Refinance Mega Thread

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Ryzen
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~

Post by Ryzen » Sat Aug 01, 2020 10:41 am

sharker10 wrote:
Sat Aug 01, 2020 10:32 am
sharker10 wrote:
Fri Jul 31, 2020 2:46 pm
MrJedi wrote:
Thu Jul 30, 2020 10:05 am
sharker10 wrote:
Thu Jul 30, 2020 9:43 am
Thanks guys, yea my numbers are wrong then. Realized a bit ago while reading some more that I am including sections F + G in that 3.3k. So my Fees right now are:

A: $839
B: $351
C: $785
E: $60

So I would need a lender credit of roughly $2050 to have a true no cost refi. I will reach out to the loan officer they assigned me to see what it would cost me rate wise to get that credit. I also reached out to WaterMark to get a Loan estimate from them as well.
Typically when you are asking for lender credits, section A goes to zero. So what you are looking for is section A=$0 and then lender credits line in section J to be roughly $1196 in your case (offsetting A+B+C+E). That will be a true no cost refinance.

This will move the rate up a bit, but if it's a better rate than your current loan, you save money immediately. As you know now, sections F and G are costs you need to pay anyway without refinancing.

Edit: see commentary below about section A vs lender credits, other lenders might leave section A and put a bigger number in lender credits. The main point is to do the math and verify, since there is not a single line that tells you the whole story.
Thanks everyone for your help. I finally received a reply from LenderFi and the lowest they can offer is 3% with credit covering A,B,C, and E fully. I think this is a pretty solid offer considering im only financing 160k. I wish I could get a response from WaterMark, no reply online and over the phone they just took my info and told me they would contact me soon.

Do you think its worth locking this in with LenderFi?

Anyone with data points with low mortgage balance? Worth the lock here? Any tips to get a quick reply from WM?

Thanks!!
I would do it. I just closed earlier in the week on under $140k at 3.25% (lowered my rate and dropped PMI). I got dinged because the LTV was between 70-80%, so Fannie Mae charges a .5% Loan Level Pricing Adjustment to the lender when the ultimately sell the loan off to FNMA. So for me, small balance with high-ish LTV couldn't get me the insane rates in this thread.

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BrandonBogle
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Re: Refinance Mega Thread

Post by BrandonBogle » Sat Aug 01, 2020 10:44 am

Berean wrote:
Sat Aug 01, 2020 9:40 am
Berean wrote:
Sat Aug 01, 2020 9:36 am
Brandon, you are good. In 2019, my current lender disbursed $7,994 from my escrow account: $2,343 to insurance and $5,651 to taxes. What does that indicate about Better's fees in my refi Loan Estimate?
Half my property taxes are due in June; the other half, in November.
Gotcha. My best guess would be is the department calculating your escrow amounts didn’t account for your property taxes due 2x/year. Thus, even if they want to hold the entire payment, that would be 6 months instead of 12. I would simply ask the processing expert (or closing expert if you’ve moved on to that person already) to have that department consider you pay property taxes semi-annually. I would expect 4-6 months of funding up front, plus the typical 2 month reserve.

If you are wondering why potentially 6 + 2 months, lenders will keep at two-month reserve minimum balance for an escrow account. Since an August closing would probably mean your first payment is due October 1st and the November payment will likely be sent to get to your tax authority before November 1st, they really only have a single month of collecting escrow in your monthly payment to work with. So I would expect essentially the entire Nov payment to be collected at closing, regardless of lender.

As for homeowners insurance, I imagine that depends on when it is due. For me, it is due late January and my current refi wants 9 months. I also will have an August closing, so Oct - Dec = 3 months + 9 months at closing = my annual premium. Yours may have similar math or the 9 months for insurance may simply be coincidence.

Cash is King
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Re: Refinance Mega Thread

Post by Cash is King » Sat Aug 01, 2020 10:47 am

topcatin wrote:
Sat Aug 01, 2020 9:22 am
Cash is King wrote:
Sat Aug 01, 2020 12:00 am
topcatin wrote:
Fri Jul 31, 2020 8:58 pm
Cash is King wrote:
Fri Jul 31, 2020 6:39 pm
topcatin wrote:
Fri Jul 31, 2020 6:26 pm

Thanks for the explanation, but even when I logged in to my current lender and they have a tool to show the "pay-off" amount, it still didnt match my closing doc. So shouldn't these 2 numbers be the same?

No. As stated in the previous reply, they add a few days of buffer to the payoff quote. You may want to take your daily interest rate and back into the $663. FWIW, when I refinanced back in March they added 7 buffer days. YMMV, but you will get any overage back.
Interest is $20/day, so it comes to 33 days interest..probably July's interest ? Seems like overkill.
Yes, July interest plus a couple of extra days. It make sense because you have not made your August payment.
Thanks for helping me understand. I figured out Lenderfi has the latest principal + 17 days of interest added to it.
My old lender gave a quote for the Principal Bal + interest for 14 days (aug 1 - Aug 14). So does this mean if the disbursement date is say Aug 10, then I should expect a refund for 7 days worth of interest?
That's correct.

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BrandonBogle
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Re: Refinance Mega Thread

Post by BrandonBogle » Sat Aug 01, 2020 10:53 am

sharker10 wrote:
Sat Aug 01, 2020 10:32 am
sharker10 wrote:
Fri Jul 31, 2020 2:46 pm
MrJedi wrote:
Thu Jul 30, 2020 10:05 am
sharker10 wrote:
Thu Jul 30, 2020 9:43 am
So my Fees right now are:

...
B: $351
C: $785
E: $60
... lender credits line in section J to be roughly $1196 in your case (offsetting A+B+C+E). That will be a true no cost refinance.
Thanks everyone for your help. I finally received a reply from LenderFi and the lowest they can offer is 3% with credit covering A,B,C, and E fully. I think this is a pretty solid offer considering im only financing 160k.
Anyone with data points with low mortgage balance? Worth the lock here?
My loan of $150k has been offered a 30-year 3% rate that covers all closing costs with a few dollars extra left for prepaids. Note that I’m doing my refi through Better’s Amex promo and thus, that credit is before the Amex credit. I have generally found that other lenders would be cheaper than without the credit, but more expensive than with the credit (for our small loan sizes). So while I don’t think that is the best offer you can find, it is not a bad offer either. If you want to move on with your life, I’d take that offer.

Please note that Thursday and Friday were (mortgage) market days in our favor, so if you haven’t locked yet, you may get a pleasant surprise of more credits or 2.875% at no cost when you ask them to lock it. Doesn’t hurt to ask if pricing has improved after the tail end of this past week.

sharker10
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Re: Refinance Mega Thread

Post by sharker10 » Sat Aug 01, 2020 11:03 am

BrandonBogle wrote:
Sat Aug 01, 2020 10:53 am
sharker10 wrote:
Sat Aug 01, 2020 10:32 am
sharker10 wrote:
Fri Jul 31, 2020 2:46 pm
MrJedi wrote:
Thu Jul 30, 2020 10:05 am
sharker10 wrote:
Thu Jul 30, 2020 9:43 am
So my Fees right now are:

...
B: $351
C: $785
E: $60
... lender credits line in section J to be roughly $1196 in your case (offsetting A+B+C+E). That will be a true no cost refinance.
Thanks everyone for your help. I finally received a reply from LenderFi and the lowest they can offer is 3% with credit covering A,B,C, and E fully. I think this is a pretty solid offer considering im only financing 160k.
Anyone with data points with low mortgage balance? Worth the lock here?
My loan of $150k has been offered a 30-year 3% rate that covers all closing costs with a few dollars extra left for prepaids. Note that I’m doing my refi through Better’s Amex promo and thus, that credit is before the Amex credit. I have generally found that other lenders would be cheaper than without the credit, but more expensive than with the credit (for our small loan sizes). So while I don’t think that is the best offer you can find, it is not a bad offer either. If you want to move on with your life, I’d take that offer.

