Welcome to City-Data.com Forum!
U.S. CitiesCity-Data Forum Index
Go Back   City-Data Forum > General Forums > Real Estate > Mortgages
 [Register]
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
View detailed profile (Advanced) or search
site with Google Custom Search

Search Forums  (Advanced)
 
Old 01-22-2010, 01:47 PM
 
Location: WA
5,641 posts, read 24,898,608 times
Reputation: 6573

Advertisements

I am trying to refinance under HARP for a Fannie loan and have had pretty good luck finding brokers to work with. I had put 20% when I bought and took a 30yr fixed at 5.75% and this program looks like a good opportunity to get a lower rate without the burden of PMI even though the home value has dropped about 20%.

My questions are about how to compare what I am being offered in today’s environment. It seems new regulations are strict enough that lenders are reluctant to provide a GFE or anything that detailed until late in the process… and I and trying to figure out who to work with.

It seems to me that the broker should not be keeping much more than half a point but am not sure what is common in this market.

Also unsure about what a buy down would cost when trying to get a low rate. I know refi’s are being quoted about 5% right now… could I get another quarter down to 4.75 for less than a point? Is this normally negotiable?

Any advice on holding the line on costs? Getting the lowest rate? Hidden dangers in rolling in costs?
Reply With Quote Quick reply to this message

 
Old 01-22-2010, 02:09 PM
 
Location: Plano, Texas
1,673 posts, read 7,007,896 times
Reputation: 697
All lenders and brokers you speak with are supposed to provide you a good faith estimate within 3 days of taking your loan application. Starting Jan. 1st, there is a new good faith estimate that has to be used that is supposed to make it easier for consumers to understand. In my opinion, the new GFE is much more confusing than the old one. The new GFE is a 3 page document that does not itemize the costs. It lumps them into a couple categories. If any lender, after doing a loan app and running credit, does not provide you a GFE within 3 days, please report them to HUD.


Generally speaking, each discount point paid, buys the rate down by .25%.

The best advice on holding down costs is to work with someone you trust. Maybe someone can refer you to somebody they used that provided great service for an honest fee. Typically, brokers can offer you lower rates than direct banks.

The only danger rolling closing costs into the loan is you will be paying interest on that money. Plus, your balance will be higher which will increase the payment vs if you paid the costs out of pocket.
Reply With Quote Quick reply to this message
 
Old 01-23-2010, 07:21 PM
 
Location: WA
5,641 posts, read 24,898,608 times
Reputation: 6573
FYI... I did manage to get a GFE (from another firm) that shows good detail of this refinance (5.75 to 4.75). The first broker knew nothing about HARP, the second was a much higher cost loan, the third one looks competitive.

Since the additional costs are recouped with a lower payment in less than three years it looks pretty good. Is there a good was to run an evaluation (like a NPV) for a refi?

I am never quite sure how to account for the cost/value of this new loan that is a new 360 payment commitment compared to the 324 left on the existing loan.
Reply With Quote Quick reply to this message
 
Old 01-25-2010, 12:15 PM
 
Location: Plano, Texas
1,673 posts, read 7,007,896 times
Reputation: 697
As long as you can recoup the costs inside 36 months, probably a wise move. That is assuming you will be keeping the home at least for that time frame.

A good way to compare the current loan to a new 360 months is to have your mortgage professional let you know how quickly you will pay off the home if you refinance to the new low rate but continue to make the same payment you are making now.

For example, a $200,000 loan at 5.75% makes Principle and interest payment $1167. Assuming you have had current loan for 3 years puts your payoff around $192,000. Assuming you refinance and the fees added to loan are $5,000, the new loan amount would be $197,000 at 4.75% making your p and i payment $1027 saving you about $140 per month.

If you dont refi, you would continue to pay $1167 for 27 more years. If you refinance to the lower rate but continue to pay the same amount, you pay off the home in just over 23 years paying off the mortgage in 4 less years. That is 48 payment of 1167 which equals$56,000 savings over the life of the loan.

So the ultimate question, do you want to pay $1167 for 27 years or 23 years?
Reply With Quote Quick reply to this message
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.

Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.


Reply
Please update this thread with any new information or opinions. This open thread is still read by thousands of people, so we encourage all additional points of view.

Quick Reply
Message:


Over $104,000 in prizes was already given out to active posters on our forum and additional giveaways are planned!

Go Back   City-Data Forum > General Forums > Real Estate > Mortgages

All times are GMT -6.

© 2005-2024, Advameg, Inc. · Please obey Forum Rules · Terms of Use and Privacy Policy · Bug Bounty

City-Data.com - Contact Us - Archive 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25, 26, 27, 28, 29, 30, 31, 32, 33, 34, 35, 36, 37 - Top