Refinance Mega Thread

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BrandonBogle
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Re: Refinance Mega Thread

Post by BrandonBogle »

Rocky77 wrote: Mon Sep 14, 2020 5:20 am Newbie here, anyone has any experience here with cashcall mortgage? Their rate for 15 yrs is 2.375% and 1k flat fee for closing costs seems too good to be true.
No experience, but make sure you took into account the loan assumptions for the advertised rates. You may not fit that cookie cutter mold.
Cash Call Mortgage Loan Assumptions wrote: https://www.cashcallmortgage.com/disclosures#assump

15 Year Fixed - First Mortgage
Disclosed rate assumes a $300,000 rate and term refinance loan with no point and a $995 loan origination fee on an owner-occupied single family residence in California, minimum 740 FICO credit score, 60% loan to value with no subordinate debt. If these factors are not met, you may still qualify. Subject to underwriting approval. Not all applicants will qualify.
So the first thing to note is that a $995 loan origination fee with their advertisement of a “$995 flat fee” may be them being crafty to say they have a $995 flat LENDER fee and that even if you qualify for that rate, you will still have to pay for Section C costs (title and settlement) and maybe appraisal since those are Third-Party costs. Then there is still Section E government costs.
dks05c
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Re: Refinance Mega Thread

Post by dks05c »

Hi Guys, better option on 15 yr refi, 345K loan, LTV 60%?

2.125 w/ $1500 credit or
2.25 w/ $3700 credit
Lucky2Invest
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Re: Refinance Mega Thread

Post by Lucky2Invest »

Has anyone had any luck with Interest Only refinance on a Jumbo? I keep hearing "because 30 and 15 yr's are so low we aren't offering ARM's at the moment"....
mega317
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Re: Refinance Mega Thread

Post by mega317 »

dks05c wrote: Mon Sep 14, 2020 9:57 am Hi Guys, better option on 15 yr refi, 345K loan, LTV 60%?

2.125 w/ $1500 credit or
2.25 w/ $3700 credit
Take the credit. IMO not close. Like a 5 year break even.
https://www.bogleheads.org/forum/viewtopic.php?t=6212
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sunny_socal
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Re: Refinance Mega Thread

Post by sunny_socal »

So here's my quote from better.com

- Location: Central TX
- 625k home value
- 457k loan balance (to refi)
- 760 credit score
- No debt other than this mortgage
- 3.125% current rate

I'd be out about $6000 at closing, I don't understand why I'm getting such a terrible deal while others are getting 2.5-2.625 with no costs :?

They said I can "shop around" for the title company, is that really true? Would it make a difference?

This is for a 30-year 2.75% refi
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MrJedi
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Re: Refinance Mega Thread

Post by MrJedi »

sunny_socal wrote: Mon Sep 14, 2020 11:01 am So here's my quote from better.com

- Location: Central TX
- 625k home value
- 457k loan balance (to refi)
- 760 credit score
- No debt other than this mortgage
- 3.125% current rate

I'd be out about $6000 at closing, I don't understand why I'm getting such a terrible deal while others are getting 2.5-2.625 with no costs :?

They said I can "shop around" for the title company, is that really true? Would it make a difference?

This is for a 30-year 2.75% refi
Image
Better never gives out good initial estimates without competition. You have to get a competing offer and then they will be competitive.
atx1202
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Re: Refinance Mega Thread

Post by atx1202 »

MrJedi wrote: Mon Sep 14, 2020 11:12 am
sunny_socal wrote: Mon Sep 14, 2020 11:01 am So here's my quote from better.com

- Location: Central TX
- 625k home value
- 457k loan balance (to refi)
- 760 credit score
- No debt other than this mortgage
- 3.125% current rate

I'd be out about $6000 at closing, I don't understand why I'm getting such a terrible deal while others are getting 2.5-2.625 with no costs :?

They said I can "shop around" for the title company, is that really true? Would it make a difference?

This is for a 30-year 2.75% refi
Image
Better never gives out good initial estimates without competition. You have to get a competing offer and then they will be competitive.
Try to get a quote from LF and get it matched by better. LF has appraisal waiver, snd no origination fees. Their Title Services Fee (Section C) is very reasonable.
dks05c
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Re: Refinance Mega Thread

Post by dks05c »

mega317 wrote: Mon Sep 14, 2020 10:50 am
dks05c wrote: Mon Sep 14, 2020 9:57 am Hi Guys, better option on 15 yr refi, 345K loan, LTV 60%?

2.125 w/ $1500 credit or
2.25 w/ $3700 credit
Take the credit. IMO not close. Like a 5 year break even.
Thanks I locked in the 2.25%. Yea the monthly payment difference is about $20, so it'll take over 9 years to get to the $2200 difference. Even if we kept the 2.125% loan as is for the full 15 years, I'd only be net saving $1400, so it seems the 2.25 is the way to go.
kappat
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Re: Refinance Mega Thread

Post by kappat »

Rocky77 wrote: Mon Sep 14, 2020 5:20 am Newbie here, anyone has any experience here with cashcall mortgage? Their rate for 15 yrs is 2.375% and 1k flat fee for closing costs seems too good to be true.
I have used them twice for a refinance. The process was smooth and quick. The $995 fee will be waived or reduced based on the amount of the loan.
Goal33
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Re: Refinance Mega Thread

Post by Goal33 »

I am signing on 9/17... closing date says 9/17. Disbursement Date says 9/22.