Please note that Thursday and Friday were (mortgage) market days in our favor, so if you haven’t locked yet, you may get a pleasant surprise of more credits or 2.875% at no cost when you ask them to lock it. Doesn’t hurt to ask if pricing has improved after the tail end of this past week.
I have not locked yet, but this quote was from mid day yesterday. When I go to lock, do they just offer me the current best rate or is that something I would have to ask them to review to see if I am eligible for it?

Monsterflockster
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Re: Refinance Mega Thread

Post by Monsterflockster » Sat Aug 01, 2020 11:06 am

amking wrote:
Sat Aug 01, 2020 9:19 am
Berean wrote:
Sat Aug 01, 2020 6:14 am
I have locked in a 15-year refi with Better at 2.625%. As we move toward closing, they keep increasing my costs in Loan Estimate section G, "Initial Escrow Payment at Closing." They now want a full year of property tax payments and 9 months of homeowner's insurance payments up front, totaling $7,000. I of course don't want to plop down that much cash up front, which prevents me from generating any interest on that money.

Are Better's requirements standard and reasonable? Is there anything I can do to decrease these costs?

I don't see why they demand so much up front. My credit score is 800. In 11 years on my current mortgage, I have never been a day late or a dollar short on either property taxes or insurance. At the outset of the process, Better said they would waive escrow if I paid an additional $600. I declined.
Better continues to do this to me as well. Each new version of the loan estimate has had a higher and higher amount for the prepaids and escrows. My property tax is due in Sept, so I don’t understand why I need to pay so much into escrow for the following year.

I plan to ask them about this in more detail once I’m done shopping
This was happening to me with a different lender. I just had them drop the escrow which increased the rate 1/4 point.

Cash is King
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Re: Refinance Mega Thread

Post by Cash is King » Sat Aug 01, 2020 11:17 am

Monsterflockster wrote:
Sat Aug 01, 2020 11:06 am
amking wrote:
Sat Aug 01, 2020 9:19 am
Berean wrote:
Sat Aug 01, 2020 6:14 am
I have locked in a 15-year refi with Better at 2.625%. As we move toward closing, they keep increasing my costs in Loan Estimate section G, "Initial Escrow Payment at Closing." They now want a full year of property tax payments and 9 months of homeowner's insurance payments up front, totaling $7,000. I of course don't want to plop down that much cash up front, which prevents me from generating any interest on that money.

Are Better's requirements standard and reasonable? Is there anything I can do to decrease these costs?

I don't see why they demand so much up front. My credit score is 800. In 11 years on my current mortgage, I have never been a day late or a dollar short on either property taxes or insurance. At the outset of the process, Better said they would waive escrow if I paid an additional $600. I declined.
Better continues to do this to me as well. Each new version of the loan estimate has had a higher and higher amount for the prepaids and escrows. My property tax is due in Sept, so I don’t understand why I need to pay so much into escrow for the following year.

I plan to ask them about this in more detail once I’m done shopping
This was happening to me with a different lender. I just had them drop the escrow which increased the rate 1/4 point.
Yeah, I'm a big fan of no escrow simply for this reason. The lenders are not doing anything shady but they need to fund the escrow account enough to cover upcoming payments of taxes and HI which can be a significant amount of cash.

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BrandonBogle
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Re: Refinance Mega Thread

Post by BrandonBogle » Sat Aug 01, 2020 11:23 am

sharker10 wrote:
Sat Aug 01, 2020 11:03 am
I have not locked yet, but this quote was from mid day yesterday. When I go to lock, do they just offer me the current best rate or is that something I would have to ask them to review to see if I am eligible for it?
Typically it is automatic. I was just mentioning it in case your quote was from Wednesday.

andyandyandy
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Re: Refinance Mega Thread

Post by andyandyandy » Sat Aug 01, 2020 11:43 am

LenderFi is not taking any new applications.
Any suggestions for Refinance on Primary residence are highly appreciated!

My local lender is offering 2.625 , 30 year fixed but costing me $3500.
Appreciate any good lenders!

juice000
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Re: Refinance Mega Thread

Post by juice000 » Sat Aug 01, 2020 11:50 am

We applied to lender fi, better, movement, loan depot, and watermark. Watermark ended up being the best and we locked there at 2.5 30 yr. better said if they can beat it by 100 bucks for same deal would I go with them. I said send me the LE and we’ll compare the two. They went dark.

A 1499
B 37
C 815

Credit of 2059

MrJedi
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Re: ~

Post by MrJedi » Sat Aug 01, 2020 12:28 pm

Ryzen wrote:
Sat Aug 01, 2020 10:41 am

I would do it. I just closed earlier in the week on under $140k at 3.25% (lowered my rate and dropped PMI). I got dinged because the LTV was between 70-80%, so Fannie Mae charges a .5% Loan Level Pricing Adjustment to the lender when the ultimately sell the loan off to FNMA. So for me, small balance with high-ish LTV couldn't get me the insane rates in this thread.
I'm curious to learn more about this.

What are the thresholds that produce favorable rates?

I got a mediocre rate (still a no brainer for me though as I improved my rate and got enough lender credits to cover all extra costs), I assumed it was due to a low balance (122k), but my LTV is only ~60%. Is there a matrix or guidelines out there that show various thresholds?

sharker10
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Re: ~

Post by sharker10 » Sat Aug 01, 2020 12:41 pm

MrJedi wrote:
Sat Aug 01, 2020 12:28 pm
Ryzen wrote:
Sat Aug 01, 2020 10:41 am

I would do it. I just closed earlier in the week on under $140k at 3.25% (lowered my rate and dropped PMI). I got dinged because the LTV was between 70-80%, so Fannie Mae charges a .5% Loan Level Pricing Adjustment to the lender when the ultimately sell the loan off to FNMA. So for me, small balance with high-ish LTV couldn't get me the insane rates in this thread.
I'm curious to learn more about this.

What are the thresholds that produce favorable rates?

I got a mediocre rate (still a no brainer for me though as I improved my rate and got enough lender credits to cover all extra costs), I assumed it was due to a low balance (122k), but my LTV is only ~60%. Is there a matrix or guidelines out there that show various thresholds?

My LTV is 55% with 160k balance and I’m getting 3% no cost. Which is also kind of a no brainer as I’m currently at 3.5% 8 years into my original loan. Part of me wants to keep pushing for a lower rate but no one has replied as fast as LenderFi did and continues to communicate with me..

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pianos101
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Re: Refinance Mega Thread

Post by pianos101 » Sat Aug 01, 2020 1:06 pm

juice000 wrote:
Sat Aug 01, 2020 11:50 am
We applied to lender fi, better, movement, loan depot, and watermark. Watermark ended up being the best and we locked there at 2.5 30 yr. better said if they can beat it by 100 bucks for same deal would I go with them. I said send me the LE and we’ll compare the two. They went dark.

A 1499
B 37
C 815

Credit of 2059
What state and loan size?

juice000
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Re: Refinance Mega Thread

Post by juice000 » Sat Aug 01, 2020 1:10 pm

Loan size 235K , house is worth 400K. Locked it yesterday. Arizona

juice000
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Re: Refinance Mega Thread

Post by juice000 » Sat Aug 01, 2020 1:17 pm

pianos101 wrote:
Sat Aug 01, 2020 1:06 pm
juice000 wrote:
Sat Aug 01, 2020 11:50 am
We applied to lender fi, better, movement, loan depot, and watermark. Watermark ended up being the best and we locked there at 2.5 30 yr. better said if they can beat it by 100 bucks for same deal would I go with them. I said send me the LE and we’ll compare the two. They went dark.

