Refinance Mega Thread

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Cobra Commander
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Re: Refinance Mega Thread

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Quick question on my LenderFi closing. On my closing docs it says the payoff to my old lender is $531K in the payments and payoffs section. However, when I look at my account with my old lender it says that they received $528K. I initially thought the $531K was high but didn't worry about it because I figured they would just pay the old lender the higher amount and it would then get refunded to me. Any idea where the extra $3K went and will I somehow get this money back or do I need to chase it down?
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Re: Refinance Mega Thread

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mattvt15 wrote: Fri Aug 21, 2020 9:01 am
jimmyrules712 wrote: Fri Aug 21, 2020 8:09 am
mattvt15 wrote: Thu Aug 20, 2020 7:41 pm
JSDNJ wrote: Thu Aug 20, 2020 7:30 pm
mattvt15 wrote: Thu Aug 20, 2020 7:27 pm

Thanks for that perspective. I think I’m okay if that scenario plays out. What if rates go higher and I can’t even get 2.5% for $4,758?

Plus, I feel like we are getting so low with rates that it’s almost free money. $4,758 for 2.375% over 30 years its only $1,722 in interest. Inflation alone more than pays for this.
Right. If rates go up and you don't see that 2.375 again, youll have cost yourself money in the long run by going with the 'no cost' option now.
exactly. To be honest, I totally get the mentality here to not pay anything. But I think that applies more when interest rates were in the 3.5% - 5% range. Now, just roll that money into the loan, as its basically free money. That's my opinion anyways and I'm typically very cheap :-)
People used this mentality to pay higher fees and points for lower rates at 4% and then 3.75% and then 3.5% all the way down to where we are today. I myself am one of them. Just last year I paid a few thousand in closing costs to get a 3.25% 30 year rate that I was sure would be the last refinance I would ever do and now I'm refinancing again to 2.625% with NO COSTS. The extra money I paid to gt 3.25% last year instead of 3.5% at no cost was a complete waste. For my refinance now I could have gotten 2.5% or 2.375% if I was willing to pay thousands in fees but I'm not making that mistake again because rates could easily continue falling into 1% territory.
That’s all well and good because rates have continued to drop. How would you feel about spending money for 3.25% if after you refinanced, they rose back up to 4% and we’re still at 4% today?

Hindsight is 20/20 and this feels like trying to time the market vs taking the best deal available now. It’s like buying Tesla last week for $1,600, you feel like a genius. But very easily that $1,600 could have dropped to $1,000...and it still may.

To me, spending a could thousand at a <2.5% interest rate to get over $400k at that same <2.5% rate is a no brainer. Maybe if people only have $100-2xx,000 for a loan it’s not as big of a deal. But for higher loan values, I see no reason not to snag the best deal, using extremely cheap money.
Considering it would take close to 10 years to come out ahead paying thousands in fees for a slightly lower rate I won't lose any sleep if rates never drop any further. I may not even be in the same house that long. You're betting that both rates may not drop any further (which is 50/50 at best) and that your personal situation won't change before the lower rate pays off. The first bet may be 50/50 but the second bet tips the scales to the lower rate on average being less likely to work in your favor. Even if you have very high confidence you won't move before the payoff unexpected stuff can always happen you weren't planning for.
Last edited by jimmyrules712 on Fri Aug 21, 2020 9:44 am, edited 1 time in total.
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BrandonBogle
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Re: Refinance Mega Thread

Post by BrandonBogle »

barberakb wrote: Fri Aug 21, 2020 1:01 am He stated "Not at a price I’d be willing to pay" so Im pretty sure that rate is paying pts
Yup. I just checked Box Home Loans today and they offer a 1.75% 15-year for 4.75% in points!

But meanwhile, I'm looking at around 2.5 - 2.625% with no closing costs. Still a work in progress, so we shall see. I am down to 2.75% and $1,300 in closing costs, but I know I can do better than that offer.
mattvt15 wrote: Fri Aug 21, 2020 9:01 am That’s all well and good because rates have continued to drop. How would you feel about spending money for 3.25% if after you refinanced, they rose back up to 4% and we’re still at 4% today?

Hindsight is 20/20 and this feels like trying to time the market vs taking the best deal available now. It’s like buying Tesla last week for $1,600, you feel like a genius. But very easily that $1,600 could have dropped to $1,000...and it still may.

To me, spending a could thousand at a <2.5% interest rate to get over $400k at that same <2.5% rate is a no brainer. Maybe if people only have $100-2xx,000 for a loan it’s not as big of a deal. But for higher loan values, I see no reason not to snag the best deal, using extremely cheap money.
It all depends on the individual circumstances. My local lender will allow me to lower my rate 1/8% for an extra $150. I would totally do that even though I'm one of those advocating for paying not paying points. In my case, if payback of the lower rate's points is within a year, it seems reasonable to do it. If further out than that, it really depends on your plans and the loan rate. There is no "one size fits all" for this. Instead, I recommend folks target no-cost and then look at the point spread for a final decision.
Cobra Commander wrote: Fri Aug 21, 2020 9:43 am Quick question on my LenderFi closing. On my closing docs it says the payoff to my old lender is $531K in the payments and payoffs section. However, when I look at my account with my old lender it says that they received $528K. I initially thought the $531K was high but didn't worry about it because I figured they would just pay the old lender the higher amount and it would then get refunded to me. Any idea where the extra $3K went and will I somehow get this money back or do I need to chase it down?
Since the closing docs say the payoff is $531k, I wouldn't worry about it because, as you say, any overage comes back to you. But in general, this is because of a few things: 1 - accrued interest by payoff date (plus a margin for delays), 2 - the payoff quote not including the 8/1 payment, depending on when it was generated, 3 - LenderFi sometimes has a pretty decent gap between the closing docs and the actual closing and in the LenderFi thread, some have had funding delayed, leading to #1's margin needing to be even higher to account for the longer delays.
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Cobra Commander
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Re: Refinance Mega Thread

Post by Cobra Commander »

BrandonBogle wrote: Fri Aug 21, 2020 9:44 am
Cobra Commander wrote: Fri Aug 21, 2020 9:43 am Quick question on my LenderFi closing. On my closing docs it says the payoff to my old lender is $531K in the payments and payoffs section. However, when I look at my account with my old lender it says that they received $528K. I initially thought the $531K was high but didn't worry about it because I figured they would just pay the old lender the higher amount and it would then get refunded to me. Any idea where the extra $3K went and will I somehow get this money back or do I need to chase it down?
Since the closing docs say the payoff is $531k, I wouldn't worry about it because, as you say, any overage comes back to you. But in general, this is because of a few things: 1 - accrued interest by payoff date (plus a margin for delays), 2 - the payoff quote not including the 8/1 payment, depending on when it was generated, 3 - LenderFi sometimes has a pretty decent gap between the closing docs and the actual closing and in the LenderFi thread, some have had funding delayed, leading to #1's margin needing to be even higher to account for the longer delays.
My initial assumption was that the payoff amount would all go to my former lender who would then cut me a check. Should I now expect a check from either LenderFi or Amrock for the $3K and then another check from my former lender for the escrow balance? This all may just be ordinary course in which case, no big deal.

Edit: The bolded makes a lot of sense and would account for most of the difference in the two amounts.
itsallaboutme
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Re: Refinance Mega Thread

Post by itsallaboutme »

NEED HELP PLEASE I am closing in 6 days.

I was told they changed rate from 2.75% to 2.875% because they said I would not have enough for closing but the account I gave them did have. enough. They are willing to go back to the 2.75% because I do have enough here are the numbers what should I do?

a+b+c+d = $1618.62 lender credit $3002 cash to close $2354.23 escrow refund will cover this.

a+b+c+d = $1618.62 lender credit $1443 so I am paying $175.62 to get 2.75% rate. Cash to close $3854.23 escrow won't cover this I would be paying total of $1566.19 this includes the $175 and cash to close should I just stay with the 2.875% rate? Please I have 3 days because they need 3 days advance... It would take me 4.5 months to break even.
Last edited by itsallaboutme on Fri Aug 21, 2020 10:45 am, edited 1 time in total.
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BrandonBogle
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Re: Refinance Mega Thread

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Cobra Commander wrote: Fri Aug 21, 2020 10:02 am My initial assumption was that the payoff amount would all go to my former lender who would then cut me a check. Should I now expect a check from either LenderFi or Amrock for the $3K and then another check from my former lender for the escrow balance? This all may just be ordinary course in which case, no big deal.
No. If the payoff amount is $X, your old lender will get $X, even if they only needed $Y. They will send you $X - $Y like they will for your escrow, either in a single check or around the same time via two.

