Refinance question: Should I deal directly with bank or my broker?

[VictorBurek]

Originally Posted by helppls

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Hmmm, this is why I can't imagine how we can go from 3.5-4% closing cost now to 1% refinancing 6 months from now... This is for NYC, 550k loan amount, I'm wrestling with paying 1 point for 4.625% or taking 5% with 0 points. The breakeven calculators seems to say we will breakeven in 3 years time, so if we are staying longer than 3 yrs we should pay for the point, right? .. I just hate taking a rate with points right now, especially if the rates might fall within the next 30days...

One thought is that we take the bestest rate and never ever think about refinancing...

The other is that we definitely leave the re-financing option open and use that 1pt money towards refinancing but I'm really skeptical of being able to refinance with 1pt costs within 6 months. I see people on here saying you shouldn't pay more than $600 for refinancing... how is that possible???

You got it correct, if you pay the costs and point and the lower rate breaks even in 3 years and you plan on being there longer, then it makes sense.

The people who say dont pay more then $600 unfortuntely cant see the forest for the trees. All they see is the upfront costs and they dont see that over time, buying a lower rate will save them thousands in the long run. Keep in mind, getting an interest rate is like buying anything else. If you want a nicer car, it costs more. If you want a better doctor, they charge more. If you want a better rate it costs more. The people paying $600 are being given a higher rate and the lender/broker is paying the rest of the fees by the money the lender is paying them for locking the client at a higher rate.

For people not planning on staying in a home for at least 3 years should do a no cost or low cost refinance as they wont be in the home long enough to recoup what it costs with the savings from the lower rate.

Hope this helps but it seems like you have it figured out. And yes, rates could very well move lower but if you can lock a 30 year loan at 4.625%, you can then forget about your mortgage as that is a great rate.

[SmartMoney]

It also depends when you refinance - a bring down for re-issue rates on the title after 4 months is a lot less than a bring to date after 3 years. Recording can be zip if you remain w/ the same lender, you only pay on the difference between the old loan amount and the new loan amount. Certain lenders may have to pay a penalty if they refinance your loan too soon and may persuade you not to move forward. Not because it benefits the home owner, but because it doesn't penalize the lender. This is the value in finding a lender you trust, they know the money saving tips and tricks and share them with their clients. There are many that are just too busy to share or take the time. In my state (VA), assuming the escrows will cancel out, the net cost for a recent refi is about 2%, if the loan amount is 250K or higher. On a 550K loan, so many of the costs are fixed, I can see 1% being possible.

I also don't buy into one size fits all. What is right for one person in a refi situation is not the same for their neighbor. In fact, when you start setting norms across the board, harm can be done to those that could benefit should they listen without pursuing individual advice, trusting what they have read online. We live super-busy lives and if it crosses one thing off our to-do list, we feel like we are getting ahead.

What is right for the single owner who is in the home for maybe 3 years will be vastly different for the family of 4 in the home until the kids finish school. In fact, if anyone wants a one size fits all rule, it would be all situations are different and need to be treated as such. My standard advice to borrowers is once they decide on a loan program and rate (or lock strategy) to tune everyone out. There is something about having a baby and taking out a mortgage that everyone you run into is compelled to give you the worse case scenario and tell you what you are doing wrong. Tune them out and turn them off. Listen to those you are paying to guide you through the process. Hindsight will always be 20/20 and yes, it's human nature to want the best deal. But it's an obsession to let it consume you to the point of moving your loan from lender to lender chasing that deal. In fact, in this market, it can down right cost you the loan altogether if what your are hearing are false promises or miss out on the approval with the way guidelines keep changing.

We are no where close to the market we we knew 12 months ago, let alone 2 or 3 years ago and this credit crisis is far from over just because the rates are lower. If we follow the trend we have seen in the past 18 months, the next move will be for us to see acceptable underwriting ratios be cut.