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When / Where / How to Refinance Mortgage?

Discussion in 'Non-Vegas Chat' started by 3OfDiamonds, Jun 17, 2020.

  1. 3OfDiamonds

    3OfDiamonds Vegas is Fabulous When You Degen Responsibly ;)

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    With the Fed seeming to be fine with holding pat at “near zero” for the fed funds rate, and us paying 4.00% currently (5 years into a 30-year fixed - our credit scores were good then but now my credit score is even better, so we’re both in the 800 range and now I’m fully past where my 2008 bankruptcy can *legally* be considered), I know I should probably be refinancing, but so many factors are making me freak out:

    1) When (now, even if it seems rates are creeping up - and why is that happening anyway!?! or is it best to hold off? If the latter, what should I be looking for before I jump in?)

    2) Where: I entered my info into LendingTree, and it seems like Better might be the way to go? Or is there another source I should look into? Me and my mom (we own the house and hold the mortgage together) are both generally wiped after our work weeks and neither one of us is inclined to fill out a bunch of applications, so we’re definitely looking for ease/efficiency and “bang for the buck” with our time and effort :goofy:

    3) How - Sort of an extension on Where, are there any companies you know of that are particularly easy/hard to deal with throughout the process? Again, we don’t have a lot of spare energy to devote to this :goofy::yawn:

    Any constructive input is appreciated - thanks in advance :nworthy:
     
    Last edited: Jun 17, 2020
  2. Multifarious5

    Multifarious5 VIP Whale

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    We just refinanced, and right when it was at an all-time low, so hopefully something in this might help.

    1) We bought our house on a 2.99% ARM Loan in 2014, to avoid PMI. Locked in for five years. At year six, rates were around five %+, and industry experts said they'd go up and up. We waited till we liked the rates. By waiting, we refi-ed at 3.125%, even though mortgage reports swore low 5%+ was the beginning of the end when we *should* have refi-ed.

    Golden rule, remember no one knows, so don't refi purely on fear factor.

    2) The rule of thumb I've read over and over, don't refi unless you can save 1%+.

    If 4.5%, wait till 3.5%. If at 5%, target 4% or less before refi. Around 1% or more is where you start getting value, from what I've read over and over.

    3) All creditors are not equal. Credit unions often keep your loan in-house. Others often keep reselling your loan. Same terms, but it can be a headache keeping up with financers. Even credit union terms vary drastically. (Our credit union was 3.25% then dropped when we locked, when standard banks were 3.66% upward.)

    4) Have all your ducks in a row (prior year taxes, pay stubs, etc.) so that you can move quickly WHEN you see a rate you love, but don't refi based on "chicken little" projections. Had we done this, we would have refi-Ed at around 5%. Yes, we paid more for 1.5 years, but we now have a rate we love, it was well worth the rate. Our mortgage gal confirmed our "low rate" straddled just a few days. Had we not had the supporting docs ready, we would have missed it.

    Also, study rates for awhile. They are low now, but not enough lower than yours that you're risking losing a cash wind of a deal. Financial samurai and motley fool are resources I found helpful to study trends.

    Bottomline, no one knows where rates will go, but the reason I gambled and waited, even with an arm loan, the 80's market saw awful spikes, but the 80's you didn't have the internet.... where companies try to go lower than each other, due to public data. It was more "secret society" on rates/terms, most of us peons didn't have access to the data you have now, and this data acts like a checks and balance on keeping rates less extreme on swings.

    If at 4%, I am not sure I'd refi to get 3.75%, but that's just me.

    If on an ARM? Different story. But on a fixed rate? I'd want to see a higher decrease before I put the time/money/energy into refinancing.

    But still, have your ducks in a row, just in case.

    And remember to explore credit unions. We've always found them to offer some of the best rates, and keeping the loan in house is a plus.

    This is just my 1.5 cents. I in NO WAY am a financial guru, so many on here are WAY more savvy financially than I am. But, by not feeding into speculations 1.5 years ago, and refinancing at the "5% 5.25% rate, and it's only gojng to get worse" drama, we snagged a 3.125% fixed rate 30 year loan, and we are very grateful!

    I hope this helps, and good luck!!! (And for those of you that think I have crackpot advice, please be kind! This is just feedback from our experience, and in no way am I saying it's the best approach. It just works for us! :))

    Ps this is the string I posted when we refi-Ed, as always, VMBers had some great tips. And we have a Better Mortgage expert in house! I really liked Better, out of private institutions, we just decided to refi with our previous credit union. But I was impressed with Better.

    https://www.vegasmessageboard.com/forums/index.php?threads/better-mortgage-home-refinance.171722/

    Oh! And don't forget, you can pay out-of-pocket for refi costs (often 10k up for our house value), but you can also roll them into the refi, if you have enough equity. This, is what we opted for, as we plan to move in 5-10 years if all works out. ( Suburbia to acreage baby!) Your mortgage rate will be higher , but it is an option. It depends on what works best for you.ours was about $35 bucks more a month to do this. (We didn't pay one penny upfront to close, and actually got some back from our prior escrow account. And yes, our current escrow account is full, no shortfall... we made sure to verify after the loan closed, to avoid any fun surprises! )
     
    Last edited: Jun 17, 2020
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  3. MGinCO

    MGinCO High-Roller

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    One BIG thing to consider FIRST:
    If your credit score isn't good enough, you won't get a REFI from anyone...
    even if you have been paying 5% or more for years!