* Some lenders deposit the excess into your escrow account, so then the escrow refund will include both. Other lenders have the excess in a holding account and send that back separate from any escrow refunds.
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BrandonBogle
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Re: Refinance Mega Thread

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itsallaboutme wrote: Fri Aug 21, 2020 10:42 am NEED HELP PLEASE I am closing in 6 days.

I was told they changed rate from 2.75% to 2.875% because they said I would not have enough for closing but the account I gave them did have. enough. They are willing to go back to the 2.75% because I do have enough here are the numbers what should I do?

a+b+c+d = $1618.62 lender credit $3002 cash to close $2354.23 escrow refund will cover this.

a+b+c+d = $1618.62 lender credit $1443 so I am paying $175.62 to get 2.75% rate. Cash to close $3854.23 escrow won't cover this I would be paying total of $1566.19 this includes the $175 and cash to close should I just stay with the 2.875% rate? Please I have 3 days because they need 3 days advance...
What’s the loan amount? If under $200k, I’d personally be inclined to take the extra $1,600 in cash (towards closing costs). For the difference in lender credits, what is your breakeven period that you’ve now paid more in interest at 2.875% vs. saved via 2.75%?
itsallaboutme
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Re: Refinance Mega Thread

Post by itsallaboutme »

BrandonBogle wrote: Fri Aug 21, 2020 10:46 am
itsallaboutme wrote: Fri Aug 21, 2020 10:42 am NEED HELP PLEASE I am closing in 6 days.

I was told they changed rate from 2.75% to 2.875% because they said I would not have enough for closing but the account I gave them did have. enough. They are willing to go back to the 2.75% because I do have enough here are the numbers what should I do?

a+b+c+d = $1618.62 lender credit $3002 cash to close $2354.23 escrow refund will cover this.

a+b+c+d = $1618.62 lender credit $1443 so I am paying $175.62 to get 2.75% rate. Cash to close $3854.23 escrow won't cover this I would be paying total of $1566.19 this includes the $175 and cash to close should I just stay with the 2.875% rate? Please I have 3 days because they need 3 days advance...
What’s the loan amount? If under $200k, I’d personally be inclined to take the extra $1,600 in cash (towards closing costs). For the difference in lender credits, what is your breakeven period that you’ve now paid more in interest at 2.875% vs. saved via 2.75%?
Loan amount is $288,193
what is your breakeven period that you’ve now paid more in interest at 2.875% vs. saved via 2.75%?
For the 2.875% there is no break even because everything is covered. But with 2.75% it would take 4 and a half months to break even based on savings monthly that I am paying now. I hope I answered the question not sure if that is what you meant.
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BrandonBogle
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Re: Refinance Mega Thread

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itsallaboutme wrote: Fri Aug 21, 2020 10:54 am
BrandonBogle wrote: Fri Aug 21, 2020 10:46 am
itsallaboutme wrote: Fri Aug 21, 2020 10:42 am NEED HELP PLEASE I am closing in 6 days.

I was told they changed rate from 2.75% to 2.875% because they said I would not have enough for closing but the account I gave them did have. enough. They are willing to go back to the 2.75% because I do have enough here are the numbers what should I do?

a+b+c+d = $1618.62 lender credit $3002 cash to close $2354.23 escrow refund will cover this.

a+b+c+d = $1618.62 lender credit $1443 so I am paying $175.62 to get 2.75% rate. Cash to close $3854.23 escrow won't cover this I would be paying total of $1566.19 this includes the $175 and cash to close should I just stay with the 2.875% rate? Please I have 3 days because they need 3 days advance...
What’s the loan amount? If under $200k, I’d personally be inclined to take the extra $1,600 in cash (towards closing costs). For the difference in lender credits, what is your breakeven period that you’ve now paid more in interest at 2.875% vs. saved via 2.75%?
Loan amount is $288,193
what is your breakeven period that you’ve now paid more in interest at 2.875% vs. saved via 2.75%?
For the 2.875% there is no break even because everything is covered. But with 2.75% it would take 4 and a half months to break even based on savings monthly that I am paying now. I hope I answered the question not sure if that is what you meant.
Nope. Not a breakeven to refi or not, but a breakeven between 2.75% and 2.875%.

For $288,193 (assuming a 30-year) that would be...
2.75% @ $1,176.52
2.875% @ $1,195.69

Rough calc = ($3002 - $1443) / ($1,195.69 - $1,176.52) = $1,559 / $19.17 = over 81 months

Now, an amortization table is best used to properly figure out when you've paid more than $1,559 in extra interest at 2.875%, but for "back of the envelope", let's use 78 months or 6.5 years. That is a LONG time to wait to actually come out ahead by paying more up front to get the 0.125% discount.
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Re: Refinance Mega Thread

Post by itsallaboutme »

BrandonBogle wrote: Fri Aug 21, 2020 11:04 am
itsallaboutme wrote: Fri Aug 21, 2020 10:54 am
BrandonBogle wrote: Fri Aug 21, 2020 10:46 am
itsallaboutme wrote: Fri Aug 21, 2020 10:42 am NEED HELP PLEASE I am closing in 6 days.

I was told they changed rate from 2.75% to 2.875% because they said I would not have enough for closing but the account I gave them did have. enough. They are willing to go back to the 2.75% because I do have enough here are the numbers what should I do?

a+b+c+d = $1618.62 lender credit $3002 cash to close $2354.23 escrow refund will cover this.

a+b+c+d = $1618.62 lender credit $1443 so I am paying $175.62 to get 2.75% rate. Cash to close $3854.23 escrow won't cover this I would be paying total of $1566.19 this includes the $175 and cash to close should I just stay with the 2.875% rate? Please I have 3 days because they need 3 days advance...
What’s the loan amount? If under $200k, I’d personally be inclined to take the extra $1,600 in cash (towards closing costs). For the difference in lender credits, what is your breakeven period that you’ve now paid more in interest at 2.875% vs. saved via 2.75%?
Loan amount is $288,193
what is your breakeven period that you’ve now paid more in interest at 2.875% vs. saved via 2.75%?
For the 2.875% there is no break even because everything is covered. But with 2.75% it would take 4 and a half months to break even based on savings monthly that I am paying now. I hope I answered the question not sure if that is what you meant.
Nope. Not a breakeven to refi or not, but a breakeven between 2.75% and 2.875%.

For $288,193 (assuming a 30-year) that would be...
2.75% @ $1,176.52
2.875% @ $1,195.69

Rough calc = ($3002 - $1443) / ($1,195.69 - $1,176.52) = $1,559 / $19.17 = over 81 months

Now, an amortization table is best used to properly figure out when you've paid more than $1,559 in extra interest at 2.875%, but for "back of the envelope", let's use 78 months or 6.5 years. That is a LONG time to wait to actually come out ahead by paying more up front to get the 0.125% discount.
I see what you did but I don't get it. I did use an amortization calculator the only thing I see is that total interest paid for 2.75% would be $135,355 and for 2.875% it would be $142,255 That's about $7k more in 30 years I am not sure your numbers I would like to understand more thanks. But from what I gather you are saying stick with the 2.875% by the way I am definitely going to pay extra every month probably $100 more a month and biweekly to shorten the length of the loan.
juice000
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Re: Refinance Mega Thread

Post by juice000 »

We just signed this morning with the Notary with Better with a 2.5 rate 30 year refinance. We started with Watermark but they we're so slow we asked Better to match which they did. Closed quickly, seemed easy to work with in our opinion. Good luck to all. :moneybag
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Cobra Commander
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Re: Refinance Mega Thread

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BrandonBogle wrote: Fri Aug 21, 2020 10:43 am
Cobra Commander wrote: Fri Aug 21, 2020 10:02 am My initial assumption was that the payoff amount would all go to my former lender who would then cut me a check. Should I now expect a check from either LenderFi or Amrock for the $3K and then another check from my former lender for the escrow balance? This all may just be ordinary course in which case, no big deal.
No. If the payoff amount is $X, your old lender will get $X, even if they only needed $Y. They will send you $X - $Y like they will for your escrow, either in a single check or around the same time via two.

* Some lenders deposit the excess into your escrow account, so then the escrow refund will include both. Other lenders have the excess in a holding account and send that back separate from any escrow refunds.
Right, well that's my issue. LenderFi sent them payoff amount X but included payoff amount Y on the closing docs so it seems like LenderFi has some extra money they should be returning to me.