When is it safe to give my employer notice?
Xrayman69
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Re: Refinance Mega Thread

Post by Xrayman69 »

dks05c wrote: Mon Sep 14, 2020 11:43 am
mega317 wrote: Mon Sep 14, 2020 10:50 am
dks05c wrote: Mon Sep 14, 2020 9:57 am Hi Guys, better option on 15 yr refi, 345K loan, LTV 60%?

2.125 w/ $1500 credit or
2.25 w/ $3700 credit
Take the credit. IMO not close. Like a 5 year break even.
Thanks I locked in the 2.25%. Yea the monthly payment difference is about $20, so it'll take over 9 years to get to the $2200 difference. Even if we kept the 2.125% loan as is for the full 15 years, I'd only be net saving $1400, so it seems the 2.25 is the way to go.
Good choice
dlrkw9mu
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Re: Refinance Mega Thread

Post by dlrkw9mu »

Goal33 wrote: Mon Sep 14, 2020 12:41 pm I am signing on 9/17... closing date says 9/17. Disbursement Date says 9/22.

When is it safe to give my employer notice?
Employer notice? Are you refinancing your mortgage or retiring?
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BrandonBogle
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Re: Refinance Mega Thread

Post by BrandonBogle »

Goal33 wrote: Mon Sep 14, 2020 12:41 pm I am signing on 9/17... closing date says 9/17. Disbursement Date says 9/22.

When is it safe to give my employer notice?
10/17 after you see the old loan paid off and your closing doc of “I expect employment to not change in the next 30 days” has expired.
mega317
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Re: Refinance Mega Thread

Post by mega317 »

sunny_socal wrote: Mon Sep 14, 2020 11:01 am So here's my quote from better.com
This is better than I got from them AFTER sending another LE for 2.625% no cost. They sent back 2.75% with 2 points lol. 600k, 60% LTV, credit score 780.
https://www.bogleheads.org/forum/viewtopic.php?t=6212
Goal33
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Re: Refinance Mega Thread

Post by Goal33 »

dlrkw9mu wrote: Mon Sep 14, 2020 1:56 pm
Goal33 wrote: Mon Sep 14, 2020 12:41 pm I am signing on 9/17... closing date says 9/17. Disbursement Date says 9/22.

When is it safe to give my employer notice?
Employer notice? Are you refinancing your mortgage or retiring?
New job.
Goal33
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Re: Refinance Mega Thread

Post by Goal33 »

nevermind
Last edited by Goal33 on Mon Sep 14, 2020 5:07 pm, edited 1 time in total.
atxll
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Re: Refinance Mega Thread

Post by atxll »

Can anyone please point me in the right direction to get started on a refi?

Central TX, home value approx. $400k, loan balance approx. $160k. On a 15 yr @ 2.75% currently

If I'm understanding the refi calculators correctly, I need to be around 2% with little to no closing costs for this to make sense.

It sounds like there aren't many good offerings in TX for such a low balance? The quotes I've looked at from the places listed here are finally getting closer to 2% but with very high fees. I would want to stick with 15 or 10 yr term. Thank you!
Goal33
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Re: Refinance Mega Thread

Post by Goal33 »

atxll wrote: Mon Sep 14, 2020 3:14 pm Can anyone please point me in the right direction to get started on a refi?

Central TX, home value approx. $400k, loan balance approx. $160k. On a 15 yr @ 2.75% currently

If I'm understanding the refi calculators correctly, I need to be around 2% with little to no closing costs for this to make sense.

It sounds like there aren't many good offerings in TX for such a low balance? The quotes I've looked at from the places listed here are finally getting closer to 2% but with very high fees. I would want to stick with 15 or 10 yr term. Thank you!
Anything under 2.75% with no closing costs makes sense.
atxll
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Re: Refinance Mega Thread

Post by atxll »

Goal33 wrote: Mon Sep 14, 2020 3:26 pm
atxll wrote: Mon Sep 14, 2020 3:14 pm Can anyone please point me in the right direction to get started on a refi?

Central TX, home value approx. $400k, loan balance approx. $160k. On a 15 yr @ 2.75% currently

If I'm understanding the refi calculators correctly, I need to be around 2% with little to no closing costs for this to make sense.

It sounds like there aren't many good offerings in TX for such a low balance? The quotes I've looked at from the places listed here are finally getting closer to 2% but with very high fees. I would want to stick with 15 or 10 yr term. Thank you!
Anything under 2.75% with no closing costs makes sense.
Well yes that's true. I guess I was using some of the closing cost estimates I was getting (around $6k) in the calculators and that was where I came up with the 2% figure. But I'm reading here that most of you are paying little to no closing. It would need to be some sort of decent reduction though to make up for the credit pulls, time and effort, having someone out to appraise etc.

Is there any lender that has been better with lower balances in TX? Do I just need to think about doing a cash out refi instead?
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Re: Refinance Mega Thread

Post by confusedinaz »

Goal33 wrote: Mon Sep 14, 2020 2:20 pm
dlrkw9mu wrote: Mon Sep 14, 2020 1:56 pm
Goal33 wrote: Mon Sep 14, 2020 12:41 pm I am signing on 9/17... closing date says 9/17. Disbursement Date says 9/22.