A 1499
B 37
C 815

Credit of 2059
What state and loan size?
Loan size 235K , house is worth 400K. Locked it yesterday. Arizona

manatee2005
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Re: Refinance Mega Thread

Post by manatee2005 » Sat Aug 01, 2020 1:28 pm

Goal33 wrote:
Sat Aug 01, 2020 12:24 am
manatee2005 wrote:
Sat Aug 01, 2020 12:06 am
br0nd wrote:
Thu Jul 30, 2020 8:14 pm
I just locked with lenderfi @ 2.5%
30 yr, 510k loan
Enough lender credits to cover all costs except prepaids/escrow.

When I called in to lock the loan, it was a little awkward. Almost felt like an Inquisition
1) we aren't taking loan apps, how did you even manage to apply today?
2) are you sure you are done shopping, otherwise I don't really want to talk to you
3) you owe us your first born if you refi in 6 months ( well that's a little exaggeration but not much)

Was not a very warm conversation, but I can deal with it to save $$
On a positive note they had my application process credited and loan estimate sent within a few hours of me submitting my app..
I had the same experience as you, they very rude few months ago. I actually refinanced a month after I closed with them haha. They didn’t want to match a lower rate so I went to someone else.
So what happened with the 6 month lender credit clawback?
Nothing yet. Haven’t heard from them. I think it’s illegal to do the clawback anyways. At the very least it’s unAmerican. They probably put it there to scare people.

K-knows
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Re: Refinance Mega Thread

Post by K-knows » Sat Aug 01, 2020 1:32 pm

I'm interested in comparing the equivalent total out of pocket costs of sticking with my current loan vs a refi. Here are two possible methods for an apples to apples comparison where my out of pocket costs going forward under both a refi and existing loan scenarios are the same. Which method is correct (if either)?

Method 1 - compare the following two calculations
REFI cost scenario: Total lifetime cost of a refi = total interest paid on the loan plus loan costs A+B+C+E. Assume loan closes 9/1/2020.

Existing Loan cost scenario: 2) Projected remaining interest on my current loan starting on 9/1/2020 with adjustments as follows. Pay a 1 time lump sum principal payment on 9/1 equal to the refi loan costs (A+B+C+E) plus extra monthly principal payments starting 10/1/2020 equal to the difference between the P&I on the new refi and my current P&I.

Method 2
REFI cost scenario: Total lifetime cost of a refi = Loan amount + total interest paid on the loan + plus cash to close the loan.

Existing Loan cost scenario: Remaining P&I payments going forward + the extra principal payments per method 1 (lump sum on 9/1 + plus extra monthly principal payments).

I have been using the excel spreadsheet posted at https://www.vertex42.com/Calculators/ho ... lator.html (thank you @BrandonBogle for sharing the link) to run various calculations.

Using Method 1, I compare my current 20 year loan (11 years left) at 3.375% with a balance of 145K against a 10 year refi of $148K at 2.25% with A+B+C+E estimated at $5K. Comparing the two scenarios, I estimate the lifetime cost of the refi will save about $3K over the 10 years vs the existing loan cost scenario with extra payments (accelerating the payoff date by 13 months).

Using Method 2, the refi cost scenario saves aprox $2K vs the existing loan cost scenario.

Under both calculation methods the refi is only marginally compelling. But I want to get the apples to apples comparison method correct should rates drop further.

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BrandonBogle
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Re: Refinance Mega Thread

Post by BrandonBogle » Sat Aug 01, 2020 1:36 pm

I have seen a couple people mention they feel clawbacks are illegal.

While I also agree that LenderFi and other such lenders may not enforce a clawback on lender credits, especially if they have transferred servicing elsewhere before the refi,I don’t feel it is illegal - i.e., if they put in your closing disclosures, I would see no reason why they couldn’t pursue that.

That said, notice I mention closing disclosures. If it wasn’t something you signed at closing vs. a disclosure at time of application, I could see the argument that the “agreement” for a clawback is unenforceable.

Shikoku
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Re: Refinance Mega Thread

Post by Shikoku » Sat Aug 01, 2020 1:37 pm

We are in a good interest rate environment where many forum members are getting excellent deals from Better. I am curious about business model of Better.
  • Why Better beats some LE but not others?
  • Is the $2,500 AMEX credit built in the Better's pricing model? Better should make a profit even after giving AMEX credit. Otherwise, lights will be off!
  • If Better declines to beat an LE, does that indicate the LE is pretty close to the best deal in that market condition?
"I don't worry too much about pointing fingers at the past. I operate on the theory that every saint has a past, every sinner has a future." -- Warren Buffett

mbasherp
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Re: Refinance Mega Thread

Post by mbasherp » Sat Aug 01, 2020 1:50 pm

I’m about to start the refi process again after starting a 30 year in February at 3.5% with LenderFi. My balance is around $196k. It sounds like I may be better off shopping loans of $200k in comparison - does anyone know how much I could take out at closing with a new loan while it still remains a technical rate/term refi?

Perhaps rolling in escrow or something would do it. Although I’d still like to keep things relatively no cost, I’m wondering what’s the best all around way to do it. I plan to shop for $196k loans as well, but I’m willing to borrow a tiny bit more if it makes sense and is feasible.

LTV 60% - really hoping to get 2.75% or below!

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BrandonBogle
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Re: Refinance Mega Thread

Post by BrandonBogle » Sat Aug 01, 2020 2:05 pm

K-knows wrote:
Sat Aug 01, 2020 1:32 pm
I'm interested in comparing the equivalent total out of pocket costs of sticking with my current loan vs a refi. Here are two possible methods for an apples to apples comparison where my out of pocket costs going forward under both a refi and existing loan scenarios are the same. Which method is correct (if either)?

...

Under both calculation methods the refi is only marginally compelling. But I want to get the apples to apples comparison method correct should rates drop further.
IMO, neither. This is what I do.
  1. Build an amortization table of your current mortgage
  2. Build an amortization table of the expected refi. Easiest to do this as a duplicated tab in the same spreadsheet.
  3. Whichever has a lower payment, put in additional principal (monthly) on the spreadsheet to make it equal the payment of the other mortgage
  4. On the current mortgage, take note of the Cumulative Interest for 9/1/2020. Keep in mind that interest in earned in arrears, so that number is for interest up to 8/30/2020.
  5. Calculate the refi's A + B + C + E - credits in J (plus any outside credits, like Better/Rocket's Amex promo when it was around)
  6. Add in a calculation that does old mortgage Cumulative Interest - refi Cumulative Interest
  7. Note which month that this savings of interest between the two mortgages becomes larger that the closing costs calculated above
  8. This is your breakeven point. If you plan to have this loan past this date, get the refi. If you don't plan on having this loan that far, keep your current loan.
The above assumes you are making a decision on cost. If you are making a decision on liquidity or something else, that would be a different calculation.

