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Old 09-02-2011, 03:58 PM
 
3,428 posts, read 3,713,247 times
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I saw this option when I logged into my Wells Fargo account.

Seems like a fair and easy process.

Currently I am at 4.875% fixed 30 years.

They gave me option for another 30 years at 4.5% (lowers my payment by about $160 a month).
Other option is 20 years at 4.25% (raises payment by about $300)
third option is at 15 years at 3.875% (raises payment by about $700 a month).

I am probably just going for the 4.5% option since it doesn't involve any extra payments.

It's like a free refinance. Called them up to reconfirm and they say absolutely no fees except for notary fees. Also, I will have to skip October's payment so they add on a month's interest to the loan. (but I pay an extra $500-1000 into the principal each month anyways....I'll just pay an extra month's mortgage to make up the difference).

I know I can get a 30 year fix in the low 4's and a 15 year fixed refinance in the mid 3s these days. But that involves another appraisal, more underwriting etc. and more refinancing fees which usual run 1% of the total value of the loan. I am very secure financially and have outstanding credit with lots of liquid assets so underwriting won't be an issue.

I plan on keeping this home for another 2-3 years.

My question is how can brokers compete with this? I know the reason Wells Fargo is doing this (they want to keep servicing my loan and don't want me to go refinance at other lenders).
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Old 09-03-2011, 06:43 AM
 
Location: MID ATLANTIC
4,032 posts, read 8,732,468 times
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Something for nothing doesn't exist. You don't say if this is FHA or conventional and that makes a huge difference on the pricing........but, let me tell you what we are paying towards closing costs at 4.5% as of yesterday.....keep in mind, there are variables......but I'm sure variables also exist for WF.

You don't give your loan amount, so lets assume 200K.

CONV 30 YEAR 4.5% 2.75 points or $5500
FHA 30 YEAR 4.5% 3.0 points or $6000
CONV 15 YEAR 3.875% 2.75 points of $5500

They are counting on the population that doesn't want to do the math or the time. In our area the true cost of a refinance would be about 1/2 of the total credits above, the balance being prepaids (taxes, prepaid interest, etc)......whatever is not used is called "overage." Overage use to go into the loan officer's pocket, but now it goes into the big bank's pockets.

The only way you can be sure your not being sucked in by a sheeple move is to have somoene "on the outside, local to your area, run a comparison. The lower your loan amount, the better the deal from WF.........but the higher loan amounts, why don't you just write them a nice big fat check.
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Old 09-03-2011, 08:27 AM
 
Location: Plano, Texas
1,672 posts, read 4,481,367 times
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Here is how a no cost loan works. You agree to take a higher interest rate and the lender pays your closing costs for you. So, there are closing costs. On every loan that is done there are fees to be paid, it just comes down to who is going to pay them. Getting a mortgage rate is like hiring an attorney. You can get one right out of college for $100 or so an hour, or you can get one with 20 years of experience, that graduated first from his/her class from lets say Harvard, but that attorney is gonna charge you much more for the same service. Hondas cost $25,000, Bentleys cost $250,000 but they are both cars, but one is much better than the other thus the higher price.

Currently, you pay the closing costs the interest rate should be .50% to .75% lower. If you are keeping the home for only a few years a no cost loan is a great option. Like you said it is a free refinance to a lower rate and payment. If you are keeping the home for a longer period, you should pay the closing costs as you will save that money over the life of the loan by having the lower rate. Your loan officer should be able to help you determine a break even point which is how long you have to keep the mortgage to recoup your costs. On a no cost loan, there is no costs to you so there is no break even point.

I would also recommend you do what Smartmoney says, get a second opinion. I would recommed you contact a mortgage broker in your area and see what they can offer. A broker can also offer a no cost loan, but can probably get you a better deal than what Wells is offering. Without a doubt, working with the broker the process will go smoother and quicker. Many banks are taking months to close a simple refinance when it should take 30 days or less.