When is it safe to give my employer notice?
Employer notice? Are you refinancing your mortgage or retiring?
New job.
I quit my job after accepting a new offer and took two weeks off in the middle of a refi. I let the lender know I was doing so and they just wanted my offer letter from my new job with a start date. Loan closed without issue before I even started the new job (so technically unemployed). I was fully prepared to walk from the refi in order to take a break though.

Can't give specific advice for your situation, but thought I'd share mine as an indicator of what may happen.
GoodOmens
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Re: Refinance Mega Thread

Post by GoodOmens »

mega317 wrote: Mon Sep 14, 2020 2:05 pm
sunny_socal wrote: Mon Sep 14, 2020 11:01 am So here's my quote from better.com
This is better than I got from them AFTER sending another LE for 2.625% no cost. They sent back 2.75% with 2 points lol. 600k, 60% LTV, credit score 780.
Haha better did that to me too. LE has to be offical and dated. No draft or estimate.
jco
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Re: Refinance Mega Thread

Post by jco »

GoodOmens wrote: Mon Sep 14, 2020 4:14 pm
mega317 wrote: Mon Sep 14, 2020 2:05 pm
sunny_socal wrote: Mon Sep 14, 2020 11:01 am So here's my quote from better.com
This is better than I got from them AFTER sending another LE for 2.625% no cost. They sent back 2.75% with 2 points lol. 600k, 60% LTV, credit score 780.
Haha better did that to me too. LE has to be offical and dated. No draft or estimate.
I got Better to beat a Closing Fee worksheet that was not an official LE. However, the main boss happened to be off that day and so one of the lower-level team members worked on it. And I was offered something almost $1500 better. I honestly think there was a mistake that didn't take the loan origination into account in the worksheet. I locked shortly after receiving Better's offer :)
AlphaLess
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Re: Refinance Mega Thread

Post by AlphaLess »

Lucky2Invest wrote: Mon Sep 14, 2020 10:29 am Has anyone had any luck with Interest Only refinance on a Jumbo? I keep hearing "because 30 and 15 yr's are so low we aren't offering ARM's at the moment"....
Interest-only and ARM are different products.

I have also heard that lenders don't want to do ARMS.
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AlphaLess
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Re: Refinance Mega Thread

Post by AlphaLess »

Rocky77 wrote: Mon Sep 14, 2020 5:20 am Newbie here, anyone has any experience here with cashcall mortgage? Their rate for 15 yrs is 2.375% and 1k flat fee for closing costs seems too good to be true.
I am not sure that is "too good to be true".

I am trying to close with a 2.000% 15-year, with a credit at closing (not counting pre-paids in that calculation).
"A Republic, if you can keep it". Benjamin Franklin. 1787. | Party affiliation: Vanguard. Religion: low-cost investing.
Johny
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Re: Refinance Mega Thread

Post by Johny »

Has anyone ever been able to negotiate the origination fees under A on an LE before? Maybe even get them waived completely? Thank you.
bgh11
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Re: Refinance Mega Thread

Post by bgh11 »

Johny wrote: Mon Sep 14, 2020 5:27 pm Has anyone ever been able to negotiate the origination fees under A on an LE before? Maybe even get them waived completely? Thank you.
Sort of yes by using another lender's LE and get a higher lender credit to cover the origination.
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FrugalProfessor
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Re: Refinance Mega Thread

Post by FrugalProfessor »

FrugalProfessor wrote: Fri Sep 11, 2020 6:48 pm Just locked in 2.25%, 15Y, $0 lender fee refi with LenderFI on a $244k mortgage. It was an unbelievably slick process that took less than an hour.

After I got my online quotes, I called to ask about waiving appraisal + escrow. They waived both and took $1k or so off of the closing costs that were generated with my online application.
I ended up getting a 15Y 2.25Y $253k Loan Estimate from Better.com with approximately net zero in closing fees. The way to optimally sequence the negotiation appears to be:
1.) collect estimates from company A
2.) provide estimate from company A to company B and have company B beat it by $100 in closing costs
3-(N-1).) repeat step 2 as many times as you want to bother with
N.) bring best loan to Better.com, who will beat it by $100 while including a $550 appraisal fee in the estimate. With a low enough LTV (mine was about 50%), they'll waive the $550 fee, meaning you'll beat the next-best offer by $650 in closing fees.

This was my first refi experience. It reminded me a lot buying a new car.

I'm now out of the woods yet, but it appears to be the easiest $10k (in interest savings) I've made in my life....

For the curious, I created a spreadsheet that goes through the refi math (breakeven, interest savings, etc) that can be accessed through this blog post: https://frugalprofessor.com/mortgage-re ... fi-review/
Last edited by FrugalProfessor on Mon Sep 14, 2020 5:57 pm, edited 2 times in total.
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FrugalProfessor
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Re: Refinance Mega Thread

Post by FrugalProfessor »

AlphaLess wrote: Sat Sep 12, 2020 2:32 pm
FrugalProfessor wrote: Fri Sep 11, 2020 4:23 pm
nic3456 wrote: Fri Sep 11, 2020 3:44 pm Not sure how quick other lenders will follow but just got this email from Better

“Lock now — prices go up on 9/21
As you may know, the FHFA has introduced a 0.5% fee on all refinance loans funded after November 30, 2020. That means you must lock a rate before September 21 to avoid additional costs.
The fee will raise the cost of refinancing by 0.5% of the loan amount — $1650 on average.

