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Help Understanding ReFiance Quote

Posted: Mon May 03, 2021 9:32 am
by jason1122
Hey all I've got the following 30y fixed quote from better.com and just want to run it by the forum since this is my first refi and 2nd time with mortgage. Our original loan was November 2019 for around 405,000 >
Outstanding Principal: 393,788
Interest Rate: 3.75

Here's the terms of the quote which "seem" to me to be a fairly good deal? The total closing costs are 5k because I'm funding my escrow correct - which means I'm essentially borrowing 5k from them to pay for my property taxes and home owners insurance correct?

Is there any reason not to punch the ticket here? Thanks!

Loan Amount: 399,823
Interest Rate: 2.75
APR: 2.82
Lender Credits: 988

A. Origination: 0
B: Credit Report: 50 / Flood Cert: 14
C: Title Insurance: 560 / Title Settlement Fee: 450
D: Total Loan Cost: 1074
E: Taxes and Gov: 1057
F: Prepaids: 458
G: Escrow at Closing: 3942 (in process of getting insurance quotes to get that down)
H: Other: 0
I: Total Other: 5457
J: Total Closing Costs: 5543 (D+I - 988 credits)

Estimated cash to close To Borrower: 491

Re: Help Understanding ReFiance Quote

Posted: Mon May 03, 2021 9:42 am
by RickBoglehead
jason1122 wrote: Mon May 03, 2021 9:32 am The total closing costs are 5k because I'm funding my escrow correct - which means I'm essentially borrowing 5k from them to pay for my property taxes and home owners insurance correct?
Pretty simple math.

Line I, Total Other, is the total of lines E (taxes and gov), F (prepaids), and G (escrow at closing).

Your total closing costs, line J, are D+I minus $988 credits.

D, Total Loan Cost, is the total of B and C.

I would hope that your paperwork indicated that these are subtotals?

You're paying some fees to refinance, including a new title insurance fee, a title settlement fee, flood certification, credit report. It's not just escrow, no.

Re: Help Understanding ReFiance Quote

Posted: Mon May 03, 2021 1:52 pm
by Stinky
This is a no brainer. Do it.

You’re paying $1074 (line D) in upfront costs to reduce your interest rate on a $400k loan by 1%. Interest savings in the first year is about $4k.

So your payback period is about 3 months. That’s exceptionally quick for a refinance.

Just do it.

Re: Help Understanding ReFiance Quote

Posted: Mon May 03, 2021 4:32 pm
by jason1122
Stinky wrote: Mon May 03, 2021 1:52 pm This is a no brainer. Do it.

You’re paying $1074 (line D) in upfront costs to reduce your interest rate on a $400k loan by 1%. Interest savings in the first year is about $4k.

So your payback period is about 3 months. That’s exceptionally quick for a refinance.

Just do it.
Thanks. That's sort of what I needed to hear. Seems like a pretty good price to lower my interest by 1%.