Is this going to be a trend in the coming months?
Of course. Wouldn’t be surprised if they temporarily stop cash-out refinance
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Hi Trism- I really enjoy your posts here. I am currently looking at a Refi and wanted your view. I am in for 18 months in a 30yr fixed with 585k mortgage at 4,375APR fixed confirming. Got an offer today for a $510k at 3.25APR. Closing costs $4.5k including tittle and transfer charges are $$1,870, and origination fee at $1,195. May waive appraisal at $430.00. I plan to stay in the house at least 7yrs (graduation of Kids from School). Of course I would need to put additional $75k to have such rate. For a $585k the rate is higher (3.659%)
That doesn’t sound like a good option at all. Have you checked out Better.com? You can also check out owning.com, they have a no-cost refi at 3.5% for that loan amount, if your LTV and credit scores qualify.
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Hi Jon- I will check them out to learn the details of both options. Tks,
Are you looking for feedback on the pricing you posted (lots of variables – best way to know if that’s a strong offer is to gather several quotes)?
Or how to compare multiple offers?
Or whether you’ll save money over seven years by refinancing?
You are right and I am seeking at least 3 more proposals to be able to compare with this one.
Thanks a bunch for all of the info. Think I got a good basis of quotes. Went to better.com, Zillow (sebonic), my previous mortgage loan officer and also a local bank here in Pittsburgh. What I think I’m doing is a cash out refinance as this is what everyone recommended. Better.com wouldn’t quote this in PA, said too much risk… All others are at 3.375 and between 6-8k out of pocket at closing. My mortgage rep is the same rate but only appraisal (450) due at closing. I think I got enough here to make a decision, except of course rates dropping which no one knows.
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Also, this is for a 30 year. 20 and 25 are the same rate, 15 was all over the map as two of the quotes were higher for a 15 year (3.5) than 30. The lowest on 15 was 3%, not enough difference to make it worthwhile.
If this makes you more secure with a better cash position, that makes sense.
Upside: Better short-term liquidity. May not be able to tap equity later for various reasons.
Downside: Paying interest on a higher balance, keeps payments high for the duration of the mortgage (unless you can recast later)
Higher loan balance may also push you to a higher rate. May also do the opposite.
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Really when? That looks great?
I’ve taken out 20+ mortgages over the last decade so I’ve learned a few things.
Mortgages aren’t really that complicated but they scare people because the numbers are so high. Most of the costs, both buying and closing, are set by title companies, not mortgage companies. You can shop around for those in theory, but nobody really does. And the pricing isn’t that much different between title companies anyway. And then you have govt fees which can’t be negotiated. Between title and govt costs, it’s the majority of costs.
So you’re left with shopping for 2 things: rate and lender fees.
Those fees come with different labels like points, origination fee, appraisal fee, etc. These are all controlled by the lender and can be negotiated.
Points are little different since they do buy down the rate. And sometimes it’s better to pay more points for a lower rate, if you think you’ll stay in the property for a long time. It’s a math problem. Figure out the breakeven of buying points vs the lower rate (including principal paydown). Say it’s 42 months as an example. Then ask yourself will I likely be paying this mortgage in month 43? If the answer is yes, then pay the points. If the answer is no, don’t. Also take into account that points are tax deducible in the year paid, so that may factor into it as well, especially if you are in a higher bracket today due to some extraordinary windfall.
Then all other lender fees like origination fee or whatever else they call them…all negotiable. Origination fee is just straight profit for a lender. Kind of an acquisition fee for a mortgage. Except unlike acquisition fees, they are negotiable for mortgages. One of the biggest rip offs in real estate is appraisals. $800 for someone to come to a house for an hour and then basically give you an appraisal that is always magically right at the selling price of the property. Negotiate this away as well. For newer homes with a lot of comps, many lenders won’t even do a full appraisal, they’ll just look at comps and call it close enough. My last refi was exactly this and saved me $700.
Finally, don’t be afraid of an ARM. After the last crash ARM became a 4 letter word. But it shouldn’t be. Do you know anyone who lives in a house for 30 years? Probably not. Then why sign up for a 30 year fixed loan? Get a 7 or 10 year ARM if the rate is significantly lower. Chances are you will move before the 7 or 10 years is up anyway. And if you don’t, you have plenty of opportunities to refinance if you end up staying longer.
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Makes no difference now to have different logins, FYI. That “hack” is gone.
Yes. I was making a different observation… that if it you don’t see the offer on one Amex, check your others.
But info posted later suggests that you don’t even need to see the offer to be eligible. You just need to have one card on the list.
Got conditionally approved a few days ago. Title and appraisal already done. Will update when I finalize.
Locked yesterday on 30 year fixed, 3.25 and no points. Takes my payment down 400/month but I’ll just keep paying the same with the 400 going to principle. If we stay here (or don’t refinance again), will be paid off in 20 years. Somehow got an appraisal waiver which saves me an additional 450.
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Tons of appraisal waivers happening now.
They don’t want appraisers in homes.
Same w town fire equipment inspections.
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Also dependent on the LTV ratio.
How does this work? Do they go based off comparables or asking for photos/videos from homeowner.
They went off comparables for me. A few homes in my neighborhood sold recently which probably gave them a good basis. My LTV is 80 so somewhat surprised they still did the waiver.
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