Rates are still near record lows, so don’t wait. Lock instantly online today — and lock in those savings.”
I got the same email from Better. I've learned over the past week or two that this is a well known fee that was initially intended to be implemented on Sept 1 but was pushed back to Dec 1. Consequently, it puts some time pressure on refinancing before that 0.5% fee is implemented.
The real question is, why is FHFA implementing a refinancing fee of 0.5%.
https://www.fhfa.gov/Media/PublicAffair ... ber-1.aspx

The fee is necessary to cover projected COVID-19 losses of at least $6 billion at the Enterprises. Specifically, the actions taken by the Enterprises during the pandemic to protect renters and borrowers are conservatively projected to cost the Enterprises at least $6 billion and could be higher depending on the path of the economic recovery.

Those expenses are expected to at least include:

$4 billion in loan losses due to projected forbearance defaults;
$1 billion in foreclosure moratorium losses; and
$1 billion in servicer compensation and other forbearance expenses.
I blog. Taxes are the lowest hanging source of alpha. I eat tax alpha for breakfast.
presto987
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Re: Refinance Mega Thread

Post by presto987 »

FrugalProfessor wrote: Mon Sep 14, 2020 5:54 pm
FrugalProfessor wrote: Fri Sep 11, 2020 6:48 pm Just locked in 2.25%, 15Y, $0 lender fee refi with LenderFI on a $244k mortgage. It was an unbelievably slick process that took less than an hour.

After I got my online quotes, I called to ask about waiving appraisal + escrow. They waived both and took $1k or so off of the closing costs that were generated with my online application.
I ended up getting a 15Y 2.25Y $253k Loan Estimate from Better.com with approximately net zero in closing fees. The way to optimally sequence the negotiation appears to be:
1.) collect estimates from company A
2.) provide estimate from company A to company B and have company B beat it by $100 in closing costs
3-(N-1).) repeat step 2 as many times as you want to bother with
N.) bring best loan to Better.com, who will beat it by $100 while including a $550 appraisal fee in the estimate. With a low enough LTV (mine was about 50%), they'll waive the $550 fee, meaning you'll beat the next-best offer by $650 in closing fees.

This was my first refi experience. It reminded me a lot buying a new car.

I'm now out of the woods yet, but it appears to be the easiest $10k (in interest savings) I've made in my life....

For the curious, I created a spreadsheet that goes through the refi math (breakeven, interest savings, etc) that can be accessed through this blog post: https://frugalprofessor.com/mortgage-re ... fi-review/
Nice work! You might be able to reduce your Better.com closing costs further. In my case, Better chose Title365 as the default title/settlement company. Title365 charged $1100 ($550 for title insurance and $550 for settlement services). I got a quote from Radian which was $900 ($450 for each). I simply forwarded the Radian quote to my Better loan processor, and she immediately gave me an additional $200 in lender credit to price match the title costs.

So I was able to get Better to beat the next-best offer by $850.

For info on how to get a title quote from Radian, search this thread for "Radian"... I posted about this very recently.
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BrandonBogle
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Re: Refinance Mega Thread

Post by BrandonBogle »

Keep in mind folks to also consider the various rate options a lender offers to you, as getting the lowest no-cost rate isn’t always the best option.

For instance, in my current refi, I have rate options all the way down to 1.875%. If I pick the 2.125%, all my closing costs would be covered and then some, or at 2% I would have $500 in closing costs after everything.

So which option am I choosing? 2.75%. That option comes with earning $3,650. Doing the math of total interest saved vs. money I get up front from taking the higher rate, everything up to 2.75% took me 9 years to get ahead by choosing the lower rate. Considering I’m doing a 15-year loan, it just isn’t worth taking the lower rate.

Now, this is my situation. Yours may vary.
JohnSmith123
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Re: Refinance Mega Thread

Post by JohnSmith123 »

I got lenderfi and locked in today:
CA, 600k loan, $2M value, fico 800+

2.125 % 15 year

I would have really liked the 30 year, but is was priced closer to 2.75% no cost.

Let’s hope it all goes through...
Goal33
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Re: Refinance Mega Thread

Post by Goal33 »

Johny wrote: Mon Sep 14, 2020 5:27 pm Has anyone ever been able to negotiate the origination fees under A on an LE before? Maybe even get them waived completely? Thank you.
mine are $0 and i didn't negotiate. LenderFi
presto987
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Re: Refinance Mega Thread

Post by presto987 »

BrandonBogle wrote: Mon Sep 14, 2020 6:53 pm Keep in mind folks to also consider the various rate options a lender offers to you, as getting the lowest no-cost rate isn’t always the best option.

For instance, in my current refi, I have rate options all the way down to 1.875%. If I pick the 2.125%, all my closing costs would be covered and then some, or at 2% I would have $500 in closing costs after everything.

So which option am I choosing? 2.75%. That option comes with earning $3,650. Doing the math of total interest saved vs. money I get up front from taking the higher rate, everything up to 2.75% took me 9 years to get ahead by choosing the lower rate. Considering I’m doing a 15-year loan, it just isn’t worth taking the lower rate.