Edit: I am assuming my numbers are right based upon the transaction activity on my account. Maybe my current lender is not showing the overage from the payment on my account to make the ledger balance out correctly. I guess I can wait a bit to see what the refund check from my old lender looks like.
Last edited by Cobra Commander on Fri Aug 21, 2020 11:35 am, edited 1 time in total.
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Re: Refinance Mega Thread

Post by ChiKid24 »

mattvt15 wrote: Fri Aug 21, 2020 6:19 am
ChiKid24 wrote: Thu Aug 20, 2020 10:51 pm
mattvt15 wrote: Thu Aug 20, 2020 7:41 pm
JSDNJ wrote: Thu Aug 20, 2020 7:30 pm
mattvt15 wrote: Thu Aug 20, 2020 7:27 pm

Thanks for that perspective. I think I’m okay if that scenario plays out. What if rates go higher and I can’t even get 2.5% for $4,758?

Plus, I feel like we are getting so low with rates that it’s almost free money. $4,758 for 2.375% over 30 years its only $1,722 in interest. Inflation alone more than pays for this.
Right. If rates go up and you don't see that 2.375 again, youll have cost yourself money in the long run by going with the 'no cost' option now.
exactly. To be honest, I totally get the mentality here to not pay anything. But I think that applies more when interest rates were in the 3.5% - 5% range. Now, just roll that money into the loan, as its basically free money. That's my opinion anyways and I'm typically very cheap :-)
It's also free money at 2.75%, but you get flexibility in case rates fall at all from this offer. Another way to think of it is that you are placing a $4,758 bet that you timed the market perfectly and got the bottom. I'm saying I'd rather not place that bet, and I recommend lowering the rate to a nice 2.75% and continue monitoring and redo it again if pricing continues to improve at any point prior to you getting the payback on your out of pocket cost.
Wouldn’t the “bet” scenario be:

I pay $4,758 bet,

If I’m right (ie rates stay flat or go up), I “win” a $30k+ reduction in interest of life of loan

If I’m wrong (ie rates go down) within my 19 month break even period, I lose a portion of that $4,758, depending on when. It would be sliding scale from 0-19 months and $4,758 - $0.

If I’m wrong (ie rates go down) after my break even point, then I just refinance and I lost no money and maybe even started saving money.

That’s how I view the situation. I get the flexibility part, but it seems to me that the risk/reward, in my opinion skews to paying points now for a much lower rate.

It feels like trying to time the stock market, except I can lock in 100% guaranteed ROI of $30k interest saved.
I see what you are trying to say, but you are missing a few things in this analysis.

First, you need to rerun your numbers. The difference in monthly payments between 2.75% and 2.375% on a $445k loan is only about $87/month. So you are looking at a payback of over 50 months (close to 4.5 years), not 19 months.

Second, you are saying there is a 100% guaranteed ROI of $30k interest saved. To get that 100% ROI, it would require you to stay in this home for the full 30 years and continue to make the minimum payment on the mortgage every month for 360 months. If you pay extra principal in any month, decide to sell the home at any point, or at some point move from your 30-year mortgage to a 15-year, than this $30k interest savings doesn't happen. To me, that doesn't seem like a 100% guarantee.

So with a payback of 4.5 years, you are basically placing the bet that at no point in the next 50+ months could you have refinanced at a lower rate or at the same rate with less cost. That sounds like market timing to me, and not a bet I'd be willing to place.

Since you are, curious why not pay $10k or $15k or $Xk to go even lower than 2.375%? I mean if you could get 2% for $10k which would save you even more in interest over the life of the loan, why not inquire about doing that? I'm sure some mortgage broker would gladly take your money for that deal.
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BrandonBogle
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itsallaboutme wrote: Fri Aug 21, 2020 11:18 am I see what you did but I don't get it. I did use an amortization calculator the only thing I see is that total interest paid for 2.75% would be $135,355 and for 2.875% it would be $142,255 That's about $7k more in 30 years I am not sure your numbers I would like to understand more thanks. But from what I gather you are saying stick with the 2.875% by the way I am definitely going to pay extra every month probably $100 more a month and biweekly to shorten the length of the loan.
I was taking the difference in lender credits divided by the difference in payments. This doesn’t account for principal reduction, so I rounded down a bit vs. comparing via an amortization table.

Assuming $100/mo extra month at 2.75% and $80/mo extra at 2.875% (since the payment is already about $20 higher), your total interest is:

2.875% total interest @ $127,353.97
2.75% total interest @ $118,210.58

Or $9,143.39 over 30 years

For the difference in lender credits and looking at an amortization table with those extra payments included, after about 4 years, you will have saved enough interest on 2.75% to make up the up front cost vs. taking 2.875%.
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Post by Cash is King »

Cobra Commander wrote: Fri Aug 21, 2020 10:02 am
BrandonBogle wrote: Fri Aug 21, 2020 9:44 am
Cobra Commander wrote: Fri Aug 21, 2020 9:43 am Quick question on my LenderFi closing. On my closing docs it says the payoff to my old lender is $531K in the payments and payoffs section. However, when I look at my account with my old lender it says that they received $528K. I initially thought the $531K was high but didn't worry about it because I figured they would just pay the old lender the higher amount and it would then get refunded to me. Any idea where the extra $3K went and will I somehow get this money back or do I need to chase it down?
Since the closing docs say the payoff is $531k, I wouldn't worry about it because, as you say, any overage comes back to you. But in general, this is because of a few things: 1 - accrued interest by payoff date (plus a margin for delays), 2 - the payoff quote not including the 8/1 payment, depending on when it was generated, 3 - LenderFi sometimes has a pretty decent gap between the closing docs and the actual closing and in the LenderFi thread, some have had funding delayed, leading to #1's margin needing to be even higher to account for the longer delays.
My initial assumption was that the payoff amount would all go to my former lender who would then cut me a check. Should I now expect a check from either LenderFi or Amrock for the $3K and then another check from my former lender for the escrow balance? This all may just be ordinary course in which case, no big deal.

Edit: The bolded makes a lot of sense and would account for most of the difference in the two amounts.
Does the $528K satisfy your obligation with the old lender? If so, the title company would send you back the $3K difference provided they only sent $528K to your old lender. It seems odd because typically an amount goes to your old lender and any overages are returned to you. I assume the $531K was on your final closing documents.
itsallaboutme
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Post by itsallaboutme »

BrandonBogle wrote: Fri Aug 21, 2020 11:32 am
itsallaboutme wrote: Fri Aug 21, 2020 11:18 am I see what you did but I don't get it. I did use an amortization calculator the only thing I see is that total interest paid for 2.75% would be $135,355 and for 2.875% it would be $142,255 That's about $7k more in 30 years I am not sure your numbers I would like to understand more thanks. But from what I gather you are saying stick with the 2.875% by the way I am definitely going to pay extra every month probably $100 more a month and biweekly to shorten the length of the loan.
I was taking the difference in lender credits divided by the difference in payments. This doesn’t account for principal reduction, so I rounded down a bit vs. comparing via an amortization table.

Assuming $100/mo extra month at 2.75% and $80/mo extra at 2.875% (since the payment is already about $20 higher), your total interest is:

2.875% total interest @ $127,353.97
2.75% total interest @ $118,210.58

Or $9,143.39 over 30 years

For the difference in lender credits and looking at an amortization table with those extra payments included, after about 4 years, you will have saved enough interest on 2.75% to make up the up front cost vs. taking 2.875%.
Okay would you take the upfront $1600 or go with. the 2.875% knowing you can probably refinance again some other time to get lower rate?
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BrandonBogle
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Post by BrandonBogle »

Cobra Commander wrote: Fri Aug 21, 2020 11:29 am Right, well that's my issue. LenderFi sent them payoff amount X but included payoff amount Y on the closing docs so it seems like LenderFi has some extra money they should be returning to me.

Edit: I am assuming my numbers are right based upon the transaction activity on my account. Maybe my current lender is not showing the overage from the payment on my account to make the ledger balance out correctly. I guess I can wait a bit to see what the refund check from my old lender looks like.
On page 3 of your closing disclosures, it should say who got paid what amount. That number will match the check sent to your old lender. If that number was over what it needed to be, you will get a refund.

Are you saying that this number on page 3 is different than what your old lender says they received? Keep in mind to look for what they received, not what they applied to your balance.
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Cobra Commander
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Re: Refinance Mega Thread

Post by Cobra Commander »

BrandonBogle wrote: Fri Aug 21, 2020 12:13 pm
Cobra Commander wrote: Fri Aug 21, 2020 11:29 am Right, well that's my issue. LenderFi sent them payoff amount X but included payoff amount Y on the closing docs so it seems like LenderFi has some extra money they should be returning to me.