Minty
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Re: Refinance Mega Thread

Post by Minty » Sat Aug 01, 2020 2:10 pm

Does anyone happen to know if Owning.com has a clawback if you refi again quickly? I closed a 15 at the end of June at 2.375%, but I see LoanCabin has that loan at 2%.
Core Four w/ nominal bonds & TIPS. Refi Rampage: Purchase: 4.125% 30 -> R1 3% 20 -> R2 2.375% 15 -> R3 shopping

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BrandonBogle
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Re: Refinance Mega Thread

Post by BrandonBogle » Sat Aug 01, 2020 2:14 pm

Shikoku wrote:
Sat Aug 01, 2020 1:37 pm
We are in a good interest rate environment where many forum members are getting excellent deals from Better. I am curious about business model of Better.
  1. Why Better beats some LE but not others?
  2. Is the $2,500 AMEX credit built in the Better's pricing model? Better should make a profit even after giving AMEX credit. Otherwise, lights will be off!
  3. If Better declines to beat an LE, does that indicate the LE is pretty close to the best deal in that market condition?
Please note I numbered your list above to make it easier to answer.
  1. The pool of investors they can sell your loan to while meeting company policies w.r.t. to profitability of the loan, the expected output of the loan officer, and the overall volume with the lender. There likely are other factors as well, but I would call those the main ones.
  2. In a way, yes. Think of it as part of discretionary, marketing budget. It isn't directly in the pricing model, but it is a 'pot' the loan officers tap to offset some costs. Similar to how car dealerships may have a cost for an individual car, but based on volume that month, they will have an extra pot of profitability they can use to improve deals.
  3. Not necessarily. The individual loan officer may have met their pipeline/volume goals for the month and not be approved for tapping the pot anymore. It could be that Better has so much volume that this is a way of stopping new apps like how LenderFi is simply preventing people from applying (for the most part). It could also be that the loan officer has extinguished how much of that pot they have access to.
As an example to #3, in my case, they did not fully match Watermark's offer pre-credit. Instead, they were $500 higher from Watermark. I proceeded anyways since I would still be $2k ahead in the end. So now my loan officer did their part and I'm working with the processor. The processor has their own access to a pot of "marketing" dollars for concessions. This may/may not be the same pot the loan officer had access to, but it would be using the processor's "allotment" of such dollars. So I engaged the processor for a match/beat and immediately got a concession to match my competing offer. This was also days apart, so market changes may have also helped my case.

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BrandonBogle
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Re: Refinance Mega Thread

Post by BrandonBogle » Sat Aug 01, 2020 2:17 pm

mbasherp wrote:
Sat Aug 01, 2020 1:50 pm
I’m about to start the refi process again after starting a 30 year in February at 3.5% with LenderFi. My balance is around $196k. It sounds like I may be better off shopping loans of $200k in comparison - does anyone know how much I could take out at closing with a new loan while it still remains a technical rate/term refi?

Perhaps rolling in escrow or something would do it. Although I’d still like to keep things relatively no cost, I’m wondering what’s the best all around way to do it. I plan to shop for $196k loans as well, but I’m willing to borrow a tiny bit more if it makes sense and is feasible.

LTV 60% - really hoping to get 2.75% or below!
I normally waive escrow in my refis. However, this time around, I did not and I'm financing the escrow and walking away from closing with $2k in case (the max Fannie Mae allows for rate-and-term refis). This pushed me into a better pricing bracket and my closing costs are lower than when I paid cash for the closing costs. This also enabled me to leverage using a higher rate/lender credit since I know I will refi again.

soobaerodude
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Re: Refinance Mega Thread

Post by soobaerodude » Sat Aug 01, 2020 2:29 pm

whites27 wrote:
Sat Aug 01, 2020 8:26 am
I am trying to get Better to match another LE offer and they keep wanting to use the AMEX Statement credit as a kind of lender credit but it’s not since it is not on the loan estimate. Has anyone had them do this to you? I keep saying you need to beat what’s on the loan estimate but then they will come back and talk about the AMEX credit and how that applies against closing costs. And even then, they only apply it against B+C and ignore that A (points) is way worse in their LE. I just feel like I am getting the run around. Any suggestions?
It looks like you need to lock with Better first, then request a ratematch with the loan processor, not the concierge/loan officer. My concierge gave a similar reply to me, $8000 in points if I wanted to match the rate of a competing LE. I then locked and sent the LE to the loan processor. I had a fee and lender credit match plus $2500 AMEX credit within an hour

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Re: Refinance Mega Thread

Post by anon_investor » Sat Aug 01, 2020 2:37 pm

BrandonBogle wrote:
Sat Aug 01, 2020 1:36 pm
I have seen a couple people mention they feel clawbacks are illegal.

While I also agree that LenderFi and other such lenders may not enforce a clawback on lender credits, especially if they have transferred servicing elsewhere before the refi,I don’t feel it is illegal - i.e., if they put in your closing disclosures, I would see no reason why they couldn’t pursue that.

That said, notice I mention closing disclosures. If it wasn’t something you signed at closing vs. a disclosure at time of application, I could see the argument that the “agreement” for a clawback is unenforceable.
It was only in the rate lock disclosures, not in the closing documents. The disclosure is actually pretty poorly worded, I think it would be difficult for them to enforce. Additionally, even if it was enforceable, from a practical stand point, unless LenderFi was still the loan servicer at the time someone tried to refi during the "clawback period", they would have no easy mechanism to clawback the credits (which for most people are probably only around $2k-$3k). The legal costs (plus the time/effort) it would take to try to clawback that credit would likely not make it financially advantagous for them to try. That being said, I bet if LenderFi lost money because someone did a refi ealier than 6 months, that they would likely never do business with them again.

I just closed with LenderFi, and I see interest rates only going down between now and 6 months, so I would prefer not to burn any bridges with them so I can potentually use them for my next refi.

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Re: Refinance Mega Thread

Post by thrillhou » Sat Aug 01, 2020 2:39 pm

BrandonBogle wrote:
Sat Aug 01, 2020 2:05 pm
K-knows wrote:
Sat Aug 01, 2020 1:32 pm
I'm interested in comparing the equivalent total out of pocket costs of sticking with my current loan vs a refi. Here are two possible methods for an apples to apples comparison where my out of pocket costs going forward under both a refi and existing loan scenarios are the same. Which method is correct (if either)?

...

Under both calculation methods the refi is only marginally compelling. But I want to get the apples to apples comparison method correct should rates drop further.
IMO, neither. This is what I do.
  1. Build an amortization table of your current mortgage
  2. Build an amortization table of the expected refi. Easiest to do this as a duplicated tab in the same spreadsheet.
  3. Whichever has a lower payment, put in additional principal (monthly) on the spreadsheet to make it equal the payment of the other mortgage
  4. On the current mortgage, take note of the Cumulative Interest for 9/1/2020. Keep in mind that interest in earned in arrears, so that number is for interest up to 8/30/2020.
  5. Calculate the refi's A + B + C + E - credits in J (plus any outside credits, like Better/Rocket's Amex promo when it was around)
  6. Add in a calculation that does old mortgage Cumulative Interest - refi Cumulative Interest
  7. Note which month that this savings of interest between the two mortgages becomes larger that the closing costs calculated above
  8. This is your breakeven point. If you plan to have this loan past this date, get the refi. If you don't plan on having this loan that far, keep your current loan.
The above assumes you are making a decision on cost. If you are making a decision on liquidity or something else, that would be a different calculation.
This looks good. Perhaps a simpler way would be to compare the two and see what the total cost is going to be.
Trying to model K-knows, take a look at these two results:
https://www.calculator.net/mortgage-pay ... 4#loanterm
https://www.calculator.net/mortgage-pay ... 5#loanterm

Quickly, you can see what the total cost will be for the life of the loan. Clicking to view the amortization tables, you can get more nuanced on how long it'll take.

I hope this helps!