Now, this is my situation. Yours may vary.
Yes, and if rates stay low, you can always refi again to bring your rate back down. Then you can have your cake and eat it too: pocket the $3,650 and still get your lower rate later (the slightly higher interest paid during the intervening period should be pretty negligible).
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Re: Refinance Mega Thread

Post by need403bhelp »

BrandonBogle wrote: Mon Sep 14, 2020 6:53 pm Keep in mind folks to also consider the various rate options a lender offers to you, as getting the lowest no-cost rate isn’t always the best option.

For instance, in my current refi, I have rate options all the way down to 1.875%. If I pick the 2.125%, all my closing costs would be covered and then some, or at 2% I would have $500 in closing costs after everything.

So which option am I choosing? 2.75%. That option comes with earning $3,650. Doing the math of total interest saved vs. money I get up front from taking the higher rate, everything up to 2.75% took me 9 years to get ahead by choosing the lower rate. Considering I’m doing a 15-year loan, it just isn’t worth taking the lower rate.

Now, this is my situation. Yours may vary.
So I have a question about this.

I am now working on my refi #2 after doing initial refi #1 30 year fixed with better.com at 2.5% with $1300 principal reduction (no cash back at closing due to state restrictions on this) and $2,500 AmEx credit.

For refi #2, my options are basically either a loan for 2.375% with $0 costs (this is lots of price matching later so please don't ask "which lender" as it doesn't really apply here and anyway you can tell by reading my prior posts) or 2.25% with $2k rolled into my loan.

I'm favoring 2.25% as is as basically I just had a $1300 principal reduction and will get $2,500 AmEx credit, so I'm still coming out positive after rolling extra $2k into refi #2.

However, even if I make an amortization table of the two loans, I come up with total interest on 2.375% loan as $113.6k and total interest on 2.25% loan as $107.8k. So difference of ~$5.8k over 30 years in interest paid. Given the extra $2k in principal, that still makes interest paid over 30 years ~$3.8k less for the 2.25% loan. Further, I'm no longer planning on pre-paying the loan at all as I plan to arbitrage with my 3% guaranteed unrestricted TIAA traditional.

In any case, I fail to see how I come out worse ahead by choosing the 2.25% rate loan in this situation, but I'm happy to find flaws in my calculations.

And yes, I do realize that rates can drop again and I might be able to refi to 2.25% without paying any closing costs, but I'm trying to see where in the amortization cost comparison I'm missing the disadvantage of increasing my loan balance by $2k to go from 2.375% -> 2.25%.

Thanks!

EDIT: Fixed numbers slightly as I was playing with my spreadsheet and forget to revert to correct specifications. And I do plan on staying in this house for 30 years, although I do realize if I am forced to sell for some reason, I will obviously realize the $2k difference immediately.
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Re: Refinance Mega Thread

Post by FrugalProfessor »

presto987 wrote: Mon Sep 14, 2020 7:21 pm
BrandonBogle wrote: Mon Sep 14, 2020 6:53 pm Keep in mind folks to also consider the various rate options a lender offers to you, as getting the lowest no-cost rate isn’t always the best option.

For instance, in my current refi, I have rate options all the way down to 1.875%. If I pick the 2.125%, all my closing costs would be covered and then some, or at 2% I would have $500 in closing costs after everything.

So which option am I choosing? 2.75%. That option comes with earning $3,650. Doing the math of total interest saved vs. money I get up front from taking the higher rate, everything up to 2.75% took me 9 years to get ahead by choosing the lower rate. Considering I’m doing a 15-year loan, it just isn’t worth taking the lower rate.

Now, this is my situation. Yours may vary.
Yes, and if rates stay low, you can always refi again to bring your rate back down. Then you can have your cake and eat it too: pocket the $3,650 and still get your lower rate later (the slightly higher interest paid during the intervening period should be pretty negligible).
The new 0.5% covid refi surcharge will put a damper on many of these net-lending-credit-receipt strategies after Dec 1, right?

https://nahbnow.com/2020/08/fannie-fred ... til-dec-1/
I blog. Taxes are the lowest hanging source of alpha. I eat tax alpha for breakfast.
dudefella
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Re: Refinance Mega Thread

Post by dudefella »

Loan: 315k
Current rate: 3.125%

Loan A: 2.25%
A+B+C: $1900
Lender credit:$1200

Loan B: 2.375%
A+B+C: $1900
Lender credit:$2400

Taking the lower date would reduce mortgage by $20ish a month. Recouping the $1200 would take about 5 years so my assumption is go 2.375% and get the $2400 instead so everything is covered?
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BrandonBogle
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Re: Refinance Mega Thread

Post by BrandonBogle »

presto987 wrote: Mon Sep 14, 2020 7:21 pm
BrandonBogle wrote: Mon Sep 14, 2020 6:53 pm Keep in mind folks to also consider the various rate options a lender offers to you, as getting the lowest no-cost rate isn’t always the best option.

For instance, in my current refi, I have rate options all the way down to 1.875%. If I pick the 2.125%, all my closing costs would be covered and then some, or at 2% I would have $500 in closing costs after everything.