Edit: I am assuming my numbers are right based upon the transaction activity on my account. Maybe my current lender is not showing the overage from the payment on my account to make the ledger balance out correctly. I guess I can wait a bit to see what the refund check from my old lender looks like.
On page 3 of your closing disclosures, it should say who got paid what amount. That number will match the check sent to your old lender. If that number was over what it needed to be, you will get a refund.

Are you saying that this number on page 3 is different than what your old lender says they received? Keep in mind to look for what they received, not what they applied to your balance.
Good point on the last sentence, I was looking at the transaction history but maybe that is just how they apply the loan and not what they received. I'll give it some time and see how much my refund check is.
Cash is King
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Re: Refinance Mega Thread

Post by Cash is King »

BrandonBogle wrote: Fri Aug 21, 2020 12:13 pm
Cobra Commander wrote: Fri Aug 21, 2020 11:29 am Right, well that's my issue. LenderFi sent them payoff amount X but included payoff amount Y on the closing docs so it seems like LenderFi has some extra money they should be returning to me.

Edit: I am assuming my numbers are right based upon the transaction activity on my account. Maybe my current lender is not showing the overage from the payment on my account to make the ledger balance out correctly. I guess I can wait a bit to see what the refund check from my old lender looks like.
On page 3 of your closing disclosures, it should say who got paid what amount. That number will match the check sent to your old lender. If that number was over what it needed to be, you will get a refund.

Are you saying that this number on page 3 is different than what your old lender says they received? Keep in mind to look for what they received, not what they applied to your balance.
True, but you should also be able to see what was received. By checking that it will clear up your mystery.
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BrandonBogle
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Re: Refinance Mega Thread

Post by BrandonBogle »

Cash is King wrote: Fri Aug 21, 2020 12:25 pm
BrandonBogle wrote: Fri Aug 21, 2020 12:13 pm
Cobra Commander wrote: Fri Aug 21, 2020 11:29 am Right, well that's my issue. LenderFi sent them payoff amount X but included payoff amount Y on the closing docs so it seems like LenderFi has some extra money they should be returning to me.

Edit: I am assuming my numbers are right based upon the transaction activity on my account. Maybe my current lender is not showing the overage from the payment on my account to make the ledger balance out correctly. I guess I can wait a bit to see what the refund check from my old lender looks like.
On page 3 of your closing disclosures, it should say who got paid what amount. That number will match the check sent to your old lender. If that number was over what it needed to be, you will get a refund.

Are you saying that this number on page 3 is different than what your old lender says they received? Keep in mind to look for what they received, not what they applied to your balance.
True, but you should also be able to see what was received. By checking that it will clear up your mystery.
Yup. My payoff went out to Wells Fargo yesterday. Their online banking view has both. But if you just happen to scroll along the right-hand side to see where it eventually says your balance is $0.00, that is NOT the received funds field. That is further to the left. Other servicers may list it differently. Just trying to say to make sure someone digs through to the details and not just look for the $0 and see it went from one amount to another.
itsallaboutme
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Re: Refinance Mega Thread

Post by itsallaboutme »

BrandonBogle wrote: Fri Aug 21, 2020 11:32 am
itsallaboutme wrote: Fri Aug 21, 2020 11:18 am I see what you did but I don't get it. I did use an amortization calculator the only thing I see is that total interest paid for 2.75% would be $135,355 and for 2.875% it would be $142,255 That's about $7k more in 30 years I am not sure your numbers I would like to understand more thanks. But from what I gather you are saying stick with the 2.875% by the way I am definitely going to pay extra every month probably $100 more a month and biweekly to shorten the length of the loan.
I was taking the difference in lender credits divided by the difference in payments. This doesn’t account for principal reduction, so I rounded down a bit vs. comparing via an amortization table.

Assuming $100/mo extra month at 2.75% and $80/mo extra at 2.875% (since the payment is already about $20 higher), your total interest is:

2.875% total interest @ $127,353.97
2.75% total interest @ $118,210.58

Or $9,143.39 over 30 years

For the difference in lender credits and looking at an amortization table with those extra payments included, after about 4 years, you will have saved enough interest on 2.75% to make up the up front cost vs. taking 2.875%.
I feel like a fool lol now I see what you were doing. The 19.17 or lets say $20 more a month I am paying on the 2.875% would take about 6.5-7 years to break even on the $1600 up front cost. Thank you now let me go tell my wife and see what she wants to do.
need403bhelp
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Re: Refinance Mega Thread

Post by need403bhelp »

BrandonBogle wrote: Tue Aug 18, 2020 5:27 pm
need403bhelp wrote: Tue Aug 18, 2020 5:17 pm
BrandonBogle wrote: Tue Aug 18, 2020 5:14 pm
need403bhelp wrote: Tue Aug 18, 2020 5:06 pm Dumb question - is A + B + Lender Credits (which are a negative number) best way to compare offers?

Also, if you could choose between closing with WM, LC, or Better.com, whom would you choose?

Thanks!
A + B + C*+ E- Lender Credits

* For C, use the lower of either the lender’s preferred provider, or one you can get elsewhere

Meanwhile, I view lenders as a commodity, so whichever provides the best value (which may not be the cheapest) is who I would go with.
Thanks. For my state, most title charges are mandated by law and I am using my own title company.

E is also mandated by law in my state.

So I guess I am ignoring those as they are not going to change based on lender.

I guess I don't 100% understand your "best value" comment. Are you talking about responsiveness? Something else?
Whatever value points matter to you.

- Better’s website is pretty convenient, but they make you hustle to get a good offer
- Watermark is up front about the offerings, competitive, and services their loans, but takes 45+ days to close
- Loan Cabin is very competitive, but is very slow on communication and likely takes 60 days to close

Don’t ignore Section C costs. For instance, for my refis, Better charges $1,250 using their provider and Watermark charges $1,600 using theirs. However, my local provider charges $1,150. So I use $1,150 when comparing those two and others. However, loanDepot’s preferred provider charges $975. So I use $975 in their offer vs. $1,125 at the others, since I can’t get the loanDepot orovider’s pricing without going through them. Sometimes you find such surprising options.
So I found a lender that is quoting 2.25% for me with 0 points and zero lender fees (or really a lender credit equivalent to cover the fees they charge in section A). I'm waiting to hear back what their lender credits are for 2.375 and 2.5%. Ideally, I'd lock a 2.375% with them that has enough lender credits to cover closing costs not including prepaids.

Any chance that Better may be able to match this and go down to 2.375% despite my locked rate table ending at 2.5%?

I'd really like to get 2.375% no-cost if I could as I already have the 2.5% no cost locked (well, with $1.3k profits after $2,500 AmEx credit).

Thanks!

EDIT: I have not locked yet nor received a formal LE. I did find this lender from this thread but it is a long one and I think it was only mentioned once. They do not have the best reviews nor the most timely response so far to my inquiries. Once I lock (probably next week per their response times) I will share the lender.
Last edited by need403bhelp on Fri Aug 21, 2020 3:20 pm, edited 1 time in total.
KNMLHD
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Re: Refinance Mega Thread

Post by KNMLHD »

Quick question on the Fannie Mae 0.5% increase in Sept...

Is the date this kicks in based on the date papers are signed, or when the loan is funded? Possibly looking at a Friday the 28th closing, which would mean the load would be funded on the 2nd I believe?
mattvt15
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Re: Refinance Mega Thread

Post by mattvt15 »

ChiKid24 wrote: Fri Aug 21, 2020 11:29 am
mattvt15 wrote: Fri Aug 21, 2020 6:19 am
ChiKid24 wrote: Thu Aug 20, 2020 10:51 pm
mattvt15 wrote: Thu Aug 20, 2020 7:41 pm
JSDNJ wrote: Thu Aug 20, 2020 7:30 pm

Right. If rates go up and you don't see that 2.375 again, youll have cost yourself money in the long run by going with the 'no cost' option now.
exactly. To be honest, I totally get the mentality here to not pay anything. But I think that applies more when interest rates were in the 3.5% - 5% range. Now, just roll that money into the loan, as its basically free money. That's my opinion anyways and I'm typically very cheap :-)
It's also free money at 2.75%, but you get flexibility in case rates fall at all from this offer. Another way to think of it is that you are placing a $4,758 bet that you timed the market perfectly and got the bottom. I'm saying I'd rather not place that bet, and I recommend lowering the rate to a nice 2.75% and continue monitoring and redo it again if pricing continues to improve at any point prior to you getting the payback on your out of pocket cost.
Wouldn’t the “bet” scenario be:

I pay $4,758 bet,

If I’m right (ie rates stay flat or go up), I “win” a $30k+ reduction in interest of life of loan

If I’m wrong (ie rates go down) within my 19 month break even period, I lose a portion of that $4,758, depending on when. It would be sliding scale from 0-19 months and $4,758 - $0.

