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Refi Question - help deciding

Posted: Tue Sep 15, 2020 1:37 pm
by bwthomp
So I'm in the process of refinancing a home I purchased last year. I locked a rate with ally at 3% earlier this week 30 year mortgage, $1000 credits and likely to waive appraisal. They said "met requirements to waive appraisal" and holding onto appraisal fee for moment just in case then adding in back in at closing. I'm assuming this is because I purchased home 1 year ago. Today I was browsing other rates at better.com and saw I could do 2.875 with $2000 in credits and no origination fee, although I would assume I would have to pay the appraisal fee. I've never backed out once locking before but considering it.

What are your thoughts on these options? And experiences with better.com? Ive had a positive experience with ally before.

Ally Pro - prior good experience, likely no appraisal needed. Con: 0.125% interest higher, slightly more expensive at closing ($1000ish)
Better.com - Pro: Lower rate by 0.125%, save 1500 at closing vs ally (although would probably lose ally appraisal fee they are holding on to so would really only save $1000). Con: no experience with them before. Would have to relock another rate.

Re: Refi Question - help deciding

Posted: Tue Sep 15, 2020 1:56 pm
by CAsage
Do you have solid numbers on any other closing fees and costs? Are these no-cost loans where they are guaranteeing you those $$ credits and the only possible expense is an appraisal? Not sure how to compare, not quite enough certain info.

Re: Refi Question - help deciding

Posted: Tue Sep 15, 2020 2:01 pm
by bwthomp
This is a comparison of costs from the loan estimates.

Re: Refi Question - help deciding

Posted: Tue Sep 15, 2020 2:06 pm
by raixx017
You can always back out after locking. In fact, I always make it a point to mention this with a lender when I'm locking rates with them (that, I'll keep looking for better deals).
Overall I had positive experience with Better. Quite smooth and swift process.
Good luck!

Re: Refi Question - help deciding

Posted: Tue Sep 15, 2020 2:11 pm
by BrandonBogle
Ally uses Better’s systems with their own pricing parameters. And some of Better’s agents are certified to work on both sides. So if Ally would give a waiver, so would Better.

If you continue with Ally, at closing your docs will say Better on them. I would go with whichever one gave the better offer.

Re: Refi Question - help deciding

Posted: Tue Sep 15, 2020 2:14 pm
by bwthomp
Thank you. I continue to welcome other's thoughts as well. What's the process of backing out and switching? you just tell the first company you are moving on?

Re: Refi Question - help deciding

Posted: Tue Sep 15, 2020 2:33 pm
by BrandonBogle
An email to the person currently listed in the “My Team” section should be sufficient.

You can also send them the LE you get from Better and ask if they can match the Section A + B + C - credits cost.

Re: Refi Question - help deciding

Posted: Tue Sep 15, 2020 2:37 pm
by Golf maniac
BrandonBogle wrote: Tue Sep 15, 2020 2:33 pm An email to the person currently listed in the “My Team” section should be sufficient.

You can also send them the LE you get from Better and ask if they can match the Section A + B + C - credits cost.
+1. Always try to get current company you locked with to match deal. If they say no then move on.

Re: Refi Question - help deciding

Posted: Tue Sep 15, 2020 5:06 pm
by perceptionist
You can lock with multiple companies. Usually if you get a appraisal waiver, you will get it regardless of what company you go with. I say lock with both. See if Ally Pro can beat Better's offer. Heck, I would even consider shopping around more. I know it depends on location, LTV, credit score, etc, but many are getting better deals with 30 year loans. I locked my rate for a 30 year @ 2.5% about 2 weeks ago. That included lender credit and appraisal waiver. ABCE - Lender Credit = ~$400, only because my LTV is higher than the optimal 50-60% range. If my LTV was < 60% I probably would have made a couple hundred at that rate. I know rates are a little higher since then, but not by much.

Re: Refi Question - help deciding

Posted: Tue Sep 15, 2020 8:39 pm
by over45
Wonder if someone could tell me the best place for a no cost refi - 30 year - 170k loan amount. I see there are a number of threads on refis but this is the most recent and hope someone reading it can provide input. Not sure what lender credit means -- is that cash back or credit torwards closing costs? Tks

Re: Refi Question - help deciding

Posted: Tue Sep 15, 2020 9:00 pm
by TropikThunder
over45 wrote: Tue Sep 15, 2020 8:39 pm Not sure what lender credit means -- is that cash back or credit torwards closing costs?
Points: extra money you pay to get lower interest rate [cost to close is higher]
Credit: money the lender pays to get you to accept a higher interest rate [cost to close is lower]

Currently, the smart move is to take the credit and the higher rate since "higher" is relative, and rates are super low right now. The loan originator gets a commission from whoever the loan is sold to. The higher the rate, the higher the commission, and low cost lenders pass some of that commission on to the borrower in order to increase volume.