So which option am I choosing? 2.75%. That option comes with earning $3,650. Doing the math of total interest saved vs. money I get up front from taking the higher rate, everything up to 2.75% took me 9 years to get ahead by choosing the lower rate. Considering I’m doing a 15-year loan, it just isn’t worth taking the lower rate.

Now, this is my situation. Yours may vary.
Yes, and if rates stay low, you can always refi again to bring your rate back down. Then you can have your cake and eat it too: pocket the $3,650 and still get your lower rate later (the slightly higher interest paid during the intervening period should be pretty negligible).
This is what I did. In May I went from 2.875% 5/5 ARM to 2.625% 15-year at no cost. Then in July I went to a 3+% 15-year with $6,200 profit to me. Now I’m going down to 2.75% with $3,650 profit.
need403bhelp wrote: Mon Sep 14, 2020 9:23 pm For refi #2, my options are basically either a loan for 2.375% with $0 costs (this is lots of price matching later so please don't ask "which lender" as it doesn't really apply here and anyway you can tell by reading my prior posts) or 2.25% with $2k rolled into my loan.

I'm favoring 2.25% as is as basically I just had a $1300 principal reduction and will get $2,500 AmEx credit, so I'm still coming out positive after rolling extra $2k into refi #2.

However, even if I make an amortization table of the two loans, I come up with total interest on 2.375% loan as $113.6k and total interest on 2.25% loan as $107.8k. So difference of ~$5.8k over 30 years in interest paid. Given the extra $2k in principal, that still makes interest paid over 30 years ~$3.8k less for the 2.25% loan. Further, I'm no longer planning on pre-paying the loan at all as I plan to arbitrage with my 3% guaranteed unrestricted TIAA traditional.

In any case, I fail to see how I come out worse ahead by choosing the 2.25% rate loan in this situation, but I'm happy to find flaws in my calculations.
Don’t forget the time value of money. If a bank today offered you a 30-year CD where you deposit $2,000 and in 30 years the CD matures with a value or $5,800, would you take it? Now, in your case, we are talking an extra $3,800 in earnings, but in 2050’s dollars, not today’s.

But here is the clincher. If you would naw at yourself that you could have saved $3,800 for the next 3 years, $2k is small cost to pay to sleep easy at night. We are in t be level of noise, so whichever makes you most comfortable is what I would do.

All I say is that in the CD example, I wouldn’t take that deal. But that doesn’t make either one of us right and the other wrong. :happy
FrugalProfessor wrote: Mon Sep 14, 2020 9:29 pm The new 0.5% covid refi surcharge will put a damper on many of these net-lending-credit-receipt strategies after Dec 1, right?

https://nahbnow.com/2020/08/fannie-fred ... til-dec-1/
At my $150k mortgage, yes. If you have a $400k mortgage, not really. You may not get as good a deal after that, but you will still get great deals.
ossipago
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Re: Refinance Mega Thread

Post by ossipago »

FrugalProfessor wrote: Mon Sep 14, 2020 5:57 pm
AlphaLess wrote: Sat Sep 12, 2020 2:32 pm
FrugalProfessor wrote: Fri Sep 11, 2020 4:23 pm
nic3456 wrote: Fri Sep 11, 2020 3:44 pm Not sure how quick other lenders will follow but just got this email from Better

“Lock now — prices go up on 9/21
As you may know, the FHFA has introduced a 0.5% fee on all refinance loans funded after November 30, 2020. That means you must lock a rate before September 21 to avoid additional costs.
The fee will raise the cost of refinancing by 0.5% of the loan amount — $1650 on average.

Rates are still near record lows, so don’t wait. Lock instantly online today — and lock in those savings.”
I got the same email from Better. I've learned over the past week or two that this is a well known fee that was initially intended to be implemented on Sept 1 but was pushed back to Dec 1. Consequently, it puts some time pressure on refinancing before that 0.5% fee is implemented.
The real question is, why is FHFA implementing a refinancing fee of 0.5%.
https://www.fhfa.gov/Media/PublicAffair ... ber-1.aspx

The fee is necessary to cover projected COVID-19 losses of at least $6 billion at the Enterprises. Specifically, the actions taken by the Enterprises during the pandemic to protect renters and borrowers are conservatively projected to cost the Enterprises at least $6 billion and could be higher depending on the path of the economic recovery.

Those expenses are expected to at least include:

$4 billion in loan losses due to projected forbearance defaults;
$1 billion in foreclosure moratorium losses; and
$1 billion in servicer compensation and other forbearance expenses.
They made need to cover those costs, but it's unclear why that fee only applies to refinances. It would seem that refinanced mortgages, having been through at least two underwriting processes, are less risky than first-time mortgage loans. Further, if the goal is to avoid forbearance defaults and foreclosure losses, it seems counterproductive to raise prices on a mechanism for edge-case homeowners to reduce their monthly payments.
skierincolorado
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Re: Refinance Mega Thread

Post by skierincolorado »

atxll wrote: Mon Sep 14, 2020 3:14 pm Can anyone please point me in the right direction to get started on a refi?

Central TX, home value approx. $400k, loan balance approx. $160k. On a 15 yr @ 2.75% currently

If I'm understanding the refi calculators correctly, I need to be around 2% with little to no closing costs for this to make sense.