Shikoku
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Re: Refinance Mega Thread

Post by Shikoku » Sat Aug 01, 2020 2:48 pm

BrandonBogle wrote:
Sat Aug 01, 2020 2:14 pm
Shikoku wrote:
Sat Aug 01, 2020 1:37 pm
We are in a good interest rate environment where many forum members are getting excellent deals from Better. I am curious about business model of Better.
  1. Why Better beats some LE but not others?
  2. Is the $2,500 AMEX credit built in the Better's pricing model? Better should make a profit even after giving AMEX credit. Otherwise, lights will be off!
  3. If Better declines to beat an LE, does that indicate the LE is pretty close to the best deal in that market condition?
Please note I numbered your list above to make it easier to answer.
  1. The pool of investors they can sell your loan to while meeting company policies w.r.t. to profitability of the loan, the expected output of the loan officer, and the overall volume with the lender. There likely are other factors as well, but I would call those the main ones.
  2. In a way, yes. Think of it as part of discretionary, marketing budget. It isn't directly in the pricing model, but it is a 'pot' the loan officers tap to offset some costs. Similar to how car dealerships may have a cost for an individual car, but based on volume that month, they will have an extra pot of profitability they can use to improve deals.
  3. Not necessarily. The individual loan officer may have met their pipeline/volume goals for the month and not be approved for tapping the pot anymore. It could be that Better has so much volume that this is a way of stopping new apps like how LenderFi is simply preventing people from applying (for the most part). It could also be that the loan officer has extinguished how much of that pot they have access to.
As an example to #3, in my case, they did not fully match Watermark's offer pre-credit. Instead, they were $500 higher from Watermark. I proceeded anyways since I would still be $2k ahead in the end. So now my loan officer did their part and I'm working with the processor. The processor has their own access to a pot of "marketing" dollars for concessions. This may/may not be the same pot the loan officer had access to, but it would be using the processor's "allotment" of such dollars. So I engaged the processor for a match/beat and immediately got a concession to match my competing offer. This was also days apart, so market changes may have also helped my case.
Thank you, BrandonBogle. Your insight makes sense.

You mentioned that loan processors also have a pot of money to give concessions. This is totally new to me. Surprise never ends!

I took two different LEs to Better one week apart with 30yr @ 2.625% rate with loan size little less than 400K with LTV 72% and 800+ credit score. After conversation, I understand that my LEs were about 1K better than their best offer even after taking AMEX credit into consideration. Without AMEX credit, my LEs were 3.5K better than their best offer. So we kind of parted away for the moment but AMEX deal is still available to me until August 24th.
"I don't worry too much about pointing fingers at the past. I operate on the theory that every saint has a past, every sinner has a future." -- Warren Buffett

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Re: Refinance Mega Thread

Post by mc510 » Sat Aug 01, 2020 2:59 pm

I've got a satisfactory Loan Estimate from Watermark (15 fixed @ 2.25%, no points, A+B+C = $2,564, lender credit $2,669, estimated cash to close from borrower $1,222) but now that I'm going through the disclosures I see that the Uniform Residential Loan Application form lists totally different (and much much larger) closing costs resulting in closing "cash from borrower" of $5,886. I suppose there could be all sorts of reasons why these numbers might not match up exactly, but these are so wildly different that I don't know what to make of it. Any insights?

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Re: Refinance Mega Thread

Post by Shikoku » Sat Aug 01, 2020 3:06 pm

mc510 wrote:
Sat Aug 01, 2020 2:59 pm
I've got a satisfactory Loan Estimate from Watermark (15 fixed @ 2.25%, no points, A+B+C = $2,564, lender credit $2,669, estimated cash to close from borrower $1,222) but now that I'm going through the disclosures I see that the Uniform Residential Loan Application form lists totally different (and much much larger) closing costs resulting in closing "cash from borrower" of $5,886. I suppose there could be all sorts of reasons why these numbers might not match up exactly, but these are so wildly different that I don't know what to make of it. Any insights?
Without more information from your LE, it will be difficult to help. If your LE does not show cash from the borrower, it is necessary to check the application how they came up with the number. My application took three iterations before I e-signed.
"I don't worry too much about pointing fingers at the past. I operate on the theory that every saint has a past, every sinner has a future." -- Warren Buffett

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Re: Refinance Mega Thread

Post by pianos101 » Sat Aug 01, 2020 3:07 pm

BrandonBogle wrote:
Sat Aug 01, 2020 2:05 pm
K-knows wrote:
Sat Aug 01, 2020 1:32 pm
I'm interested in comparing the equivalent total out of pocket costs of sticking with my current loan vs a refi. Here are two possible methods for an apples to apples comparison where my out of pocket costs going forward under both a refi and existing loan scenarios are the same. Which method is correct (if either)?

...

Under both calculation methods the refi is only marginally compelling. But I want to get the apples to apples comparison method correct should rates drop further.
IMO, neither. This is what I do.
  1. Build an amortization table of your current mortgage
  2. Build an amortization table of the expected refi. Easiest to do this as a duplicated tab in the same spreadsheet.
  3. Whichever has a lower payment, put in additional principal (monthly) on the spreadsheet to make it equal the payment of the other mortgage
  4. On the current mortgage, take note of the Cumulative Interest for 9/1/2020. Keep in mind that interest in earned in arrears, so that number is for interest up to 8/30/2020.
  5. Calculate the refi's A + B + C + E - credits in J (plus any outside credits, like Better/Rocket's Amex promo when it was around)
  6. Add in a calculation that does old mortgage Cumulative Interest - refi Cumulative Interest
  7. Note which month that this savings of interest between the two mortgages becomes larger that the closing costs calculated above
  8. This is your breakeven point. If you plan to have this loan past this date, get the refi. If you don't plan on having this loan that far, keep your current loan.
The above assumes you are making a decision on cost. If you are making a decision on liquidity or something else, that would be a different calculation.
This is basically what I did. But I started the amortization tables at the beginning of my current mortgage in order to gauge the *entire* cost of paying for my house. Plus I have changed extra principle amounts and there's no website that can do that.

My spreadsheet allows me to quickly change refi rates and extra principle payments to see how that affects "total loan cost and term."

Image

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Re: ~

Post by Ryzen » Sat Aug 01, 2020 3:22 pm

MrJedi wrote:
Sat Aug 01, 2020 12:28 pm
Ryzen wrote:
Sat Aug 01, 2020 10:41 am

I would do it. I just closed earlier in the week on under $140k at 3.25% (lowered my rate and dropped PMI). I got dinged because the LTV was between 70-80%, so Fannie Mae charges a .5% Loan Level Pricing Adjustment to the lender when the ultimately sell the loan off to FNMA. So for me, small balance with high-ish LTV couldn't get me the insane rates in this thread.
I'm curious to learn more about this.

What are the thresholds that produce favorable rates?

I got a mediocre rate (still a no brainer for me though as I improved my rate and got enough lender credits to cover all extra costs), I assumed it was due to a low balance (122k), but my LTV is only ~60%. Is there a matrix or guidelines out there that show various thresholds?
https://singlefamily.fanniemae.com/media/9391/display

That is the matrix of all the LLPA (Loan Level Pricing Adjustments) that Fannie charges. When it says .5%, that means a .5% fee up front (not a .5% addition to the interest rate). It's pretty interesting, it will show how both credit score as well as LTV affect loan pricing and thus the lenders offers. See how just over 80% LTV has a slower LLPA than just under 80%, as over 80% has PMI which protects the investor more. And these are cumulative, if a loan hits multiple LLPA areas, you pay them all.

