estimate at 1900 or so.

i was really hoping to hear from Loan Cabin as I am doing the same cash out refi scenario but so far I haven't heard back.

[Familyman2012]

Thinking about making another run at this, and could use suggestions

Current quicken loan 15 year mortgage is $140k at 3.25. Home value approx $340k. In TX

That is just too small a balance to make numbers work. But what about doing a cash out and going to about $250k. If I could get a 30 year at 2.5% or lower, even with some fees, that could be attractive.

Quicken loans won't do another quote without doing another hard pull.
Lender fi doesn't do cash outs.
Seems like Better is useless unless you have written quote from someone else.

Any suggestions? Where to start?

what about a local lender or credit union?

I am using loan cabin. 410k mortgage plus 100k cash out for 30year fixed... 2.5% with 600 or so lender credit.. Total oan cost upper estimate at 1900 or so.

i was really hoping to hear from Loan Cabin as I am doing the same cash out refi scenario but so far I haven't heard back.

This sounds like a newbie question. This is more of a general question.

Why do people take out 100k cash and then refi back to 30 years? Is it just to invest? Or remodel?

I feel like I did pretty well with my 2 non cash refi. But interested in another strategy if it makes sense for me to do it. Open minded.

[dilligaf401]

Just managed to lock in a 2.5% refi fixed for 30 years.
$1270 origination costs (section A) w/ $945 lender credit.
$1624 section C costs, $884 of which is the lender's title insurance (in CT, rates are filed with the state so seem to all be right around the same price).

Seems like my total costs are a little higher than what I've been seeing on recent pages in this thread, but I'm pretty happy with it.
I actually got this rate from 2 different brokers, but the one I went with had lower origination costs.

This thread has been very helpful, so figured I'd share.

[presto987]

Thanks to this thread, I have been able to negotiate some good rates. I am confused about APR though.
From my understanding, we have a No cost loan if Interest rate == APR.

In the Loan Estimate, I am seeing a negative closing cost (J=-852) but my APR is still showing as higher than my interest rate. Should I be concerned? The loan officer did not have a convincing argument other than your costs are negative and it will get corrected during closing.

Lender credits aren’t included in the APR calculation sadly, so it is quite possible to have a “no cost” loan and an APR higher than the rate. Also, consider that the prepaid interest from closing to month-end counts in the APR, dirtying things further. All other things being equal, the close to month-end you close, the lower the APR. The regulations around this calculation really need to be revamped to make it easier to establish its goal of making it simple to compare various lender offers.

Although Better's offer will beat your cost by 100, and they'll include their appraisal, 550, as one of their costs. And then if your appraisal also gets waived by better, their end costs will be lower by 650 dollars. Which might make it worth.

(At least that's what happened when I got them to beat a loan estimate that didn't include an appraisal, and then in final closing my appraisal also got waived making my total costs 650 less than the original loan estimate I brought to them)

Keep in mind Better will try their beat of the quote based on what's in the Loan Estimate. If jco's loan estimate from LenderFi already has the appraisal waived on there, then a waiver by Better won't affect things. Thus, hopefully jco's LE has the appraisal listed for some extra savings.

BrandonBogle, with all the respect, I disagree with you on this. In my experiences, Better matches A+B+C+E-LenderCredit regardless of what's in the Loan Estimate

Yes, I agree with baseball2horse and leviathan. I had this happen to me with Better matching LF. Because LF’s LE had no appraisal but Better’s did, I was able to make an extra $550 when Better waived the appraisal.

Presto87 just agreed with what I said, and s/he says they agree baseball2horse and leviathan, so I’m confused on what people are saying?

If a loan estimate presented has A + B + C + E - Lender Credits on it, Better will try to beat/match those regardless of if B includes an appraisal. The gotcha is when Better has already determined to waive an appraisal and the competing LE lists an appraisal, as they generally do not compare the costs as if the other lender would waive the appraisal.

So basically, what you want is for Better to match while they are planning on an appraisal.

I think some of us misunderstood you originally, but yes, I agree with what you just said.

[presto987]

Option 1: 30 year 2.875% no cost loan. 100% cash out monies receieved.

Option 2: 30 year 2.5% with $4500 to close. Will be taken from our cash out monies to pay closing costs.


LO mentioned he would do Option 1 to get full cash out monies and said come back to him in 6 months to refi and lock in a lower rate.

Personally, I would agree with the LO. Even if rates go up within the next 6 months, it likely won’t be too significant of a price change (but that’s just a guess). The $4,500 you would have spent now may still get you to closing on 2.5% then. If not, the extra cost will likely pale compared to long-term savings.

So yeah, I personally would go the route of cash-out with no cost and refi once eligible for a rate-and-term refi.