It sounds like there aren't many good offerings in TX for such a low balance? The quotes I've looked at from the places listed here are finally getting closer to 2% but with very high fees. I would want to stick with 15 or 10 yr term. Thank you!
Think about it. If the closing costs are zero or near zero, any lower rate makes sense. Also make sure your calculator is not looking at just the change in payment, but also the fact that more of your payment will be going to principal with a lower rate. If the payment is reduced by $30/mo the reduction in interest is usually close to $60/mo and that is the number you care about.

set tax rate to 0% unless you itemize
https://www.bankrate.com/calculators/mo ... lator.aspx
Last edited by skierincolorado on Mon Sep 14, 2020 11:45 pm, edited 1 time in total.
mega317
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Re: Refinance Mega Thread

Post by mega317 »

We discussed a few days ago Owning.com signing closing docs before completing underwriting. I signed Thursday and it looks like the underwriters aren't happy with how my pay appears on the paystub. LO keeps saying it's fine, he's going to talk directly to the underwriter, but I wasn't left with a warm fuzzy feeling after a 30 minute 8pm call the night before we're supposed to fund.

So, tomorrow is 3 business days from signing, should I just back out? Keep shopping but don't back out? If I don't back out what is the endpoint?

Annoying because my paycheck has looked the same for 2 purchases and a recent refinance.
https://www.bogleheads.org/forum/viewtopic.php?t=6212
skierincolorado
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Re: Refinance Mega Thread

Post by skierincolorado »

dudefella wrote: Mon Sep 14, 2020 9:39 pm Loan: 315k
Current rate: 3.125%

Loan A: 2.25%
A+B+C: $1900
Lender credit:$1200

Loan B: 2.375%
A+B+C: $1900
Lender credit:$2400

Taking the lower date would reduce mortgage by $20ish a month. Recouping the $1200 would take about 5 years so my assumption is go 2.375% and get the $2400 instead so everything is covered?
You're nor factoring the change in interest. Yes your payment is only $20 less, but more of it goes to principal. What you should care about is the reduction in interest, which is $39.38/month for 1/8 of a % on a 315k loan. At close to $40/month in savings, you will break even in 2.5 years.

It's still a toss up IMO but I'd be leaning towards the lower rate when the breakeven is less than 3 years.

Use this calculator but be sure to set the tax rate to 0% unless you itemize: https://www.bankrate.com/calculators/mo ... lator.aspx
Last edited by skierincolorado on Mon Sep 14, 2020 11:45 pm, edited 1 time in total.
skierincolorado
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Re: Refinance Mega Thread

Post by skierincolorado »

BrandonBogle wrote: Mon Sep 14, 2020 6:53 pm Keep in mind folks to also consider the various rate options a lender offers to you, as getting the lowest no-cost rate isn’t always the best option.

For instance, in my current refi, I have rate options all the way down to 1.875%. If I pick the 2.125%, all my closing costs would be covered and then some, or at 2% I would have $500 in closing costs after everything.

So which option am I choosing? 2.75%. That option comes with earning $3,650. Doing the math of total interest saved vs. money I get up front from taking the higher rate, everything up to 2.75% took me 9 years to get ahead by choosing the lower rate. Considering I’m doing a 15-year loan, it just isn’t worth taking the lower rate.

Now, this is my situation. Yours may vary.
Be sure you are considering that the lower rate doesn't just lower your payment, it also increases the % of your payment that is principal. If the payment is reduced $50, the amount of interest you pay each month is likely reduced close to $100.

I very much doubt that the loan terms you were offered have 9 month breakevens. That would be unheard of.

On a 350k loan I calculate that you would save $2600 in interest in the first year alone by reducing from 2.75% to 2.0%. Your breakeven on the $3650+500 of closing costs would be 20 months. On a 250k loan the breakeven on $4150 in closing costs at 2% vs 2.75% is 31 months.

Even a 150k loan has a 57 month breakeven, not nearly 9 years. EDIT: I see your loan amount is 150k, so the breakeven is 57 months. I'd be doing the same as you and taking the cash.

Just guessing at your loan amount, but unless your loan is under 100k, the breakeven isn't 9 years.
Last edited by skierincolorado on Mon Sep 14, 2020 11:48 pm, edited 1 time in total.
need403bhelp
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Re: Refinance Mega Thread

Post by need403bhelp »

BrandonBogle wrote: Mon Sep 14, 2020 10:51 pm
need403bhelp wrote: Mon Sep 14, 2020 9:23 pm For refi #2, my options are basically either a loan for 2.375% with $0 costs (this is lots of price matching later so please don't ask "which lender" as it doesn't really apply here and anyway you can tell by reading my prior posts) or 2.25% with $2k rolled into my loan.

I'm favoring 2.25% as is as basically I just had a $1300 principal reduction and will get $2,500 AmEx credit, so I'm still coming out positive after rolling extra $2k into refi #2.

However, even if I make an amortization table of the two loans, I come up with total interest on 2.375% loan as $113.6k and total interest on 2.25% loan as $107.8k. So difference of ~$5.8k over 30 years in interest paid. Given the extra $2k in principal, that still makes interest paid over 30 years ~$3.8k less for the 2.25% loan. Further, I'm no longer planning on pre-paying the loan at all as I plan to arbitrage with my 3% guaranteed unrestricted TIAA traditional.

