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Thread: Definitely off topic: Mortgage Refinance

  1. #1

    Definitely off topic: Mortgage Refinance

    Hey everybody. I know there's a wealth of experience and knowledge floating around here, so I wanted to talk to y'all about mortgage refinancing.

    I've never done it before, I'm about 4 years into my first mortgage. Wife and I are looking at refinancing. Now, my primary work experience has been working with car dealers... so my opinion of "salesmen" is pretty low including all those financial types. Is what it is, I guess.

    Anyway, wife was talking with a broker and he's asking all sorts of detailed questions... what's your payment? How much PMI are you paying, etc etc etc.

    Based on my experience, my feeling is that if we're refinancing, then we have a salesman trying to earn our business, right? So my opinion is that he needs to know how much we owe on our current mortgage and how much our house appraised for when that mortgage was funded, and that's it. He takes those two figures and tries to get us the best deal he can while making the kind of profit he wants. If he beats our current deal, then he wins. If not, he needs to sharpen the pencil or we walk. No need to give him a list of numbers he needs to beat by 0.025% and easily max his profit, right??

    Am I off base? Thanks folks.

  2. #2
    Join Date
    Oct 2006
    ABQ NM

    Definitely off topic: Mortgage Refinance

    Timely post, David. I'm also getting ready to enter the refi/consolidation market, but I'm ignorant about how the game is played. I'll be watching this thread with interest.
    When the going gets weird, the weird turn pro. - Hunter S. Thompson
    When the weird get going, they start their own forum. - Vaughn McMillan

  3. #3
    Join Date
    Jul 2009
    Amherst, New Hampshire
    Lots of competition for your business out there. Look around until you find one that's not going to charge points or closing costs. Don't worry about how much he's going to make on the deal just make sure that you are saving at least a half % if not a full % or it's hardly worth the effort.
    Tell him what your goals are then give him all the information he asks for so he can get the best deal for you.
    Faith, Hope & Charity

  4. #4
    Join Date
    Nov 2006
    Wisconsin Dells, WI
    If you have a local bank that you bank with I would go to them first. Even if you're with one of the national type banks, such as Wells Fargo, B of A, Citi etc., I'd go to one of them before answering one of the ads you see in papers or on TV.

    We tried a refi in February or March of 2012 with one of those ad type deals. Ended up costing us around $400 for an appraisal and would have cost another $2500 or so in closing fees. Not really sure what happened with that loan, but as it turned out we came out pretty good in the end. The interest rates were in the mid to high 4% range at the time we tried for this loan in early 2012.

    In October 2012 I checked with our local bank where we have our checking & savings accounts. Our local mortgage guy got us into a Fed loan program through either Freddie Mae or Freddie Mac, don't remember which now. Our total out of pocket expense was less than $400, we didn't need an appraisal and our loan went through with an interest rate of 3.65%. Our local bank manages the loan and we get payment stubs from our local bank and make payments to our local bank. Most importantly, we deal with our local bank, in person if there is any problem regarding our mortgage. We don't have to call a 800 number and talk to someone who really doesn't know our situation and probably could care less.

    I don't know if the program we got into is still available or not, but I would trust my local banker, even if it's one of the biggie banks before I'd go to one of the mortgage places that use ads to get your business.

    Hope this helps.
    Last edited by Karl Laustrup; 08-17-2013 at 10:43 AM.

  5. #5
    Join Date
    Nov 2012
    Wapakoneta, OH
    I agree with what you said, they should be concerned with what you want and what you qualify for, they may want some info that helps them judge whether you qualify. I would skip the brokers, after all they are earning money on this...and that will ultimately come out of your pocket. Working directly with a bank or CU loan officer will put you one step closer to the process.

  6. #6
    Join Date
    Mar 2010
    Decatur, Alabama
    Generally I've found the mortgage companies beat the banks. Local banks and mortgage companies usually beat the national banks in my experience, but it might vary by location. In my town home mortgage of America and similar companies usually beat credit unions by 1/8%. I'd definitely shop around.

    If you are asking about mortgage, my best advice is to stick with standard 15,20,30 year loans, either standard, FHA, va. Your mortgage broker will always need credit rating, the equivalent down payment (appraised value and amount owed), and a lot of debt/ asset information. They require a lot more than they did 5 years ago. If he is going to compare your payments he would need current loan data too.

    The thing to avoid is paying excess fees. Some brokers will add in points (up front costs) to make your interest seem lower. Comparing apr should give you a good idea between offers. I refinanced a few months ago, I think I paid about 3% in fees not including pre paid interest and insurance.

    My suggestion is only refinance for at least 1% lower rate than your current loan if you are thinking of moving in 5 years. If you are pretty certain you'll be there for 15, maybe go as low as .5% lower rate. If you have a non conventional loan or balloon loan you might consider refinancing for that even if the interest doesn't justify it.

    In the lower cost brokers, they mostly compete in service around here. The brokers in the more legit companies don't really try and price to sell, the rates fluctuate with the market, and they have a markup % and fees that are set by their company. That said, I've heard lots of stories of brokers that did try and take advantage of people. You will see this a lot more in subprime and more complex nonstandard loans.
    Last edited by Jeb Taylor; 08-17-2013 at 12:55 PM.

  7. #7
    Join Date
    Dec 2007
    Los Angeles, CA
    I bought the house over 2.5 years ago. I thought the interest rate of 4.375 was pretty good until it went down lower. I refinanced a year ago and got 3.75. Since I refinanced with the same mortagage company, they didn't ask for too many things. I did have to pay a small fee and had the house re-appraised. I have already re-couped the fees with the lower payments.
    Chinese Proverb: Man who eats many prunes gets good run for the money.

  8. #8
    Join Date
    Apr 2010
    North of Reno, NV...middle of the desert
    Quote Originally Posted by Mohammad Madha View Post
    I bought the house over 2.5 years ago. I thought the interest rate of 4.375 was pretty good until it went down lower. I refinanced a year ago and got 3.75. Since I refinanced with the same mortagage company, they didn't ask for too many things. I did have to pay a small fee and had the house re-appraised. I have already re-couped the fees with the lower payments.
    Ditto, we had the exact situation and got the same rates as you Mohammad. It's a pain and we had to write a big check to get the fall of the market off our backs, but feel much better to be in a more "normal" amount of owing on a house. We also went for a 15 year loan and would recommend that for anyone that can afford the extra few hundred dollars a month. Now I just have to get off my butt and sell the house we own in the bay area (I guess I always viewed that as a fall back plan).

  9. #9
    I would shop around for a new loan.

    Make a few calls to different loan institutions and don't rule out credit unions.

    Thursday I finished a bathroom remodel for my oldest son. He is refinancing his home and going with a local credit union. They sent an inspector out of photograph and inspect his home around the end of June. . His main bathroom needed some plumbing work. In the end, it was quicker and easier for us to gut the bathroom and make the plumbing repairs and then retile the tub/shower surround and paint. Yesterday the inspector came back out, verified the functionality of that bathroom, took photos and dropped them off the credit union. 2 hours later the credit union called, the loan was approved and they close on Wednesday. Though the rates have risen since he initially applied, they are honoring the lower rate to him. His monthly house payments will decrease by $450 per month.

    Generally speaking, a quick phone call should tell you what the current rate is for a given loan and what closing costs will be. If you can regain the closing costs in a relatively short period of time....say 2 years and you intend on being in the house that long, it might be worth it.

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