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Old 10-08-2013, 11:58 AM
 
472 posts, read 398,201 times
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Hi,
I just closed in on my first home purchase but since the rates 've dropped I'm now looking to refi. I do understand that at a basic level refi is repeating the steps that I recently went through but what issues - peculiar to refi - should I look out for or quiz the lender about before I choose one.

Pls chime in with your suggestions or experiences.

Thanks.
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Old 10-08-2013, 12:10 PM
 
Location: Mount Laurel
4,146 posts, read 8,415,406 times
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Quote:
Originally Posted by ThisDamnLife View Post
Hi,
I just closed in on my first home purchase but since the rates 've dropped I'm now looking to refi. I do understand that at a basic level refi is repeating the steps that I recently went through but what issues - peculiar to refi - should I look out for or quiz the lender about before I choose one.

Pls chime in with your suggestions or experiences.

Thanks.
The most important thing to remember is knowing the actual cost of the new loan, don't confuse that with closing cost. Lots of people don't understand that there is a cost associated to refinancing even when there is no "closing cost". They fail to realize that the cost is rolled into the new loan.

I am interested in hearing the details of your quote for a jumbo 30yrs fixed at 4.25% with no cost.

Last edited by sj08054; 10-08-2013 at 12:20 PM..
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Old 10-08-2013, 12:24 PM
 
472 posts, read 398,201 times
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Quote:
Originally Posted by sj08054 View Post
The most important thing to remember is knowing the actual cost of the new loan
What parameters do you look for when calculating the 'actual cost'? Also, Can you explain the above statement with some numbers.
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Old 10-08-2013, 12:35 PM
 
Location: Southern California
4,350 posts, read 4,950,162 times
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You acknowledge that this may be a once in a life time chance, you are not alone which is why there was such a refi boom. There are two ways to look at it, do a "no cost/ hide the cost" loan and get a higher rate , or miss out on the "once in a life time chance" of the lowest rate. Whether cost be in a higher loan amount or having to bring in cash, there is a certain amount of time required for you to recoup that cost. It may be 2 years, it may be 7. If you do a no cost loan , then the rates go up, you just missed what you called a once in a life time chance. You just really have to answer what you'll be happy with. A) the lowest rate without having to pay something B) Pay some closing cost and take what "might" be the lowest rates for a long time.

I know many people who did something like 3.875% no cost versus 3.625%. You just never know what the lowest point will be. If you want the lowest rate, you can even pay discount points.

I don't want to get into too much detail about it, but it will become more difficult for you to refinance each time your rate gets lower.

Last edited by thelopez2; 10-08-2013 at 01:20 PM..
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Old 10-08-2013, 12:36 PM
 
Location: Mount Laurel
4,146 posts, read 8,415,406 times
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Quote:
Originally Posted by ThisDamnLife View Post
What parameters do you look for when calculating the 'actual cost'? Also, Can you explain the above statement with some numbers.
Things to remember.

1. A lot non-ARM loan has origination fee. 1% of loan amount is not out of the norm. So in a $417K loan, that's $4170 in origination fee.

2. Any points associated with the big advertised rate? (e.g, 4.25% but in small prints, there are "assumptions". 1/2 a points, title fees, recording fees, appraisal fees, application fees.. list goes on). Some will even put 800 FICO.. how many people really have that?

3. What's the current amount and what's the new loan amount?


There are good refinancing calculators online that you can use to plug the numbers in to see the break even point with any refinancing that cost money.. The bottom line is that refinancing cost money. The question is whether the reduced rate is worth it.
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Old 10-08-2013, 12:47 PM
 
Location: Southern California
4,350 posts, read 4,950,162 times
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Quote:
Originally Posted by ThisDamnLife View Post
What parameters do you look for when calculating the 'actual cost'? Also, Can you explain the above statement with some numbers.
You already stated it in your other thread. 4.25 at no cost or 4.125 with $2600. The cost to go from 4.25 verus 4.125 is $2600. It is called a No Cost but really you are paying the cost by taking a higher interest rate. Every month it COST you more than if you paid the closing cost of $2600, so in your mind is it really "no cost loan" if it cost you more per month than if you have paid the cost up front. The "Cost" is disclosed differently by different lender.

It sounds like you had very little conversation with you loan officer about options or they didn't explain it well enough for you and probably no discussion with your accountant about deducting points on a purchase versus refinancing.

Last edited by thelopez2; 10-08-2013 at 12:55 PM..
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Old 10-08-2013, 01:27 PM
 
Location: Southern California
4,350 posts, read 4,950,162 times
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Quote:
Originally Posted by sj08054 View Post
I am interested in hearing the details of your quote for a jumbo 30yrs fixed at 4.25% with no cost.
The OP other thread was with 417k loan at 4.25 not a jumbo.
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Old 10-08-2013, 02:04 PM
 
Location: Mount Laurel
4,146 posts, read 8,415,406 times
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Quote:
Originally Posted by thelopez2 View Post
The OP other thread was with 417k loan at 4.25 not a jumbo.
Quote:

Loan Amount: 417000
Current Rate: 4.625
Current Monthly $: 2144

Prospective Rate: 4.25
Prospective Monthly $: 2051
Savings (over 30yrs): 33,326

Prospective Rate: 4.125
Prospective Monthly $: 2021
Savings (over 30yrs): 44, 270


Correct... OP current loan is $417K at 4.625. I only see prospective Rate, no Prospective Loan amount and given that I don't see any closing cost, I can only assume that it's getting rolled into the loan so new loan will no longer be $417K.

I don't follow the rate that closely but 4.25% 30yrs refi with no fees?
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Old 10-08-2013, 03:35 PM
 
Location: Southern California
4,350 posts, read 4,950,162 times
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They also posted the cost of $2600 further down the thread.
Rates are always changing , but 4.25 at 75% LTV doesn't seem far out there, but you already mentioned there is always fine print. I remember one website, they'd post a rate, as rates increase, just just changed the fine print from 80% LTV to 75% to 65% you get the picture, then they changed the terms from 30 years to a shorter term.
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Old 10-09-2013, 09:32 AM
 
472 posts, read 398,201 times
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Quote:
Originally Posted by sj08054 View Post
Correct... OP current loan is $417K at 4.625. I only see prospective Rate, no Prospective Loan amount and given that I don't see any closing cost, I can only assume that it's getting rolled into the loan so new loan will no longer be $417K.

I don't follow the rate that closely but 4.25% 30yrs refi with no fees?
The 4.25% was wo/closing costs
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