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Re: Refinance Mega Thread

Post by mc510 » Sat Aug 01, 2020 3:24 pm

Shikoku wrote:
Sat Aug 01, 2020 3:06 pm
mc510 wrote:
Sat Aug 01, 2020 2:59 pm
I've got a satisfactory Loan Estimate from Watermark (15 fixed @ 2.25%, no points, A+B+C = $2,564, lender credit $2,669, estimated cash to close from borrower $1,222) but now that I'm going through the disclosures I see that the Uniform Residential Loan Application form lists totally different (and much much larger) closing costs resulting in closing "cash from borrower" of $5,886. I suppose there could be all sorts of reasons why these numbers might not match up exactly, but these are so wildly different that I don't know what to make of it. Any insights?
Without more information from your LE, it will be difficult to help. If your LE does not show cash from the borrower, it is necessary to check the application how they came up with the number. My application took three iterations before I e-signed.
In J, it says total closing costs = $575 (D+I = 3,224, less lender credit of 2,669)
Then in "calculating cash to close" the loan amount is shown as $647 less than the actual payoff amount, so that gets added to the $575 closing costs and "estimated cash to close from borrower" is $1,222. There isn't anything else that indicates cash from borrower on the Loan Estimate.

The Uniform Residential Loan Application shows "estimated prepaid items" of $4,965 and "estimated closing costs" of $2,942. So I guess it's just that this form is assuming a bunch more prepaid expenses than the Loan Estimate does ... but prepaid items are things that I'd by paying anyways, right? Maybe it's last month on the old mortgage and first month on the new mortgage, or something like that?

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Re: Refinance Mega Thread

Post by Shikoku » Sat Aug 01, 2020 3:40 pm

mc510 wrote:
Sat Aug 01, 2020 3:24 pm
Shikoku wrote:
Sat Aug 01, 2020 3:06 pm
mc510 wrote:
Sat Aug 01, 2020 2:59 pm
I've got a satisfactory Loan Estimate from Watermark (15 fixed @ 2.25%, no points, A+B+C = $2,564, lender credit $2,669, estimated cash to close from borrower $1,222) but now that I'm going through the disclosures I see that the Uniform Residential Loan Application form lists totally different (and much much larger) closing costs resulting in closing "cash from borrower" of $5,886. I suppose there could be all sorts of reasons why these numbers might not match up exactly, but these are so wildly different that I don't know what to make of it. Any insights?
Without more information from your LE, it will be difficult to help. If your LE does not show cash from the borrower, it is necessary to check the application how they came up with the number. My application took three iterations before I e-signed.
In J, it says total closing costs = $575 (D+I = 3,224, less lender credit of 2,669)
Then in "calculating cash to close" the loan amount is shown as $647 less than the actual payoff amount, so that gets added to the $575 closing costs and "estimated cash to close from borrower" is $1,222. There isn't anything else that indicates cash from borrower on the Loan Estimate.

The Uniform Residential Loan Application shows "estimated prepaid items" of $4,965 and "estimated closing costs" of $2,942. So I guess it's just that this form is assuming a bunch more prepaid expenses than the Loan Estimate does ... but prepaid items are things that I'd by paying anyways, right? Maybe it's last month on the old mortgage and first month on the new mortgage, or something like that?
I believe those prepaids are property taxes and insurance premium. So it is better to have a conversation with your LO about what you will be required to pay at closing. If I expect any of these two items in my closing disclosure as prepaids, I pay them in advance and let the LO know with receipts.
"I don't worry too much about pointing fingers at the past. I operate on the theory that every saint has a past, every sinner has a future." -- Warren Buffett

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Re: Refinance Mega Thread

Post by BrandonBogle » Sat Aug 01, 2020 3:56 pm

thrillhou wrote:
Sat Aug 01, 2020 2:39 pm
This looks good. Perhaps a simpler way would be to compare the two and see what the total cost is going to be.
Trying to model K-knows, take a look at these two results:
https://www.calculator.net/mortgage-pay ... 4#loanterm
https://www.calculator.net/mortgage-pay ... 5#loanterm

Quickly, you can see what the total cost will be for the life of the loan. Clicking to view the amortization tables, you can get more nuanced on how long it'll take.

I hope this helps!
pianos101 wrote:
Sat Aug 01, 2020 3:07 pm
This is basically what I did. But I started the amortization tables at the beginning of my current mortgage in order to gauge the *entire* cost of paying for my house. Plus I have changed extra principle amounts and there's no website that can do that.

My spreadsheet allows me to quickly change refi rates and extra principle payments to see how that affects "total loan cost and term."

Image
My problem with these methods is that they are essentially assuming you are keeping the loan to completion. My method doesn't make such an assumption, which is great for scenarios like mine where I am doing 3 refis of the same property in 2020. Comparing the cost after 15-30 more years won't really answer if the 2nd or 3rd refis were worthwhile. In fact, when I did the 1st refi in May, I did focus on long-term cost and decided to get 2.625% with nothing in my pocket vs. 2.875% with $1k in my pocket. I wish I hadn't made that decision and had another $1k right now. Oh well, worst things happen in life.

I'll just leave the conversation that there have been sub-2% 15-year loans in the past 48 hours. So it is quite likely that lower rates can be had before the end of 2020. However, I acknowledge that is indeed market timing trying to get the best rate.

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Re: Refinance Mega Thread

Post by pianos101 » Sat Aug 01, 2020 4:14 pm

BrandonBogle wrote:
Sat Aug 01, 2020 3:56 pm
thrillhou wrote:
Sat Aug 01, 2020 2:39 pm
This looks good. Perhaps a simpler way would be to compare the two and see what the total cost is going to be.
Trying to model K-knows, take a look at these two results:
https://www.calculator.net/mortgage-pay ... 4#loanterm
https://www.calculator.net/mortgage-pay ... 5#loanterm

Quickly, you can see what the total cost will be for the life of the loan. Clicking to view the amortization tables, you can get more nuanced on how long it'll take.

I hope this helps!
pianos101 wrote:
Sat Aug 01, 2020 3:07 pm
This is basically what I did. But I started the amortization tables at the beginning of my current mortgage in order to gauge the *entire* cost of paying for my house. Plus I have changed extra principle amounts and there's no website that can do that.

My spreadsheet allows me to quickly change refi rates and extra principle payments to see how that affects "total loan cost and term."

Image
My problem with these methods is that they are essentially assuming you are keeping the loan to completion. My method doesn't make such an assumption, which is great for scenarios like mine where I am doing 3 refis of the same property in 2020. Comparing the cost after 15-30 more years won't really answer if the 2nd or 3rd refis were worthwhile. In fact, when I did the 1st refi in May, I did focus on long-term cost and decided to get 2.625% with nothing in my pocket vs. 2.875% with $1k in my pocket. I wish I hadn't made that decision and had another $1k right now. Oh well, worst things happen in life.

I'll just leave the conversation that there have been sub-2% 15-year loans in the past 48 hours. So it is quite likely that lower rates can be had before the end of 2020. However, I acknowledge that is indeed market timing trying to get the best rate.
It doesn't. But i would also never do a refi that I had to pay out of pocket for. So if in 6 months I refi again down to 2.25... That will only make the numbers look better. I'm not making a decision now based on the future, I'm making a decision now based on now.

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Re: Refinance Mega Thread

Post by BrandonBogle » Sat Aug 01, 2020 4:39 pm

pianos101 wrote:
Sat Aug 01, 2020 4:14 pm
BrandonBogle wrote:
Sat Aug 01, 2020 3:56 pm
My problem with these methods is that they are essentially assuming you are keeping the loan to completion. My method doesn't make such an assumption, which is great for scenarios like mine where I am doing 3 refis of the same property in 2020. Comparing the cost after 15-30 more years won't really answer if the 2nd or 3rd refis were worthwhile. In fact, when I did the 1st refi in May, I did focus on long-term cost and decided to get 2.625% with nothing in my pocket vs. 2.875% with $1k in my pocket. I wish I hadn't made that decision and had another $1k right now. Oh well, worst things happen in life.

