You can also take an option with negative points (lender credit) and have the mortgage company write you a check at closing, but you’ll pay for that in the form of a higher rate, and there are all kinds of options in between.
This is how mortgage pricing works.
The best rate/fee combo will depend on how long you intend to keep the mortgage.
Sometimes it makes sense to pay nothing upfront, sometimes it doesn’t. You just have to look at total cost over the time you intend to keep the loan.
By the way, here’s an actual mortgage hack that is worth asking about if you’re currently refinancing, or even doing a purchase.
Sometimes borrowing more than you need will get you a better rate, and sometimes the rate on a jumbo (which you may not need) is better than the rate on a conventional.
After closing you can immediately pay down the balance to whatever you intended to borrow in the first place.
I stumbled upon this by accident (although it’s hardly a secret that there is a relationship between rate and loan amount), and we did this on a 2014 refi and saved 0.25% on the rate.
If you are already at/close to the LTV limit for a given loan program, this probably won’t work.
I did this too when I first got the mortgage, but for refi, it seems to have inverted and conventional is more competitive than jumbo at least in my area at the moment.
The way risk is priced varies from company to company and program to program. Today Originator X may offer a jumbo with a lower price and next week the conventional may be more appealing, and the reverse may be true through another originator on the same days.
We didn’t actually bump up to a jumbo, we didn’t have a very big balance left… I was talking to a mortgage broker one day and he said something like, “I wish you wanted to borrow $X because I have a killer rate for that.”
So I said, “Then we’ll borrow $X,” and we got the better rate. And then when the first payment was due we repaid the amount we didn’t plan to borrow, and that was that.
It’s near all time low. I think a rate drop will happen in March, so maybe we will see 3.375. I am trying to see if my bank will let me modify the terms instead of just the rates so i can move to a 15 year at 2.75 or something
Assume yes for planning purposes, but appraisal waivers are becoming more and more common, especially where valuation data is rich and reliable, and the lower the LTV the more likely the waiver.
My parents refi’d their vacation home a couple of years ago (LTV in the mid 30s) and the appraisal was waived.
Estimated cost for the appraisal on the LE was in the $700-800 range.
My mortgage is through a credit union. I called them and asked if they had a program to lower the rate w/o having to go through the whole closing process. They said no… Guess I will look into zillow.
Have to agree with Jon. Currently locked to refi a 30yr jumbo at 3.375%. 3.75% are the initial quotes that went straight to trash. Be competitive the first time around and don’t waste people’s time with the “provide me with a few sheet” BS.
Edit: also want to add initial quote was 3.25% but my middle score was just slightly below that top tier pricing.
