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How much of a lender credit are you getting with the new loan?
There has to be a net benefit for the refinance, or the lender is not suppose to close the loan. In other words, he can get into trouble for closing a refinance with little to no benefit for the consumer. HUD started that requirement and its spread throughout the industry
Do you get the house at a substantial discount or do improvement to justify appreciation in 6 months? Is "guy to referred" a real estate agent? Did lender say you can refinance with new appraised value? After only 6 months?
Don't be surprised if your file sits for another 6 months.
No - - It sounds like you are saying the payoff of your existing loan is $3900 less than your original balance?
By "off the rate," I mean that a lender can seemingly charge no fees for the loan, and it looks "free," but within the interest rate they are charging you is an approved, legal profit margin, which is divvied up among several layers of entities, depending on whether you are using a bank or broker. All legit, all legal.
We call our "par" rate the rate at which we make our approved benchmark of revenue, say, 200 basis points (.02 of the loan amount.) We're not over-charging because we are adhering to our approved revenue benchmark. That revenue, within your 4.125% rate (or any par rate), would be $12,000 if the loan were exactly $600k and if they were at 200 bps (600,000 x .02), and will be split any number of ways among the originator, branch, originator's employer if it's a bank and not a broker, etc.
There are variations of this among lenders (.02 is in not an imposed common margin) but the point I'm over-stating is that there is money in a no-fee loan, and since compensation is based on loan amount, you're a nice big fish, hence the "urgency" involved in your refinance. Trust me, they're not chasing clients who recently closed a difficult $75k loan. (BTW lenders cannot keep a penny over their posted, approved margin anymore, that Yield Spread must be used as a credit TO the borrower's closing costs.)
Got it. So basically they are just making off the $600,000.00 loan, but the downside for us would be that we are not getting refinance at the new lower balance. This is where I am getting confused, because it seems like we are starting from the $600K instead of the current balance.
Should I be getting a better deal starting with existing balance?
Do you get the house at a substantial discount or do improvement to justify appreciation in 6 months? Is "guy to referred" a real estate agent? Did lender say you can refinance with new appraised value? After only 6 months?
Don't be surprised if your file sits for another 6 months.
We were fortunate to get the house well below listing. Well the salesman pushing to refinance tells use based on Redfin estimates we are up considerably. We made improvements adding value.
He is basing it on new appraised value. Looked up the salesperson CA id and he is only licensed real estate salesperson, same guy conveying info from lender.
How much of a lender credit are you getting with the new loan?
There has to be a net benefit for the refinance, or the lender is not suppose to close the loan. In other words, he can get into trouble for closing a refinance with little to no benefit for the consumer. HUD started that requirement and its spread throughout the industry
They are telling us we can save $177 a month with a lower rate at 4.125%. Payback or break even in two years. But I worry that they are getting us elsewhere. Scenario they give us just seems too good to be true.
For instance, salesperson email tells us out of pocket cost will be $600.00 or zero depending on when it closes. Longer it sits, will they start charging fees? I don't know.
Whereas printout from lender shows Estimated Closing Costs $6,221 (includes $3,840 in loan costs + $2,381 in other costs - $0 in Lender Credits). Also, Estimated Cash to Close is $-593,779 (includes closing costs).
That will be one of my requests. Never met actual lender. When we bought the house the salespeople just forwarded us the paperwork. This time that will not happen. Wanted to shop further, but my hands were tied. Spouse and I just argued.
Got it. So basically they are just making off the $600,000.00 loan, but the downside for us would be that we are not getting refinance at the new lower balance. This is where I am getting confused, because it seems like we are starting from the $600K instead of the current balance.
Should I be getting a better deal starting with existing balance?
You would refinance the existing balance - - note that the actual existing payoff will be higher than the amount listed on your servicer's website. You can call them and ask for a payoff for a better idea of that amount.
Sorry, I can't find an LTV or a credit score. Closing costs will be about the same, regardless who you use, typically, the lender fees change. But lower rates are quite possible, depending on those items.
If you are only going to be there 10 years, why not a 10/1 (running 3.375% up to 1M with either 80% LTV or 80/10/10, APR 3.152%)? And that is assuming 700 score.
Sorry, I can't find an LTV or a credit score. Closing costs will be about the same, regardless who you use, typically, the lender fees change. But lower rates are quite possible, depending on those items.
If you are only going to be there 10 years, why not a 10/1 (running 3.375% up to 1M with either 80% LTV or 80/10/10, APR 3.152%)? And that is assuming 700 score.
LTV is around 51% and we have always high credit scores (getting approved was never an issue). When we purchased the house, we put more than 40% down. There is probably a better way of doing this, but using Redfin estimate, we are up 14% from when we purchased the home in July.
We bought some time from the pressuring salesman, to look over the material. Salesman is telling us that despite going through all the closing costs we will still come out ahead. Don't really want to go through all these costs again.
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