If I’m wrong (ie rates go down) after my break even point, then I just refinance and I lost no money and maybe even started saving money.

That’s how I view the situation. I get the flexibility part, but it seems to me that the risk/reward, in my opinion skews to paying points now for a much lower rate.

It feels like trying to time the stock market, except I can lock in 100% guaranteed ROI of $30k interest saved.
I see what you are trying to say, but you are missing a few things in this analysis.

First, you need to rerun your numbers. The difference in monthly payments between 2.75% and 2.375% on a $445k loan is only about $87/month. So you are looking at a payback of over 50 months (close to 4.5 years), not 19 months.

Second, you are saying there is a 100% guaranteed ROI of $30k interest saved. To get that 100% ROI, it would require you to stay in this home for the full 30 years and continue to make the minimum payment on the mortgage every month for 360 months. If you pay extra principal in any month, decide to sell the home at any point, or at some point move from your 30-year mortgage to a 15-year, than this $30k interest savings doesn't happen. To me, that doesn't seem like a 100% guarantee.

So with a payback of 4.5 years, you are basically placing the bet that at no point in the next 50+ months could you have refinanced at a lower rate or at the same rate with less cost. That sounds like market timing to me, and not a bet I'd be willing to place.

Since you are, curious why not pay $10k or $15k or $Xk to go even lower than 2.375%? I mean if you could get 2% for $10k which would save you even more in interest over the life of the loan, why not inquire about doing that? I'm sure some mortgage broker would gladly take your money for that deal.
Ok, great point. I've been comparing it from my current rate at 3.375% and how quickly it ROIs.

However, I think there is something you are forgetting. I did a refinance calculator, and it shows from 2.75% to 2.375%, yes, the monthly payment is almost $90/month. However, its not purely $4,758 / $90 = 50 months. More money will be going to principal with the lower interest rate, so my equity ownership will increase. Using the calculator, it says that after 24months, I'm only $484 in the red, so sometime in year 3. Let's call it 5 additional months, so 29 months to breakeven. This is due to an additional ~$2k in principal paydown.

As to your point about just paying $10k, or $15k for a lower rate. I do agree that life happens and staying in a house for 30yrs is unlikely. I wanted the best of both worlds. A short breakeven period (<36months) coupled with the lowest possible rate. That's why I chose the 2.375% with $4,758 in costs. It was the right balance of risk for me, both for rates going up/down, as well as my length I keep this house.

Good conversation. Lots of moving parts in this, I can see why you want to do no cost. But, at least my philosophy, I'd rather not miss out on the lowest rates I can get. Plus, I'm more of a get it done and move on to something else type of person. I don't want to watch rates every day/week until it drops another 1/4 pt.
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BrandonBogle
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Re: Refinance Mega Thread

Post by BrandonBogle »

KNMLHD wrote: Fri Aug 21, 2020 3:18 pm Quick question on the Fannie Mae 0.5% increase in Sept...

Is the date this kicks in based on the date papers are signed, or when the loan is funded? Possibly looking at a Friday the 28th closing, which would mean the load would be funded on the 2nd I believe?
I would counter that question with, "if you have a locked rate, why do you care?" This is not a fee that will show up on your loan costs, period. If you are locked, it will have zero impact to you. If you aren't locked in, its already priced in on whatever rate the lender is giving you today. So why care?

But to answer your question, it is the date that the completed loan is handed over to Fannie Mae, regardless of when it closed or funded.
Goal33
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Re: Refinance Mega Thread

Post by Goal33 »

BrandonBogle wrote: Fri Aug 21, 2020 3:36 pm
KNMLHD wrote: Fri Aug 21, 2020 3:18 pm Quick question on the Fannie Mae 0.5% increase in Sept...

Is the date this kicks in based on the date papers are signed, or when the loan is funded? Possibly looking at a Friday the 28th closing, which would mean the load would be funded on the 2nd I believe?
I would counter that question with, "if you have a locked rate, why do you care?" This is not a fee that will show up on your loan costs, period. If you are locked, it will have zero impact to you. If you aren't locked in, its already priced in on whatever rate the lender is giving you today. So why care?

But to answer your question, it is the date that the completed loan is handed over to Fannie Mae, regardless of when it closed or funded.
I am also curious, but mostly because I am trying to understand if some of these late-first week of August rate locks will be honored or if we'll be ghosted by the lender given how backed up they are and the additional cost they will realize. I don't see how LenderFi isn't losing money on these loans.
ChiKid24
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Re: Refinance Mega Thread

Post by ChiKid24 »

mattvt15 wrote: Fri Aug 21, 2020 3:27 pm
ChiKid24 wrote: Fri Aug 21, 2020 11:29 am
mattvt15 wrote: Fri Aug 21, 2020 6:19 am
ChiKid24 wrote: Thu Aug 20, 2020 10:51 pm
mattvt15 wrote: Thu Aug 20, 2020 7:41 pm

exactly. To be honest, I totally get the mentality here to not pay anything. But I think that applies more when interest rates were in the 3.5% - 5% range. Now, just roll that money into the loan, as its basically free money. That's my opinion anyways and I'm typically very cheap :-)
It's also free money at 2.75%, but you get flexibility in case rates fall at all from this offer. Another way to think of it is that you are placing a $4,758 bet that you timed the market perfectly and got the bottom. I'm saying I'd rather not place that bet, and I recommend lowering the rate to a nice 2.75% and continue monitoring and redo it again if pricing continues to improve at any point prior to you getting the payback on your out of pocket cost.
Wouldn’t the “bet” scenario be:

I pay $4,758 bet,

If I’m right (ie rates stay flat or go up), I “win” a $30k+ reduction in interest of life of loan

If I’m wrong (ie rates go down) within my 19 month break even period, I lose a portion of that $4,758, depending on when. It would be sliding scale from 0-19 months and $4,758 - $0.

If I’m wrong (ie rates go down) after my break even point, then I just refinance and I lost no money and maybe even started saving money.

That’s how I view the situation. I get the flexibility part, but it seems to me that the risk/reward, in my opinion skews to paying points now for a much lower rate.

It feels like trying to time the stock market, except I can lock in 100% guaranteed ROI of $30k interest saved.
I see what you are trying to say, but you are missing a few things in this analysis.

First, you need to rerun your numbers. The difference in monthly payments between 2.75% and 2.375% on a $445k loan is only about $87/month. So you are looking at a payback of over 50 months (close to 4.5 years), not 19 months.

Second, you are saying there is a 100% guaranteed ROI of $30k interest saved. To get that 100% ROI, it would require you to stay in this home for the full 30 years and continue to make the minimum payment on the mortgage every month for 360 months. If you pay extra principal in any month, decide to sell the home at any point, or at some point move from your 30-year mortgage to a 15-year, than this $30k interest savings doesn't happen. To me, that doesn't seem like a 100% guarantee.

So with a payback of 4.5 years, you are basically placing the bet that at no point in the next 50+ months could you have refinanced at a lower rate or at the same rate with less cost. That sounds like market timing to me, and not a bet I'd be willing to place.

Since you are, curious why not pay $10k or $15k or $Xk to go even lower than 2.375%? I mean if you could get 2% for $10k which would save you even more in interest over the life of the loan, why not inquire about doing that? I'm sure some mortgage broker would gladly take your money for that deal.
Ok, great point. I've been comparing it from my current rate at 3.375% and how quickly it ROIs.

However, I think there is something you are forgetting. I did a refinance calculator, and it shows from 2.75% to 2.375%, yes, the monthly payment is almost $90/month. However, its not purely $4,758 / $90 = 50 months. More money will be going to principal with the lower interest rate, so my equity ownership will increase. Using the calculator, it says that after 24months, I'm only $484 in the red, so sometime in year 3. Let's call it 5 additional months, so 29 months to breakeven. This is due to an additional ~$2k in principal paydown.