Re: Refi Question - help deciding

Posted: Wed Sep 16, 2020 9:16 am
by over45
I appreciate the response. It looks like the lender credit is a credit against closing costs and not cash back on a no closing cost loan. Big difference and we are trying to decide where to get the best "true" no cost refi program.

Re: Refi Question - help deciding

Posted: Wed Sep 16, 2020 9:27 am
by MrJedi
over45 wrote: Wed Sep 16, 2020 9:16 am I appreciate the response. It looks like the lender credit is a credit against closing costs and not cash back on a no closing cost loan. Big difference and we are trying to decide where to get the best "true" no cost refi program.
The lender credits are used to offset closing costs. That's how you get true no cost refinances. You won't get a true no cost otherwise as there are always fixed costs like title, etc. that will need to get offset by a credit if you want true no cost.

Re: Refi Question - help deciding

Posted: Wed Sep 16, 2020 9:43 am
by BrandonBogle
over45 wrote: Wed Sep 16, 2020 9:16 am I appreciate the response. It looks like the lender credit is a credit against closing costs and not cash back on a no closing cost loan. Big difference and we are trying to decide where to get the best "true" no cost refi program.
In all three refis I’m doing in 2020, my lender credits exceed my closing costs and I walk away with cash. So I don’t understand your statement.

Re: Refi Question - help deciding

Posted: Wed Sep 16, 2020 11:01 am
by over45
The lender credit amount needs to exceed total closing costs for it to be a true no cost refinance. If a lender credit is $400 - that is not enough to cover a true no cost refi at the lower level rates. You have to bump up the rate so the lender gets enough back-end compensation to cover the closing costs.

Re: Refi Question - help deciding

Posted: Wed Sep 16, 2020 11:04 am
by BrandonBogle
over45 wrote: Wed Sep 16, 2020 11:01 am The lender credit amount needs to exceed total closing costs for it to be a true no cost refinance. If a lender credit is $400 - that is not enough to cover a true no cost refi at the lower level rates. You have to bump up the rate so the lender gets enough back-end compensation to cover the closing costs.
Right. But the point being? I guess I’m missing something in my understand.

Many, myself included, advocate asking the lender for a rate that provides sufficient credits to cover A + B + C + E as these are the true costs of a refi (vs. stuff you’d pay even if you don’t refi). So given that’s already the definition here, I’m confused on mentioning that. If you don’t have that, it isn’t a no-cost refi.

Re: Refi Question - help deciding

Posted: Wed Sep 16, 2020 11:18 am
by over45
The point is: do you get money back or not at closing. I was trying to figure out how some of the posts above were describing a lender credit - especially as it relates to the 30 year no closing cost loan with a rate of 2.5% mentioned:
I locked my rate for a 30 year @ 2.5% about 2 weeks ago. That included lender credit and appraisal waiver. ABCE - Lender Credit = ~$400, only because my LTV is higher than the optimal 50-60% range.

Re: Refi Question - help deciding

Posted: Wed Sep 16, 2020 11:36 am
by MrJedi
over45 wrote: Wed Sep 16, 2020 11:18 am The point is: do you get money back or not at closing. I was trying to figure out how some of the posts above were describing a lender credit - especially as it relates to the 30 year no closing cost loan with a rate of 2.5% mentioned:
I locked my rate for a 30 year @ 2.5% about 2 weeks ago. That included lender credit and appraisal waiver. ABCE - Lender Credit = ~$400, only because my LTV is higher than the optimal 50-60% range.
You can get up to $2000 net paid to you at closing and still be considered a rate and term refi (not cash out). I just did a refinance last month at no true cost and the title company ended up giving me a check for $500 as well (rolled part of my prepaids and initial escrow into the loan).

Re: Refi Question - help deciding

Posted: Wed Sep 16, 2020 11:45 am
by beachairs
We just closed on our refi with Better. Process was super easy, no appraisal needed.

Re: Refi Question - help deciding

Posted: Wed Sep 16, 2020 12:30 pm
by over45
could i ask what rate you received and closing costs? tks

Re: Refi Question - help deciding

Posted: Wed Sep 16, 2020 2:02 pm
by beachairs
over45 wrote: Wed Sep 16, 2020 12:30 pm could i ask what rate you received and closing costs? tks
2.875% for 15y in CA. With $2800 credit.

Better gave us list of rates and associated costs/credits--they quoted down to 2.125% but with $$ for points.

Re: Refi Question - help deciding

Posted: Wed Sep 16, 2020 5:55 pm
by over45
Thank you.