At the end of the day...Wells Fargo is basically a broker. They are not lending you their money and carrying the note for the life of the loan. The temporarily borrow the money, loan to you and sell your loan with a bunch of other loans to an end investor and they make their money on that sale. They will also make money on servicing the loan which means they send you the statement, pay your taxes and insurance if you escrow, and harass you if you dont pay. When you send them your mortgage payment, they foward the principle and interest payment to the end investor who actually owns your home.
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Old 09-03-2011, 08:15 PM
 
3,428 posts, read 3,713,247 times
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Quote:
Originally Posted by SmartMoney View Post
Something for nothing doesn't exist. You don't say if this is FHA or conventional and that makes a huge difference on the pricing........but, let me tell you what we are paying towards closing costs at 4.5% as of yesterday.....keep in mind, there are variables......but I'm sure variables also exist for WF.

You don't give your loan amount, so lets assume 200K.

CONV 30 YEAR 4.5% 2.75 points or $5500
FHA 30 YEAR 4.5% 3.0 points or $6000
CONV 15 YEAR 3.875% 2.75 points of $5500

They are counting on the population that doesn't want to do the math or the time. In our area the true cost of a refinance would be about 1/2 of the total credits above, the balance being prepaids (taxes, prepaid interest, etc)......whatever is not used is called "overage." Overage use to go into the loan officer's pocket, but now it goes into the big bank's pockets.

The only way you can be sure your not being sucked in by a sheeple move is to have somoene "on the outside, local to your area, run a comparison. The lower your loan amount, the better the deal from WF.........but the higher loan amounts, why don't you just write them a nice big fat check.
It's a conventional loan. About $400k remaining. I put down about $120k a couple of years ago when I brought the house. Even though property values have still gone down (i brought in 2009) I know I am not underwater.

There is no PMI in the refinance. I had them fax me the good faith estimate yesterday. The estimate closing cost is about $3300 to refinance but they credit me that entire exact amount on the good faith estimate.

I think the only "gotcha" is they are telling me to skip Octobers pay,net and will add the interest to the principal remaining and I start my next payment in November. So technical that's the sly maneuver they are doing. So I pay roughly $1500 in interest each month and that gets added to the principal. But as I said before I will just double up the payments in November to pay down the added interest. So technically they are getting a months interest on me. I am sure most people won't do what I would (double the payments in November to make up the missing ocotber payment).

And they automatically transfer my escow (currently about $5700) to my newly refinance loan. My property tax has gone down to about $5500 for the upcoming year so I won't be short on escrow.

Overall I think it sounds like a fair deal.

I know the usual rule of thumb is not to refinance unless you stay in your home for at least the next 2-3 years because of fees and the rate drops by at least 0.5%-1%. But I feel this free refinance (with the 30 days interest tacked onto the principal) is relatively good deal because it's an easy process.
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Old 09-03-2011, 09:25 PM
 
Location: MID ATLANTIC
4,032 posts, read 8,732,468 times
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All that matters is you are content.

But to demonstrate my point for others that may be considering this option, today, on your example, we would be paying 11K on your 400K loan and we will let you skip a payment. All lenders will do that. (Your really not skipping, the payment you're "skipping" is included in the payoff). Obviously, a new lender cannot transfer escrows.

That's a whole lot of money for the convenience of not ordering an appraisal and re-establishing escrows. Like I said, get the checkbook out, it's like writing them a check for over $7,000.
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Old 09-07-2011, 08:14 AM
 
Location: Morrisville, NC
3,663 posts, read 3,461,617 times
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I just did a refi under this program with WF. The not paying October is not a gotcha, its just how every loan usually works. Just like when you bought your house, you don't usually pay till the next month. We literally just had to pay the fee for a Notary. The package comes with a prepaid UPS envelope.

Their rates are definitely not quite as low as you could get going with a random place, but its not that much higher and it is much easier.