As to your point about just paying $10k, or $15k for a lower rate. I do agree that life happens and staying in a house for 30yrs is unlikely. I wanted the best of both worlds. A short breakeven period (<36months) coupled with the lowest possible rate. That's why I chose the 2.375% with $4,758 in costs. It was the right balance of risk for me, both for rates going up/down, as well as my length I keep this house.

Good conversation. Lots of moving parts in this, I can see why you want to do no cost. But, at least my philosophy, I'd rather not miss out on the lowest rates I can get. Plus, I'm more of a get it done and move on to something else type of person. I don't want to watch rates every day/week until it drops another 1/4 pt.
Correct more will be going to principal but that also means less of an interest rate deduction (assuming you itemize). There's also the opportunity cost on the $4,478 you are spending. In the stock market, that could earn 5+% like it had historically which more than washes out the equity build up.

But yes agree. Good discussion. To each their own. Just wanted to make sure you knew your numbers so you were going into it eyes wide open.
Bob_Sacamano
Posts: 63
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Re: Refinance Mega Thread

Post by Bob_Sacamano »

Bob_Sacamano wrote: Fri Aug 21, 2020 7:57 am
InvestDoc wrote: Thu Aug 20, 2020 10:41 pm
Bob_Sacamano wrote: Thu Aug 20, 2020 10:23 pm
anon_investor wrote: Thu Aug 20, 2020 10:17 pm
Bob_Sacamano wrote: Thu Aug 20, 2020 10:06 pm

Thank you for the response. I had a feeling it was closing costs but I don't understand how they could be that high. The lender explained that everything is basically by the book no matter the lender. Her cut is $1500 for admin/processing (which is high, I regret not shopping around) but beyond that I paid standard fees associated with closing according to her. This includes PMI prepayment, points, several HOA fees, title fees, appraisal, etc.

If I refinance again and am able to find a lender with significantly lower closing costs in addition to a lower rate (3.25% perhaps), should I look into it? Since costs were all rolled into the loan, a new loan would basically correct my mistake?

Yep my username is a Seinfeld reference :)
You want to find a refi where the lender credits are large enough to cover all costs (except prepaids and escrow). Your loan balance should not increase. You should pay the prepaids and escrow out of pocket, since the prepaids are interest you would pay anyway and the escrow from your existing loan will get refunded later.
So are the prepaids and escrow partly why my loan balance went up? I guess I'm wondering now if there might have been a mistake or I was misled somehow? And if I should refinance again to correct it.
I'd pull out your final loan closing statement and see why the cost was so high. I am not sure whether whether you can roll your initial escrow/prepaids into the loan, but if that's allowed it could potentially explain why your loan balance went up by about $8K. Your lender's comment about being "by the book" is a bit concerning though and I wonder if it was meant to mislead you. If you look at the loan estimate there are multiple sections: section A is the lender fees (i.e. points, underwriting, processing application) which are set by the lender and can vary between lenders. Section B is the "Services you cannot shop for" which usually includes the appraisal and again can vary depending on the appraisal company, and Section C is "Services you can shop for" which is the title fees. You can choose to use the lender's title company or you can shop around and find your own title company that might have lower fees.

With regards to wanting to "correct the mistake", I wouldn't look at it that way but rather see if it's possible to get a lower rate for a low cost. If you can find a lower rate with enough lender credits to essentially make it a no-cost loan, I don't see much of a reason not to refinance. However, if you'll be paying another several thousand dollars to refinance, you'll want to make sure that your interest rate drops enough to save you enough money to recoup those costs within a reasonable time frame. You should be able to get low 3's or even <3% as a no cost or very little cost loan based on what others are posting here, so it might make sense to refinance again while rates are at all time lows.
This is from the original loan:
https://imgur.com/MowjZdQ
Can someone help me determine why my costs were so high and whether I should refinance again to cut my losses?
crit
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Re: Refinance Mega Thread

Post by crit »

I have two offers to refi, from Better and Lender Fi, both 30 fixed.
~$210k loan on $350 house, PA, perfect credit, well qualified.

1. 2.375%, APR 2.57%
A=$4600
B=$550, includes appraisal
C=$2100
total cost $7300
total interest paid over loan 40%

2. 2.5%, APR 2.60%
A=$2300
B=$220, waived appraisal
C=$1850
total cost $4400
total interest paid over loan 42%
ChiKid24
Posts: 364
Joined: Fri Aug 09, 2019 3:43 pm

Re: Refinance Mega Thread

Post by ChiKid24 »

crit wrote: Fri Aug 21, 2020 4:27 pm I have two offers to refi, from Better and Lender Fi, both 30 fixed.
~$210k loan on $350 house, PA, perfect credit, well qualified.

1. 2.375%, APR 2.57%
A=$4600
B=$550, includes appraisal
C=$2100
total cost $7300
total interest paid over loan 40%

2. 2.5%, APR 2.60%
A=$2300
B=$220, waived appraisal
C=$1850
total cost $4400
total interest paid over loan 42%
Are you saying #1 wins because the APR is lower? If so, keep in mind that assumes you keep the property for 30 years, never make a payment higher than the minimum and never refinance. If you want to do a loan that requires you to pay points and are settled with these as your options, I'd go with #2. Here are my reasons.

1) The monthly savings on loan 1 is $13.58, so you are looking at a payback period of over 17 years to cover the additional $2,900 cost.
2) The TOTAL interest savings assuming you keep the loan over 30 years is only $4,890. To get this, you are paying $2,900 more up front TODAY. That's an IRR of 1.75% on your money over 30 years. I suppose that's better than a savings account, but YUCK.
3) With a loan balance of only $210k, I wouldn't want to pay any out of pocket costs, much less $7,300. That's almost 3.5% of your loan balance which is ridiculously high.
prettybogle
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Re: Refinance Mega Thread

Post by prettybogle »

Thanks to this godsend thread, we closed our refinance last month - we got notified by Wells Fargo that they are the new servicer/lender. We set up auto payments- looking good. Now our old lender - Bank of America has not mailed us the overage check - escrow balance + any excess payments. We tried calling Bank of America customer service- we are on hold for hours - no representative to talk to. Anyone have issues getting their overage check from old lender ?
crit
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Re: Refinance Mega Thread

Post by crit »

Are you saying #1 wins because the APR is lower?

No, I think #2 wins, for reasons quite similar to yours, but was looking for other eyeballs.
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anon_investor
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Re: Refinance Mega Thread

Post by anon_investor »

prettybogle wrote: Fri Aug 21, 2020 4:54 pm Thanks to this godsend thread, we closed our refinance last month - we got notified by Wells Fargo that they are the new servicer/lender. We set up auto payments- looking good. Now our old lender - Bank of America has not mailed us the overage check - escrow balance + any excess payments. We tried calling Bank of America customer service- we are on hold for hours - no representative to talk to. Anyone have issues getting their overage check from old lender ?
When was the prior loan funded? I think most lenders will take at least 10 business days (2 weeks) to refund the escrow and any overage. It took about that much time for Wells Fargo to send my refund check when I did a refi in May.
ChiKid24
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Re: Refinance Mega Thread

Post by ChiKid24 »

Bob_Sacamano wrote: Fri Aug 21, 2020 4:03 pm
Bob_Sacamano wrote: Fri Aug 21, 2020 7:57 am
InvestDoc wrote: Thu Aug 20, 2020 10:41 pm
Bob_Sacamano wrote: Thu Aug 20, 2020 10:23 pm
anon_investor wrote: Thu Aug 20, 2020 10:17 pm

You want to find a refi where the lender credits are large enough to cover all costs (except prepaids and escrow). Your loan balance should not increase. You should pay the prepaids and escrow out of pocket, since the prepaids are interest you would pay anyway and the escrow from your existing loan will get refunded later.
So are the prepaids and escrow partly why my loan balance went up? I guess I'm wondering now if there might have been a mistake or I was misled somehow? And if I should refinance again to correct it.
I'd pull out your final loan closing statement and see why the cost was so high. I am not sure whether whether you can roll your initial escrow/prepaids into the loan, but if that's allowed it could potentially explain why your loan balance went up by about $8K. Your lender's comment about being "by the book" is a bit concerning though and I wonder if it was meant to mislead you. If you look at the loan estimate there are multiple sections: section A is the lender fees (i.e. points, underwriting, processing application) which are set by the lender and can vary between lenders. Section B is the "Services you cannot shop for" which usually includes the appraisal and again can vary depending on the appraisal company, and Section C is "Services you can shop for" which is the title fees. You can choose to use the lender's title company or you can shop around and find your own title company that might have lower fees.