I'll just leave the conversation that there have been sub-2% 15-year loans in the past 48 hours. So it is quite likely that lower rates can be had before the end of 2020. However, I acknowledge that is indeed market timing trying to get the best rate.
It doesn't. But i would also never do a refi that I had to pay out of pocket for. So if in 6 months I refi again down to 2.25... That will only make the numbers look better. I'm not making a decision now based on the future, I'm making a decision now based on now.
Please elaborate. Our methodology for outlining building the data about the various loan options are similar, but are you not using the "Total Interest" column to decide between the options? To me, that indicates using the end-result to decide about which option to take now. K-knows' Method 1 seems like your Baseline + $234 option. But perhaps I'm misunderstanding a nuance.

And I as well don't pay for refis. It essentially removes all risk from the equation. I would have taken the 2.25% with $1k in my pocket option refi 2 offered, but rates have continued to go down after I applied and even if I refi to 2.25% at $1,200 cost (C + E costs for me), I come out ahead taking the higher credits right now. So refi 2 is solely a profit play.

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Re: Refinance Mega Thread

Post by pianos101 » Sat Aug 01, 2020 4:42 pm

BrandonBogle wrote:
Sat Aug 01, 2020 4:39 pm
pianos101 wrote:
Sat Aug 01, 2020 4:14 pm
BrandonBogle wrote:
Sat Aug 01, 2020 3:56 pm
My problem with these methods is that they are essentially assuming you are keeping the loan to completion. My method doesn't make such an assumption, which is great for scenarios like mine where I am doing 3 refis of the same property in 2020. Comparing the cost after 15-30 more years won't really answer if the 2nd or 3rd refis were worthwhile. In fact, when I did the 1st refi in May, I did focus on long-term cost and decided to get 2.625% with nothing in my pocket vs. 2.875% with $1k in my pocket. I wish I hadn't made that decision and had another $1k right now. Oh well, worst things happen in life.

I'll just leave the conversation that there have been sub-2% 15-year loans in the past 48 hours. So it is quite likely that lower rates can be had before the end of 2020. However, I acknowledge that is indeed market timing trying to get the best rate.
It doesn't. But i would also never do a refi that I had to pay out of pocket for. So if in 6 months I refi again down to 2.25... That will only make the numbers look better. I'm not making a decision now based on the future, I'm making a decision now based on now.
Please elaborate. Our methodology for outlining building the data about the various loan options are similar, but are you not using the "Total Interest" column to decide between the options? To me, that indicates using the end-result to decide about which option to take now. K-knows' Method 1 seems like your Baseline + $234 option. But perhaps I'm misunderstanding a nuance.

And I as well don't pay for refis. It essentially removes all risk from the equation. I would have taken the 2.25% with $1k in my pocket option refi 2 offered, but rates have continued to go down after I applied and even if I refi to 2.25% at $1,200 cost (C + E costs for me), I come out ahead taking the higher credits right now. So refi 2 is solely a profit play.
I am using multiple variables, including: interest rate, term, extra monthly principle, and one time principle payment to get to a conforming amount (I am at 556k now).

So I am looking at total interest, note due date, and monthly total payment (I.e., cash flow impact). There is a big element that is psychological and not purely mathematical. This data helps me through it all.

whites27
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Re: Refinance Mega Thread

Post by whites27 » Sat Aug 01, 2020 4:45 pm

soobaerodude wrote:
Sat Aug 01, 2020 2:29 pm
whites27 wrote:
Sat Aug 01, 2020 8:26 am
I am trying to get Better to match another LE offer and they keep wanting to use the AMEX Statement credit as a kind of lender credit but it’s not since it is not on the loan estimate. Has anyone had them do this to you? I keep saying you need to beat what’s on the loan estimate but then they will come back and talk about the AMEX credit and how that applies against closing costs. And even then, they only apply it against B+C and ignore that A (points) is way worse in their LE. I just feel like I am getting the run around. Any suggestions?
It looks like you need to lock with Better first, then request a ratematch with the loan processor, not the concierge/loan officer. My concierge gave a similar reply to me, $8000 in points if I wanted to match the rate of a competing LE. I then locked and sent the LE to the loan processor. I had a fee and lender credit match plus $2500 AMEX credit within an hour
Huh, I had thought once you locked then the match opportunity was over. Thanks for the heads up. You would think the loan officer would say this. He just says we can’t beat it and go with the other one. I don’t understand their whole process of making you go chase after everything and then they get competitive. I guess it works for them.

whites27
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Re: Refinance Mega Thread

Post by whites27 » Sat Aug 01, 2020 5:14 pm

whites27 wrote:
Sat Aug 01, 2020 4:45 pm
soobaerodude wrote:
Sat Aug 01, 2020 2:29 pm
whites27 wrote:
Sat Aug 01, 2020 8:26 am
I am trying to get Better to match another LE offer and they keep wanting to use the AMEX Statement credit as a kind of lender credit but it’s not since it is not on the loan estimate. Has anyone had them do this to you? I keep saying you need to beat what’s on the loan estimate but then they will come back and talk about the AMEX credit and how that applies against closing costs. And even then, they only apply it against B+C and ignore that A (points) is way worse in their LE. I just feel like I am getting the run around. Any suggestions?
It looks like you need to lock with Better first, then request a ratematch with the loan processor, not the concierge/loan officer. My concierge gave a similar reply to me, $8000 in points if I wanted to match the rate of a competing LE. I then locked and sent the LE to the loan processor. I had a fee and lender credit match plus $2500 AMEX credit within an hour
Huh, I had thought once you locked then the match opportunity was over. Thanks for the heads up. You would think the loan officer would say this. He just says we can’t beat it and go with the other one. I don’t understand their whole process of making you go chase after everything and then they get competitive. I guess it works for them.
Did you still have to submit the LE within 1 business day?

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Re: Refinance Mega Thread

Post by BrandonBogle » Sat Aug 01, 2020 5:36 pm

pianos101 wrote:
Sat Aug 01, 2020 4:42 pm
I am using multiple variables, including: interest rate, term, extra monthly principle, and one time principle payment to get to a conforming amount (I am at 556k now).

So I am looking at total interest, note due date, and monthly total payment (I.e., cash flow impact). There is a big element that is psychological and not purely mathematical. This data helps me through it all.
I think I understand. This goes back to what I mentioned upthread is that the process I put is if the goal is to minimize interest cost. If that indeed is your goal, then your pattern would have total interest as the key field. However, in your case, that isn't the goal (though maybe a strong part of the plan). So breaking out the components would make perfect sense.

Similarly, my goal is total interest expense, so I'm looking at 15-year loans. However, that is after I thought about cash flow to increase investments (in taxable as I already max my tax-advantaged accounts). In such a case, comparing the loan options I have, rather than a 2.25% with $1k in my pocket offer for round 2, I would be doing 2.75% with $1,200 in my pocket to balance interest expense due to rate and term due to cash flow.