In any case, I fail to see how I come out worse ahead by choosing the 2.25% rate loan in this situation, but I'm happy to find flaws in my calculations.
Don’t forget the time value of money. If a bank today offered you a 30-year CD where you deposit $2,000 and in 30 years the CD matures with a value or $5,800, would you take it? Now, in your case, we are talking an extra $3,800 in earnings, but in 2050’s dollars, not today’s.

But here is the clincher. If you would naw at yourself that you could have saved $3,800 for the next 3 years, $2k is small cost to pay to sleep easy at night. We are in t be level of noise, so whichever makes you most comfortable is what I would do.

All I say is that in the CD example, I wouldn’t take that deal. But that doesn’t make either one of us right and the other wrong. :happy
Thanks. I think from an emotional perspective I know that if I pick 2.25% it means I don't have to worry about refinancing for a longer period of time, which makes me :happy

From an amortization spreadsheet standpoint, it is much easier for me to see a "right" answer when there is actual cash being given to me (e.g., AmEx credit, since my state won't allow other cash).

It is much harder for me to see it when the money is being used to either (i) reduce my loan principal or (ii) add to my loan principal. As I'm not planning on selling in 30 years, it seems that I only "get" this money (if loan balance reduced) or "pay this money" (if loan balance increased) if (a) I am forced to sell early or (b) in 30 years. So it seems to me that I'm actually paying $2k in 2050's dollars to get savings of $5,800 that I am accruing earlier than that, no?

Of course, if I refinance again in the next few years, I would have "paid" this $2k in 2050's dollars unnecessarily, but this, in general, makes it harder for me to think about "break even" than when there's cold hard cash being paid or given to me.

Thanks again for your thoughts and great thread!
presto987
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Re: Refinance Mega Thread

Post by presto987 »

BrandonBogle wrote: Mon Sep 14, 2020 10:51 pm This is what I did. In May I went from 2.875% 5/5 ARM to 2.625% 15-year at no cost. Then in July I went to a 3+% 15-year with $6,200 profit to me. Now I’m going down to 2.75% with $3,650 profit.
That is amazing. Did you encounter any issues with the Net Tangible Benefit (NTB) test when you went from 2.625% to 3+%? Was it a rate-and-term refi?
BrandonBogle wrote: Mon Sep 14, 2020 10:51 pm
FrugalProfessor wrote: Mon Sep 14, 2020 9:29 pm The new 0.5% covid refi surcharge will put a damper on many of these net-lending-credit-receipt strategies after Dec 1, right?

https://nahbnow.com/2020/08/fannie-fred ... til-dec-1/
At my $150k mortgage, yes. If you have a $400k mortgage, not really. You may not get as good a deal after that, but you will still get great deals.
0.5% corresponds to around 1/8 of a percent on the interest rate. So it's meaningful, but not a total dealbreaker.
skierincolorado
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Re: Refinance Mega Thread

Post by skierincolorado »

dks05c wrote: Mon Sep 14, 2020 9:57 am Hi Guys, better option on 15 yr refi, 345K loan, LTV 60%?

2.125 w/ $1500 credit or
2.25 w/ $3700 credit
It's not close IMO. The $2200 will take 88 months to recoup in terms of monthly interest reduction. Personally I wouldn't consider anything over a 3-4 year breakeven given the probabilities of refinancing or selling. And the breakeven doesn't even consider what you do with the $2200 in the meantime (invest it and you likely would be ahead w/ 2.25 even 15 years from now)
Calirefi2020
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Re: Refinance Mega Thread

Post by Calirefi2020 »

I had locked in rate with loan depot last week..let the wait begin.. my LO told me he was able to get my appraisal waived but I can’t seem to confirm this in any of the disclosures.. Can some one please point to me where I can find confirmation of appraisal waiver? Thanks
hgsavita
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Re: Refinance Mega Thread

Post by hgsavita »

Calirefi2020 wrote: Tue Sep 15, 2020 12:12 am I had locked in rate with loan depot last week..let the wait begin.. my LO told me he was able to get my appraisal waived but I can’t seem to confirm this in any of the disclosures.. Can some one please point to me where I can find confirmation of appraisal waiver? Thanks
If you look at loan estimate , section B , you will see Appraisal Fee if there is an Appraisal Planned. Also Loandepot will charge you for Appraisal while locking rate.

I have also locked rate with LD last week and currently @ 'Conditional Approval" state, waiting for Account Manager Assignment.
Jags4186
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Re: Refinance Mega Thread

Post by Jags4186 »

It took 10 weeks, but I did finally get my $2500 AMEX credit from Better.
1andDone
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Re: Refinance Mega Thread

Post by 1andDone »

Jags4186 wrote: Tue Sep 15, 2020 7:32 am It took 10 weeks, but I did finally get my $2500 AMEX credit from Better.
Ditto!
atx1202
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Re: Refinance Mega Thread

Post by atx1202 »

Hello, I have LEs from LD and LC for a similar closing cost on 30yr fixed, 2.5%, $500 closing costs.

Which one would you all suggest that I lock with among LD/LC? Is one of them better over the other in terms of processing pipeline, time to close or responsiveness?

Would appreciate if folks who have closed with LC/LD can share their thoughts on closing duration and overall experience. Thank you!
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