I agree as well. Cash out rates are higher than rate-and-term rates, so once you do your cash out refi, you’re going to want to do a rate-and-term refi shortly afterward. In that case, it doesn’t matter that much what your first rate is, so you want to focus on no cost.

[jco]

A quick success story and a final question at the end:

I'm trying to refinance about $270,000 for a house worth about $470,000. Credit score close to 800, steady job, etc. The best I could get was a no-cost offer at 2.875% that netted me about $440. The interesting thing about this offer is that there was a $1000 origination fee, but a larger lender credit to offset it and make them competitive. They also have don't want you to refinance with 180 days of funding. I sent the offer to Better.com, who had been very uncompetitive up to that point. I though Better.com *might* beat the offer slightly, but at least I wouldn't have to wait 180 days to refinance again. To my shock, Better absolutely destroyed the previous offer.

Better's 30-year, 2.875% offer was:
A: 0
B: 614
C: 1320
E: 141
H: 0
J: -4061

Thus, D+E - Lender Credit = -$1986, a nearly $2,000 credit in my favor. And they've already confirmed the appraisal fee should be waived, so the offer should be even better in the end!

Who will Better.com work with in terms of title services? I haven't heard great things about their default title service. I have 5 business days to pick someone else.

[BrandonBogle]

I think some of us misunderstood you originally, but yes, I agree with what you just said.

Rereading it, I think I see where the confusion is. I'll edit to make it more clear.

[Johny]

Out of curiosity I emailed Lenderfi to ask if they would do a rate-and-term refi a month after I close my cash out refi and the reply was "Doing that would screw over your current lender".

I have never done a cash out refi before but it seems the 6 month waiting period is so the lender you work with for cash out refi doesn't get screwed over commission maybe?

Edit -- further reply from Lenderfi. Seems like good advice:

"So what I would do is take a no cost loan with the current guy but just understand you need to wait 180 days from when they sell the loan to do anything else. Legally you're not required to but it would be nice if you like the guy. In 5 months start your shopping process and then you won't hurt him "

[jco]

Otherwise, the best offer I have is a no cost 30-year at 3% with no appraisal. Since Better.com (who is currently uncompetitive) will consider matching an LE no more than 1 day old, I'm thinking I wait through tomorrow to see who else I hear from. Depending on what the best offer is, contact Better.com and see if they will beat the no-more-than-1-day-old LE, that way I have an improved rate locked in. If I get better offers down the road, I can again ask Better.com to beat them or walk.

Does this seem like a reasonable plan? Are they issues (like have to pay for an appraisal) or a depsoit that I'm not considering?

It sounds like you may have already done this, but I would open the application with Better today so things can settle on getting you assigned to a loan officer, and then tomorrow follow up with a competing offer. That way you don’t spend time tomorrow getting spun around to find someone.

That said, Better, if they beat an offer, will typically be by $100 nowadays. So you may want to just stick with LenderFi when they get you the loan estimate.

Although Better's offer will beat your cost by 100, and they'll include their appraisal, 550, as one of their costs. And then if your appraisal also gets waived by better, their end costs will be lower by 650 dollars. Which might make it worth.

(At least that's what happened when I got them to beat a loan estimate that didn't include an appraisal, and then in final closing my appraisal also got waived making my total costs 650 less than the original loan estimate I brought to them)

Keep in mind Better will try their beat of the quote based on what's in the Loan Estimate. If jco's loan estimate from LenderFi already has the appraisal waived on there, then it needs to be submitted to Better before they apply a waiver. If jco submits a loan estimate with after Better applies their waiver, then no extra discount is had.

In fact, if the competing LE has an appraisal on there that would eventually be waived and Better already waived the appraisal, then you actually end up worse off. This isn't too big a deal with having Better compete early in the process, but applies more in having them compete later in the process (perhaps with a second competing LE), as they may have already applied an appraisal waiver by then.

That said, in a scenario like this, it doesn't hurt to push whomever at Better does the new pricing why they counted the appraisal in that when they know an appraisal would be waived.

So let's hope jco's LE has an appraisal listed and the Better application doesn't have a waiver on it when submitting the LE.

Edited to make the point easier to follow.

BrandonBogle is absolutely right. I submitted a strong quote with the Appraisal included. Better beat that quote with the appraisal included. When the appraisal drops off, it Better's offer should be even better.

[drk]

I put my money where my mouth is and applied with Third Federal for my small loan balance. I'm in NH, owe 127k on 260k (49% LTV) and currently am in year 6 of a Penfed 5/5 at 3.3125%. I applied for Third Federal's 10 year fixed at 2.79%, fixed $295 closing costs. I could maybe get closer to 2.5% on a 15 year but for no work I'm happy.