Makes sense and I like how you broke that down. I considered the term aspect before I put the math on paper, so my table is comparing the various 15-year options against my existing loan to compare what I get up front for different terms vs. what I pay over 15 years.

spbos
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Re: Refinance Mega Thread

Post by spbos » Sat Aug 01, 2020 5:47 pm

Last month, I refinanced 510 k at 2.875%, 30-year ( from 4.5%). Today I got a 2.5% no points, no closing costs quote. Should I refinance now or wait for the rates to go down further? One approach is to refinance again now and, if needed, do it one more time later (if the rate hits 2%). What is the downside if the closing cost is zero? I am a little concerned about the effect of frequent mortgage inquiry and refinancing on my credit score. My FICO® Score 8 is 807. But the ones I get from the mortgage company reports are around 740. Thanks.

Shikoku
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Re: Refinance Mega Thread

Post by Shikoku » Sat Aug 01, 2020 5:54 pm

mervinj7 wrote:
Mon Mar 02, 2020 11:35 am
The two I'm working with right now only require that the first payment be done before a refinance is started.
mervinj7, I wonder if you received any paperwork to this regard. How you know about it? If it is a loan with no prepayment penalty, shouldn't they allow to refinance before the first payment?
"I don't worry too much about pointing fingers at the past. I operate on the theory that every saint has a past, every sinner has a future." -- Warren Buffett

mervinj7
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Re: Refinance Mega Thread

Post by mervinj7 » Sat Aug 01, 2020 6:30 pm

Shikoku wrote:
Sat Aug 01, 2020 5:54 pm
mervinj7 wrote:
Mon Mar 02, 2020 11:35 am
The two I'm working with right now only require that the first payment be done before a refinance is started.
mervinj7, I wonder if you received any paperwork to this regard. How you know about it? If it is a loan with no prepayment penalty, shouldn't they allow to refinance before the first payment?
That's a good question. I don't recall seeing it in the paperwork either but both loan officers said one payment should be made. In any case, could one really start the refinance process and close that fast anyway?

Shikoku
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Re: Refinance Mega Thread

Post by Shikoku » Sat Aug 01, 2020 6:56 pm

mervinj7 wrote:
Sat Aug 01, 2020 6:30 pm
Shikoku wrote:
Sat Aug 01, 2020 5:54 pm
mervinj7 wrote:
Mon Mar 02, 2020 11:35 am
The two I'm working with right now only require that the first payment be done before a refinance is started.
mervinj7, I wonder if you received any paperwork to this regard. How you know about it? If it is a loan with no prepayment penalty, shouldn't they allow to refinance before the first payment?
That's a good question. I don't recall seeing it in the paperwork either but both loan officers said one payment should be made. In any case, could one really start the refinance process and close that fast anyway?
That is also a good question. Theoretically, yes! For example, close on July 1st; first mortgage payment due the latest is on September 15th. That is almost 75 days. What I found interesting is when I talked with five lenders, none of them have any issues to start working on refinancing immediately after refinancing. Sounds kind of unreal.
"I don't worry too much about pointing fingers at the past. I operate on the theory that every saint has a past, every sinner has a future." -- Warren Buffett

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anon_investor
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Re: Refinance Mega Thread

Post by anon_investor » Sat Aug 01, 2020 7:05 pm

mervinj7 wrote:
Sat Aug 01, 2020 6:30 pm
Shikoku wrote:
Sat Aug 01, 2020 5:54 pm
mervinj7 wrote:
Mon Mar 02, 2020 11:35 am
The two I'm working with right now only require that the first payment be done before a refinance is started.
mervinj7, I wonder if you received any paperwork to this regard. How you know about it? If it is a loan with no prepayment penalty, shouldn't they allow to refinance before the first payment?
That's a good question. I don't recall seeing it in the paperwork either but both loan officers said one payment should be made. In any case, could one really start the refinance process and close that fast anyway?
Yea probably. I just closed on a refi with LenderFi that took less than 3 weeks from initial app to closing, and in May I completed a refi with Ally in less than 2 weeks.

soobaerodude
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Re: Refinance Mega Thread

Post by soobaerodude » Sat Aug 01, 2020 7:29 pm

whites27 wrote:
Sat Aug 01, 2020 5:14 pm
whites27 wrote:
Sat Aug 01, 2020 4:45 pm
soobaerodude wrote:
Sat Aug 01, 2020 2:29 pm
whites27 wrote:
Sat Aug 01, 2020 8:26 am
I am trying to get Better to match another LE offer and they keep wanting to use the AMEX Statement credit as a kind of lender credit but it’s not since it is not on the loan estimate. Has anyone had them do this to you? I keep saying you need to beat what’s on the loan estimate but then they will come back and talk about the AMEX credit and how that applies against closing costs. And even then, they only apply it against B+C and ignore that A (points) is way worse in their LE. I just feel like I am getting the run around. Any suggestions?
It looks like you need to lock with Better first, then request a ratematch with the loan processor, not the concierge/loan officer. My concierge gave a similar reply to me, $8000 in points if I wanted to match the rate of a competing LE. I then locked and sent the LE to the loan processor. I had a fee and lender credit match plus $2500 AMEX credit within an hour
Huh, I had thought once you locked then the match opportunity was over. Thanks for the heads up. You would think the loan officer would say this. He just says we can’t beat it and go with the other one. I don’t understand their whole process of making you go chase after everything and then they get competitive. I guess it works for them.
Did you still have to submit the LE within 1 business day?
My particular LE was 1 business day old. There's some discussion of ratematch-after-locking at Better in the more recent messages of this huge thread at slickdeals.

sergio
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Re: Refinance Mega Thread

Post by sergio » Sat Aug 01, 2020 7:31 pm

Am I the only one that's having trouble finding these amazing low rates? Ally closed off apps in my state, LenderFI isn't take applications, I called QuickenLoans and the rate they gave me was really bad w/high closing costs...

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anon_investor
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Re: Refinance Mega Thread

Post by anon_investor » Sat Aug 01, 2020 7:36 pm

sergio wrote:
Sat Aug 01, 2020 7:31 pm
Am I the only one that's having trouble finding these amazing low rates? Ally closed off apps in my state, LenderFI isn't take applications, I called QuickenLoans and the rate they gave me was really bad w/high closing costs...
Did you try the backdoor way to apply to LenderFi?
https://app.lenderfi.com

MrJedi
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Re: ~

Post by MrJedi » Sat Aug 01, 2020 7:37 pm

Ryzen wrote:
Sat Aug 01, 2020 3:22 pm
MrJedi wrote:
Sat Aug 01, 2020 12:28 pm
Ryzen wrote:
Sat Aug 01, 2020 10:41 am

I would do it. I just closed earlier in the week on under $140k at 3.25% (lowered my rate and dropped PMI). I got dinged because the LTV was between 70-80%, so Fannie Mae charges a .5% Loan Level Pricing Adjustment to the lender when the ultimately sell the loan off to FNMA. So for me, small balance with high-ish LTV couldn't get me the insane rates in this thread.
I'm curious to learn more about this.

What are the thresholds that produce favorable rates?

I got a mediocre rate (still a no brainer for me though as I improved my rate and got enough lender credits to cover all extra costs), I assumed it was due to a low balance (122k), but my LTV is only ~60%. Is there a matrix or guidelines out there that show various thresholds?
https://singlefamily.fanniemae.com/media/9391/display

That is the matrix of all the LLPA (Loan Level Pricing Adjustments) that Fannie charges. When it says .5%, that means a .5% fee up front (not a .5% addition to the interest rate). It's pretty interesting, it will show how both credit score as well as LTV affect loan pricing and thus the lenders offers. See how just over 80% LTV has a slower LLPA than just under 80%, as over 80% has PMI which protects the investor more. And these are cumulative, if a loan hits multiple LLPA areas, you pay them all.
Thanks, this is interesting to see some of the cliffs in there. I assume these fees make a big impact on how much lender credits are available.

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