mortgage refinance

W

WhoseHouse

250+ Posts
I apologize if this is already discussed somewhere, but I couldn't find it, which kind of surprised me.

Since rates are really low, I, like lots of people, am looking into refinancing. I got a quick quote from a lender for 5.00% with 1 point, assuming I still have good credit (I do). This seems high to me, as I have a friend claiming to have been pre-approved at 4.00% and no points for a new home loan (that seems extremely low). So anyway, are any of you looking into refinancing? What's a good rate? I'm currently at 6.125% so I'd like to get under 5.00% and no points to make it worth it. I also know there are some experts on the board, so I'd really like to hear from you.
 
Call Brooks Hiller with Heritage Mortgage Company at 936-258-8040.

He's extremely helpful and willing to answer any questions.
 
Whose,

Only way your friend got 4% is if the builder used concessions to buy it down. No one can offer that.

As for no points under 5%, not going to get that right now.

I am happy to answer any specific questions you have.

you can email me at [email protected].

I am happy to help in any way.


Good luck

hookem.gif
 
I'm looking at refinancing our home (it's currently in wife's name only). I have some general questions. What are points? And let's say I need to refinance $70,000. How much in fees (generally) should I be expecting to pay.
 
A "point" is something you can buy to lower your interest rate. They cost 1% of the total loan amount, but the amount by which your interest rate is lowered varies. For example, you might get a loan at 6.00% with zero points. Or, you might choose to buy one point for a rate of 5.75%, or 2 points for a rate of 5.5%.
 
I can't figure that out. It seems as if everyone would do it, especially since you can roll their cost into the loan. But since not everyone does it, there must be reasons not to. Maybe sometimes the cost of the points is required up front?
 
Texas Ed- say you buy a point on a $300k loan for $3000. If it lowers your monthly payment by $200 (due to the lower interest rate), don't you break even on the point in 15 months?
 
Be careful when listening to friends discuss mortgage quotes. I can't tell you how many people I've heard say they got an x.xx% interest rate and "no points" only to discover upon further inquiry that they paid a 1% origination fee. An origination fee is just a point by another name. A fee is a fee. Make sure you're comparing apples to apples.

If you pay a point on a 300k mortgage, the monthly savings will be more like $40/month (not $200/month) with a break even around month 75 (not 15).

Bernard
 
Bernard is correct.

I explain to my clients that an origination fee and a discount point are two different things.

I try to quote with 1 origination as close to par as possible. If my client wants to buy the rate down from that point, they can choose to do so.

Understand that paying 1% to buy the rate down does not lower the rate 1%. It pays 1% toward the spread between rates. That may drop it 0.5% (can vary)

Getting these quotes here or through email are tough. So many different variables for everyone. Also, Fannie Mae is constantly changing bth pricing and underwriting guidelines.

If you are truly thinking about this you really need to take 5-10 minutes minimum and talk with someone.


Good luck


mammy
 
I know the point itself won't lower it $300. But if current interest rates are already much lower AND you buy a point, and that lowers it $300 a month (I know that's probably still high, but for the sake of simple math), then say the loan costs $2500. So the point is $3000, for a total loan cost of $5500, then the loan (including point) breaks even around 18 months. Or am I still missing something? I intend to speak with someone over the phone as well.
 
Whose,

The concept is right, but the time frame is way off. If you buy down the rate for $3000 and save $30 per month it will take 100 months (over 8 years) to pay off.

Factor in time value of money and you are losing with opportunity cost out not to mention that you never recover those costs if your job takes you to another city in 3 years and you have to sell the house.

If you take that same $3000 and put it in a 3% CD you will be better off than buying down a quarter percentage point. The thing is most people don't pay out the cash, they fold it into the loan which reduces their equity in the house and then they pay interest on the closing costs too.

At a minimum the things I look at when financing are:
rate
monthly payment
payback of closing costs
total future payments over the life of the loan

I weight all of them equally or skew it towards a combination of payment and total future payments.

Compare all of those to your current loan to see if it makes sense.
 
Aces Full,

From my rather limited understanding, origination fees are the way mortgage brokers make a profit/spread on your loan, before selling the loan to a real lender. W/o origination, is it even possible for a broker to make $?
 
hey mortgage guys, is a 4.75% rate with 1 pt down a good/competitive rate on a new mortgage today? (It was 5.125% with 0 pts)
 
Have any of you tried calling your current lender to ask if they would give a lower rate than your current rate? It seems that by using the same bank you are currently using that you could save in fees. However, I don't know if that truly is the case.
 
Aces,

no there does not. The only two ways a broker gets paid is either a fee on the front of the loan (closing cost) or by raising the rate and making a spread or premium based on pre-sell numbers associated with the rate for the future sale of the mortgage.

Generally it is in the best interest of the client to pay the fee vs. the higher rate.

I want everyone I work with to get a great deal. If they don't I get no repeat/ referral business. That said, this is my job and how I support my family.

You just can't get real accurate info from here. This industry is so fluid right now from rate movement to guideline changes that if you are considering this you need to talk with someone about your situation.


hookem.gif
 
niner, check out my previous post on the rate for a new mortgage. I was quoted that on my approval; sounded high to me, what do you think?
 
Ball,

That is a very good offer. I could probably do that. That said, don't know what other fees would be charged by that broker.

Assume this is for a purchase since you mentioned new mortgage?

Rate with 1% orig. is a good deal. Make sure it is still available as rates have moved higher the last couple days.



Good luck and let me know what other questions you have.


hookem.gif
 
I switched back between 3% and 5% and it made very little difference when you are talking about the periodic savings being $10-15.

What I am trying to convey is that saving $4000 over 30 years ($11-12/ month) is not worth $4000 in today's money it is only worth about $1500 today. If you think of it in reverse and you invested $1500 today how much would it be worth in 30 years?
 
Whose-- I really liked the lady we worked with when we closed on our house a couple weeks back. She told us to send friends her way as long as they were "well qualified" because lending is so rough right now. If you want, I can give you her contact info.
 
Penfed is offering 5% on 30 year fixed rate loans. They are famous for low closing costs, in fact they just recently started charging the 1% origination fee.
 
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