Applied Sunday, processor reached out Monday around 1pm via email with a link to their document upload portal and requested documents. Will update with any shenanigans.

Any updates? I see that Third Federal is advertising a Jumbo 5/1 as low as 2.44%, or 2.74% for the low-cost version, but I've never heard of them.

[bling]

Out of curiosity I emailed Lenderfi to ask if they would do a rate-and-term refi a month after I close my cash out refi and the reply was "Doing that would screw over your current lender".

I have never done a cash out refi before but it seems the 6 month waiting period is so the lender you work with for cash out refi doesn't get screwed over commission maybe?

Edit -- further reply from Lenderfi. Seems like good advice:

"So what I would do is take a no cost loan with the current guy but just understand you need to wait 180 days from when they sell the loan to do anything else. Legally you're not required to but it would be nice if you like the guy. In 5 months start your shopping process and then you won't hurt him "

does anyone have more details on this? how badly does the lender get screwed if you refi again within 6 months?

[bling]

I put my money where my mouth is and applied with Third Federal for my small loan balance. I'm in NH, owe 127k on 260k (49% LTV) and currently am in year 6 of a Penfed 5/5 at 3.3125%. I applied for Third Federal's 10 year fixed at 2.79%, fixed $295 closing costs. I could maybe get closer to 2.5% on a 15 year but for no work I'm happy.

Applied Sunday, processor reached out Monday around 1pm via email with a link to their document upload portal and requested documents. Will update with any shenanigans.

Any updates? I see that Third Federal is advertising a Jumbo 5/1 as low as 2.44%, or 2.74% for the low-cost version, but I've never heard of them.

my HELOC is with them. fantastic company.

[BrandonBogle]

Out of curiosity I emailed Lenderfi to ask if they would do a rate-and-term refi a month after I close my cash out refi and the reply was "Doing that would screw over your current lender".

I have never done a cash out refi before but it seems the 6 month waiting period is so the lender you work with for cash out refi doesn't get screwed over commission maybe?

Edit -- further reply from Lenderfi. Seems like good advice:

"So what I would do is take a no cost loan with the current guy but just understand you need to wait 180 days from when they sell the loan to do anything else. Legally you're not required to but it would be nice if you like the guy. In 5 months start your shopping process and then you won't hurt him "

does anyone have more details on this? how badly does the lender get screwed if you refi again within 6 months?

In any refi, the lender selling the loan would have the money they made clawed back if the loan closes within 6 months. In addition to that, a cash-out loan refinanced within 6 months will/should be considered a cash-out again, even if no new cash is taken out. That is a Fannie/Freddie guideline/rule.

[jco]

Out of curiosity I emailed Lenderfi to ask if they would do a rate-and-term refi a month after I close my cash out refi and the reply was "Doing that would screw over your current lender".
...

does anyone have more details on this? how badly does the lender get screwed if you refi again within 6 months?

In any refi, the lender selling the loan would have the money they made clawed back if the loan closes within 6 months.

This is correct. e.g., you can see the contract that Provident offers its brokers here: https://pfloans.provident.com/pdf/forms ... t_bd_a.pdf

If you refinance within 180 days after your loan funds, then the broker has to pay all the credits back to Provident. For one of my recent loans, that was something like $3,500. My brokers, from a small 2-man firm, were incredible, so I chose not to refinance until after the 180 days were complete.

[bling]

Out of curiosity I emailed Lenderfi to ask if they would do a rate-and-term refi a month after I close my cash out refi and the reply was "Doing that would screw over your current lender".
...

does anyone have more details on this? how badly does the lender get screwed if you refi again within 6 months?

In any refi, the lender selling the loan would have the money they made clawed back if the loan closes within 6 months.

This is correct. e.g., you can see the contract that Provident offers its brokers here: https://pfloans.provident.com/pdf/forms ... t_bd_a.pdf

If you refinance within 180 days after your loan funds, then the broker has to pay all the credits back to Provident. For one of my recent loans, that was something like $3,500. My brokers, from a small 2-man firm, were incredible, so I chose not to refinance until after the 180 days were complete.

i just looked it up. average salary for a mortgage loan officer is ~50k....so that's almost an entire month's salary go bye bye...ouch... definitely would hurt the smaller companies out there.

[BrandonBogle]

i just looked it up. average salary for a mortgage loan officer is ~50k....so that's almost an entire month's salary go bye bye...ouch... definitely would hurt the smaller companies out there.

Keep in mind that at most lenders, a loan officer works on commission. So they likely make more than $50k if they lend nationally. However, I’m sure many, particularly with smaller lenders, make only that.