With regards to wanting to "correct the mistake", I wouldn't look at it that way but rather see if it's possible to get a lower rate for a low cost. If you can find a lower rate with enough lender credits to essentially make it a no-cost loan, I don't see much of a reason not to refinance. However, if you'll be paying another several thousand dollars to refinance, you'll want to make sure that your interest rate drops enough to save you enough money to recoup those costs within a reasonable time frame. You should be able to get low 3's or even <3% as a no cost or very little cost loan based on what others are posting here, so it might make sense to refinance again while rates are at all time lows.
This is from the original loan:
https://imgur.com/MowjZdQ
Can someone help me determine why my costs were so high and whether I should refinance again to cut my losses?
Yeah, hate to say this to you now since it's already closed, but you got screwed. So many awful things on this loan estimate. Let me go throw them by section on your estimate:

1. Anything in Section A is negotiable and can easily be $0 if you shop around. There is no reason why you should pay an Admin or Processing Fee, these are junk fees. Lenders make money on interest rate spreads, they don't need to charge junk fees. The Points in this section also seem high. People pay points to buy down a rate. Your rate on this was 3.75% which to me doesn't sound like it's below where the market was in Dec 2019.

2. Section B costs typically can't be negotiated. That said, the lender can waive an appraisal, especially if your loan to value is low enough. In your case that's not really an option since you are at a really high LTV of 88%. The other thing in this section that many of us don't have is PMI (listed on line B04). PMI is a Private Mortgage Insurance policy that protects the lender in case you default. It's typically required by lenders if your LTV is above 80% which yours is at 88%. So essentially you are buying insurance for them! This can be avoided by getting your LTV below 80%, which given your $200k home value would mean your loan needs to be no greater than $160k. Your old loan was at $171k so you were only $11k away from getting below the threshold. If you eliminated the $2,501.82 fees you paid in Section A and $1,486.92 in PMI from Section B you would have been able to put this $4k towards principal and only needed to come up with another $7k to get below 80%

3. Sections C and E look pretty reasonable to me, but they really depend on where you live. Note that you can shop around for Section C items by calling title companies and seeing if they can come in lower than the default company this lender used. Perhaps you save a few hundred here, but in my market the costs in your estimate look fine

4. Sections F and G are typically things you would be paying anyway at some point in the next year (property taxes, homeowners insurance, interest on the loan, etc.), so I usually don't worry a ton about these items. That said, I do check the math to see if it makes sense. Your prepaid interest in line F03 looks high to me. You said the new loan balance was $176k at 3.75%. That means annual interest is $6,600 ($176k x 3.75%). Typically lenders take this number and divide by 365 to calculate a daily interest charge. For you that would be 6,600/365 = $18.0822/day. For some reason they are charging you $23.4123/day. Over 30 days, this means you are paying about $160 too much in prepaid interest. The other thing that is making your loan pricier than many of us is you also pay City Property taxes and a monthly sanitation tax. That's not something I've seen.

5. Your Section H is something I really can't opine on as I have never seen these. But for some reason you are being charged a bunch of HOA fees. Perhaps that's due to this being a condo? Maybe others can opine. You are also paying $550 for a Title Policy for yourself. This is something I don't think is necessary, but perhaps there is something unique for this situation.

All in all, you definitely overpaid for this refinance. I'd definitely bring it up to me "friend" who brokered this introduction. Perhaps he's been getting taken by this lender as badly as you have. My recommendation would be to read as much of this thread as you can and shop for a new refinance with one of the lenders constantly being mentioned (Lenderfi, Better, Loan Cabin, Loan Depot, Watermark, etc.). You can definitely come down from 3.75% and do so with little or nothing out of pocket.
prettybogle
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Re: Refinance Mega Thread

Post by prettybogle »

anon_investor wrote: Fri Aug 21, 2020 5:10 pm
prettybogle wrote: Fri Aug 21, 2020 4:54 pm Thanks to this godsend thread, we closed our refinance last month - we got notified by Wells Fargo that they are the new servicer/lender. We set up auto payments- looking good. Now our old lender - Bank of America has not mailed us the overage check - escrow balance + any excess payments. We tried calling Bank of America customer service- we are on hold for hours - no representative to talk to. Anyone have issues getting their overage check from old lender ?
When was the prior loan funded? I think most lenders will take at least 10 business days (2 weeks) to refund the escrow and any overage. It took about that much time for Wells Fargo to send my refund check when I did a refi in May.
Funded on July 30
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anon_investor
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Post by anon_investor »

prettybogle wrote: Fri Aug 21, 2020 5:25 pm
anon_investor wrote: Fri Aug 21, 2020 5:10 pm
prettybogle wrote: Fri Aug 21, 2020 4:54 pm Thanks to this godsend thread, we closed our refinance last month - we got notified by Wells Fargo that they are the new servicer/lender. We set up auto payments- looking good. Now our old lender - Bank of America has not mailed us the overage check - escrow balance + any excess payments. We tried calling Bank of America customer service- we are on hold for hours - no representative to talk to. Anyone have issues getting their overage check from old lender ?
When was the prior loan funded? I think most lenders will take at least 10 business days (2 weeks) to refund the escrow and any overage. It took about that much time for Wells Fargo to send my refund check when I did a refi in May.
Funded on July 30
Do you have an online account with the prior lender to see if they lost any transactions (like escrow refund).

I completed my second refi, which funded July 31. The Money Source was the servicer, the confirmed receipt of funds August 3. They only just issued a final escrow statement (online) today which indicates the escrow refund, but still waiting for my escrow refund check.
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BrandonBogle
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Post by BrandonBogle »

ChiKid24 wrote: Fri Aug 21, 2020 5:21 pm Yeah, hate to say this to you now since it's already closed, but you got screwed. So many awful things on this loan estimate. Let me go throw them by section on your estimate:

...

2. Section B costs typically can't be negotiated. That said, the lender can waive an appraisal, especially if your loan to value is low enough. In your case that's not really an option since you are at a really high LTV of 88%. The other thing in this section that many of us don't have is PMI (listed on line B04). PMI is a Private Mortgage Insurance policy that protects the lender in case you default. It's typically required by lenders if your LTV is above 80% which yours is at 88%. So essentially you are buying insurance for them! This can be avoided by getting your LTV below 80%, which given your $200k home value would mean your loan needs to be no greater than $160k. Your old loan was at $171k so you were only $11k away from getting below the threshold. If you eliminated the $2,501.82 fees you paid in Section A and $1,486.92 in PMI from Section B you would have been able to put this $4k towards principal and only needed to come up with another $7k to get below 80%

...

5. ... You are also paying $550 for a Title Policy for yourself. This is something I don't think is necessary, but perhaps there is something unique for this situation.

... You can definitely come down from 3.75% and do so with little or nothing out of pocket.
ChiKid did a great job there. I would just add for #2, not only is this mortgage subject to PMI, it prepaid for (some?) of it too! That's sunk cost up front vs. monthly. Also, I personally am a fan of title policies for the owner as well, but that is at purchase. Assuming a person bought it at the home purchase transaction, there is no need to buy it again. If a person didn't buy it at purchase, why change course now?

As for below 3.75% on a 30-year, I am not so sure that can be done at 88% LTV with little or nothing out of pocket. That high LTV will really sour pricing from lender, even if a person's credit is otherwise great.
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Re: Refinance Mega Thread

Post by stm »

Do you all believe that rates will drop below mid 2's in the medium term? Right now I have a 2.5% on a 30 locked with about ~$1.2k back after closing costs. I could do a 2.375% (assuming a half a point) and be out about $750 in closing costs. Monthly payments would be reduced $25 a month which is about 2.5 years to break even. Will stay at this home a minimum of 8 more years (kid off to college) and it's built to be a retirement home if we do decide to stay.

The main question about rate drops is if I would refinance in the next year or so. Have been playing the refinance game (4 in the last 2 years) each time getting credits and a lower rate, but wondering if we have hit the floor. Mortgage news daily has some informative pieces about how the spread right now is still historically high.
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JonnyDVM
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Post by JonnyDVM »

Is anyone having luck on jumbos yet? I’m still getting the cold shoulder.
I’d trade it all for a little more | -C Montgomery Burns
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anon_investor
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Post by anon_investor »

stm wrote: Fri Aug 21, 2020 7:51 pm Do you all believe that rates will drop below mid 2's in the medium term? Right now I have a 2.5% on a 30 locked with about ~$1.2k back after closing costs. I could do a 2.375% (assuming a half a point) and be out about $750 in closing costs. Monthly payments would be reduced $25 a month which is about 2.5 years to break even. Will stay at this home a minimum of 8 more years (kid off to college) and it's built to be a retirement home if we do decide to stay.

