Par rate was 2.75. The 2.375% rate required 2.2+ points. They gave me a 1.5 point discount. That’s why it was only ~3/4 of point to get that lower rate.BrandonBogle wrote: ↑Tue Sep 15, 2020 11:15 pmIn your scenario, it would really depend on cash-flow and those darn transfer taxes. If you roll in the closing costs, you will raise the loan amount about $25k and pay more transfer tax on the higher loan amount.fuzzball wrote: ↑Tue Sep 15, 2020 10:14 pm Locked in 2.375%, Points paid 0.78, 30 yrs with LoanDepot.
Cash to close for me is 25k (~15k in transfer taxes.. NYS)
Escrow is waived.
My P&I goes down by 804/month and my breakeven is 32-33 months.
*LD does not process CEMA applications... so I have to pay the transfer/recording taxes again.
I do have a few Q's:
Are the points and transfer taxes on a refi deductible on taxes? I will be itemizing again for this year.
When does it make sense to roll in the closing cost?
Right now, I pay 4500/month (PITI). My new PI is 2825 (escrow waived). If I can swing it, should I keep making the 4500/month payment (with any excess going to principle? Or is there a better way to pay this off?
But given the plan to continue paying $4,500/mo, I think you are fine if you want to roll in the costs as you’ll be paying that portion down very quickly.
Out of curiosity, did you ask them what your par (0 point) rate is? That 0.78 point is $5,670 by itself. Likely it is worth it, but it doesn’t hurt to ask.
On the point of income taxes, points I believe can be deducted over the life of the loan. I think there are provisions to deducted in the year the loan originates, but that may be limited to purchase loans vs. refis. Others will hopefully chime in with more info.
Btw for others, given that fuzzball is stuck with the transfer tax bill and most lenders that are competitive just won’t do a CEMA right now (the loan will assuredly not be sold to Fannie/Freddie by 12/1 with a CEMA), this is one of those cases were it will make sense to pay reasonable points. The idea is that you put yourself in your forever rate now, as refinancing again will be cost-prohibitive without a CEMA, and those who will do one likely won’t give you 2.5% or so on a 30-year at little A + B + C cost.
They mention that that even after rate lock, I can use the 1.5 points towards closing or taxes. That will put me at the higher rate tho.
I’m just thinking long terms at this point.