For many (including my situation) not requiring an appraisal was very attractive as we bought in 2006 and while we have not had the huge drops in the Raleigh area like some places and we did have 20% down originally, running the numbers on comps myself, I could see that it was going to be borderline if the appraisal would work out or not due one of the most recent nearby sales being a short sale and this allowed us not to have to worry about that or get into a PMI situation.

It will also save you a whole raft of paperwork regarding income verification.
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Old 09-07-2011, 12:30 PM
 
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Know a person involved in this and the program is designed publicly to "reward" good people who are not underwater and unlikely to be underwater and with a great payment history and great credit by giving them lower interest rates. Its about as simople a process as you can get. And there realy are no fees involved (all picked up by the bank). You can even get the notary at no charge at a Wells Fargo bank branch but since its onlya paper or two, it usually don;t cost much anyways. You also get it done quickly with no hassles although she did admit things bog down when a larger than expected customers accept the offer.

Couple of things, the rate you are offered is based on many things not just current rates. Thats why you may get a rate of 4.45% and your neighbor gets an offer for 4.30% and your co worker is offered 4.55%. but all were offered the plan at the same time.

But the secret is that WF gets to check these off as loans. So to the people watching them, they made 1,000 loans that week. Rumor has it that it was to show that although they took federal money, they are not like the others who were not making loans. WF can claim all these as if they were new loans (although they are really refis).
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Old 09-07-2011, 02:26 PM
 
3,352 posts, read 7,492,981 times
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Quote:
Originally Posted by PacificFlights View Post
Know a person involved in this and the program is designed publicly to "reward" good people who are not underwater and unlikely to be underwater and with a great payment history and great credit by giving them lower interest rates. Its about as simople a process as you can get. And there realy are no fees involved (all picked up by the bank). You can even get the notary at no charge at a Wells Fargo bank branch but since its onlya paper or two, it usually don;t cost much anyways. You also get it done quickly with no hassles although she did admit things bog down when a larger than expected customers accept the offer.

Couple of things, the rate you are offered is based on many things not just current rates. Thats why you may get a rate of 4.45% and your neighbor gets an offer for 4.30% and your co worker is offered 4.55%. but all were offered the plan at the same time.

But the secret is that WF gets to check these off as loans. So to the people watching them, they made 1,000 loans that week. Rumor has it that it was to show that although they took federal money, they are not like the others who were not making loans. WF can claim all these as if they were new loans (although they are really refis).
Wells has been doing these 'modifications' long before any gov't bailouts. I also highly doubt they are counting any of these as 'new loans'. I don't think they are considered refinances either. They are just trying to retain their servicing portfolio instead of losing the loans to another servicer.
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Old 09-07-2011, 02:29 PM
 
3,352 posts, read 7,492,981 times
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Quote:
The not paying October is not a gotcha
. Sherriff is right on with this. Contrary to popular belief, Wells is not the recepient of the interest paid. They foward that right on to Fannie/Freddie. They get a small chip for servicing. Doesn't matter to them one bit if you extended your loan out an additional month, thereby paying a bit more interest.
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Old 09-08-2011, 03:17 PM
 
Location: Albuquerque
5,553 posts, read 9,548,734 times
Reputation: 2462
Quote:
Originally Posted by aneftp View Post
Wells Fargo (no cost) 3 step refinance seems so easy

I saw this option when I logged into my Wells Fargo account.
Where did you see this?

I logged into my account and didn't find it. I tried to search and nothing came up, etc. etc. etc.

I'm, of course always on time and add enough principle each time to
round up to the nearest $100, but unlike you, my 20% down in 2007
didn't keep my house above water. I wonder if that's it.

I'd like to call them up about it, but more information would be nice. Since
I'm under water, any my only serious assets are IRAs, they are keeping me
at 6.5% and I'm just about ready to walk. My balance is likewise just over
$400k, but 1/4th of that is a purchase HELOC - propably another reason.

P.S. I didn't know you could set your account so that you could not
.... receive DMs. Were you getting hassled? I can't imagine why.
.... in the RE forums, at least, you are a much nicer poster than I am.
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