The main question about rate drops is if I would refinance in the next year or so. Have been playing the refinance game (4 in the last 2 years) each time getting credits and a lower rate, but wondering if we have hit the floor. Mortgage news daily has some informative pieces about how the spread right now is still historically high.
I would do the 2.5% and put the $1.2k profit into VTSAX.
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BrandonBogle
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Post by BrandonBogle »

anon_investor wrote: Fri Aug 21, 2020 8:13 pm
stm wrote: Fri Aug 21, 2020 7:51 pm Do you all believe that rates will drop below mid 2's in the medium term? Right now I have a 2.5% on a 30 locked with about ~$1.2k back after closing costs. I could do a 2.375% (assuming a half a point) and be out about $750 in closing costs. Monthly payments would be reduced $25 a month which is about 2.5 years to break even. Will stay at this home a minimum of 8 more years (kid off to college) and it's built to be a retirement home if we do decide to stay.

The main question about rate drops is if I would refinance in the next year or so. Have been playing the refinance game (4 in the last 2 years) each time getting credits and a lower rate, but wondering if we have hit the floor. Mortgage news daily has some informative pieces about how the spread right now is still historically high.
I would do the 2.5% and put the $1.2k profit into VTSAX.
Or in my case, put the $1.2k profit into paying for my solar install! :D

FYI, I was offered tonight 2.75% that after all is said and done, I walk away with $300. Oddly, the cost was exactly the same with or without escrow, so I opted to waive escrow (which is my preference anyway).
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Re: Refinance Mega Thread

Post by no_username »

stm wrote: Fri Aug 21, 2020 7:51 pm Do you all believe that rates will drop below mid 2's in the medium term? Right now I have a 2.5% on a 30 locked with about ~$1.2k back after closing costs. I could do a 2.375% (assuming a half a point) and be out about $750 in closing costs. Monthly payments would be reduced $25 a month which is about 2.5 years to break even. Will stay at this home a minimum of 8 more years (kid off to college) and it's built to be a retirement home if we do decide to stay.

The main question about rate drops is if I would refinance in the next year or so. Have been playing the refinance game (4 in the last 2 years) each time getting credits and a lower rate, but wondering if we have hit the floor. Mortgage news daily has some informative pieces about how the spread right now is still historically high.
Where did you get your offer(2.5% -$1200)?
Can you share with us,please?
m7a8a6
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Re: Refinance Mega Thread

Post by m7a8a6 »

So I'm finally getting somewhere (thank you all so far for all the wisdom here).

Just got my first decent offer (in the right direction) from LenderFi...

Current Loan: 249K 30yr fixed at 4.5%

Loan Amount: 249K
LTV: 63%
Term: 30yr fixed at 2.625%

A: $354
B: $217 (appraisal waived)
C: $1175
E: $315
Total (A+B+C+E): $2061

Questions I have is how do I approach the other lenders with this LE? Should I just forward it over to them and ask them if they will beat it? Or should i apply for the same % officially and then share the LE with them for better rates?
Last edited by m7a8a6 on Mon Aug 24, 2020 2:04 pm, edited 1 time in total.
bgh11
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Re: Refinance Mega Thread

Post by bgh11 »

Some lenders are willing to give you rates verbally before you go thru an application or look at their rates on websites. My feeling is if they are too far off verbally on online, don’t waste time on another application and giving too much personal info to various lenders.
Have your considered 2.75% with lender credit for closing? Or move to 20-yr or 15-yr?
m7a8a6 wrote: Fri Aug 21, 2020 9:39 pm So I'm finally getting somewhere (thank you all so far for all the wisdom here).

Just got my first decent offer (in the right direction) from LenderFi...

Current Loan: 249K 30yr fixed at 4.5%

Loan Amount: 249K
LTV: 63%
Term: 30yr fixed at 2.625%

A: $354
B: $217 (appraisal waived)
C: $1175
D: $315
Total (A+B+C+D): $2061

Questions I have is how do I approach the other lenders with this LE? Should I just forward it over to them and ask them if they will beat it? Or should i apply for the same % officially and then share the LE with them for better rates?
cogito
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Re: Refinance Mega Thread

Post by cogito »

After locking late July, I closed Tuesday with Better, and loan funds on Monday. 0.5% fee did not pop up at any time, and when I called my closing rep ask about it to a rep, he was unaware.

An interesting data point though.. several of the lenders that initially ghosted my applications (LoanCabin, Owning, LoanDepot) have called me multiple (at least twice apiece) time over the last week, asking if I wanted to refinance with them. I don't think its too far of a stretch to surmise that the new fee has made new business dry up FAST. I didn't get the best rate out of the posters here (2.875%, no fee, 30 year, +Amex), but feel lucky that I moved forward instead of trying to perfectly "time" my refinance.
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Re: Refinance Mega Thread

Post by jjhk121 »

prettybogle wrote: Fri Aug 21, 2020 4:54 pm Thanks to this godsend thread, we closed our refinance last month - we got notified by Wells Fargo that they are the new servicer/lender. We set up auto payments- looking good. Now our old lender - Bank of America has not mailed us the overage check - escrow balance + any excess payments. We tried calling Bank of America customer service- we are on hold for hours - no representative to talk to. Anyone have issues getting their overage check from old lender ?

Call the customer service number on your old BofA mortgage statement. You should be able to use an automated system which tells you that your loan is paid off and the date you will be receiving the overage check. No need to talk to anybody.

I closed a refi on July 14 and the BofA automated system said I'd be receiving the check on August 16. I received it on August 14.
stm
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Post by stm »

no_username wrote: Fri Aug 21, 2020 9:18 pm Where did you get your offer(2.5% -$1200)?
Can you share with us,please?
It was with Loan Cabin. I matched it to Better to also get the $2,500 credit they had been offering.
need403bhelp
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Post by need403bhelp »

stm wrote: Fri Aug 21, 2020 11:34 pm
no_username wrote: Fri Aug 21, 2020 9:18 pm Where did you get your offer(2.5% -$1200)?
Can you share with us,please?
It was with Loan Cabin. I matched it to Better to also get the $2,500 credit they had been offering.
Do you have 2.375% as an option on the rate sheet you locked with better?
stm
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Re: Refinance Mega Thread

Post by stm »

need403bhelp wrote: Fri Aug 21, 2020 11:55 pm
stm wrote: Fri Aug 21, 2020 11:34 pm
no_username wrote: Fri Aug 21, 2020 9:18 pm Where did you get your offer(2.5% -$1200)?
Can you share with us,please?
It was with Loan Cabin. I matched it to Better to also get the $2,500 credit they had been offering.
Do you have 2.375% as an option on the rate sheet you locked with better?
I can no longer see the rate sheet since a rate was locked. On my original, which was at 2.75%, I believe I could, with obviously a !#%! of points to purchase.
KNMLHD
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Re: Refinance Mega Thread

Post by KNMLHD »

BrandonBogle wrote: Fri Aug 21, 2020 3:36 pm
KNMLHD wrote: Fri Aug 21, 2020 3:18 pm Quick question on the Fannie Mae 0.5% increase in Sept...

Is the date this kicks in based on the date papers are signed, or when the loan is funded? Possibly looking at a Friday the 28th closing, which would mean the load would be funded on the 2nd I believe?
I would counter that question with, "if you have a locked rate, why do you care?" This is not a fee that will show up on your loan costs, period. If you are locked, it will have zero impact to you. If you aren't locked in, its already priced in on whatever rate the lender is giving you today. So why care?

But to answer your question, it is the date that the completed loan is handed over to Fannie Mae, regardless of when it closed or funded.
Good point.

We had locked a couple weeks before that announcement, and more of a "do we need to be extra vigilant" on something that may slip in at the last hour on the basis of "well... it was out of our control... blame Fannie".

A little gun shy from the prior go-around when we tried to refinance in March (at that it would have been a jumbo), and 40 days post lock, the rug got pulled out from underneath us. Fast forward, we paid down to get under a jumbo, but still have a HELOC... having to deal with a subordination (we have that taken care of now) kept us from getting a crazy low rate (many of those lenders wouldn't deal with a subordination), but still much better than what we have now. Pretty close to a no-cost. After lender credits, we'll cover ~$120 in fees.

After this... be aggressive and get rid of the HELOC within 6 months, and see if the market and the crazy low rates remain.
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