    Now, what is the perfect score? Dunno
     
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  4. 3OfDiamonds

    3OfDiamonds Vegas is Fabulous When You Degen Responsibly ;)

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    Yes, definitely - I amended the OP to reflect our credit score situation :)
     
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  5. mkl37

    mkl37 Tourist

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    I would check with your current lender to see if they have a mortgage rate modification program. My credit union can do an existing loan modification if not taking any money out of equity.

    For a small fee, we will simply apply current lower interest rates to the remaining term and principal balance of your existing Credit Union mortgage. No need for a complicated refinance application and appraisal.

    • No application required—simply complete the form below
    • First and Second Trust Deed mortgages are eligible
    • Low fee—0.5% of your outstanding loan balance with a minimum fee of $750 and maximum fee of $1,500
    • A rate modification cannot be used for cash-out transactions
     
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  6. 3OfDiamonds

    3OfDiamonds Vegas is Fabulous When You Degen Responsibly ;)

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    The person who handled our mortgage at Chase said (when we initially got the mortgage) we could “recast” our mortgage at no charge if rates dropped, but a quick Google of “recast mortgage” shows that the rate isn’t changed and it’s only really used if people want to pre-pay a chunk of their mortgage midway through it to reduce the term and/or monthly payment. Maybe what you mentioned is what she was actually talking about; then again, if she was playing willfully fast and loose with the facts this wouldn’t be the first time (a “locked-in” rate wasn’t... when we squawked and showed evidence, her bosses relented and gave us like $600 off of the fee and the rate we were initially promised :hmmm::nono::thumbsup:).
     
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  7. AyDee

    AyDee is getting too old for this

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    The recent news I recall is that there was huge demand to refi so lenders may be overloaded with applications, so may be pricing rates upwards to reflect supply/demand,
    and more recently, may be getting a little scared of potential defaults and also upping rates to be safe..

    a longer time back when I was researching it, the advice was to beware super low internet teaser low rates (can consult internet for horror stories by company), where sketchy lenders were just trying to get all the "application fees".

    In any case, thought we were on the verge of NIRP, so rates should stay record low for a year or so, good luck..

    last thing is any and all mortgage overpayments you make apply towards principal, and (especially) early on will cut that interest heavy front end load of amortization.
     
    Last edited: Jun 18, 2020
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  8. DDB

    DDB Low-Roller

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    I'm no mortgage expert, but I would consider:

    Going to a 15 year or maybe a 20 year (if you can swing the payments). That way you are quickly gaining equity from jump-street. Around here, 15 year rates are 2.75%

    Also, do you owe enough to make it worthwhile to spend the several thousand $ a refi might cost? Maybe that money would be better spent by paying down the principle of your current loan.
     
  9. 3OfDiamonds

    3OfDiamonds Vegas is Fabulous When You Degen Responsibly ;)

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    Yes, we’re currently considering a 15-year fixed (as well as 30; given our circumstances there are definite benefits and pitfalls to both options)... oddly enough, the couple of quotes I’ve seen for a 20-year fixed are the same or higher rates than for 30-year fixed :eek:
     
  10. saintpauljeff

    saintpauljeff VIP Whale

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    refi'd to save about 75 basis points, although my mortgage was only 9 months old when I started the refi process; working for the same financial institution that originated my mortgage gave me some incentive
     
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  11. cjcjcj

    cjcjcj High-Roller

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    Rates should be low for awhile. We just REFId into a 15yr fixed at 2.75%...no origination...no points, very minimal closing costs. Better has some deal I think if you get a better offer they will beat it if you give the Good Faith Estimate to them within 24 hours. They are pushing lot of loans and from what I see They have good reviews.

    Avoid Quicken Loans at all cost...
     
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  12. Slidey1

    Slidey1 Low-Roller

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    Hi there. I’m the person from Better. It is true that we are swamped but it’s a good thing for us as we are hiring and scaling up like crazy. If you have an Amex card we have an awesome partnership deal with them right now where you get a $2500 credit with them and a free appraisal. The age old the question is always: how long should I wait, and how low should rates go before I refinance? The answer I always give, and I have been doing this for almost 20 years, is don’t wait. When you try to time the market, it almost never works out in your favor. Rates are historically low right now, and yes you may get an incremental gain in a lower rate. But if rates happen to go up for some reason, which I have seen many times, you would lose out. It’s definitely equivalent to gambling! My recommendation would be to start an application now. Feel free to shop around. We also have a deal where if we cannot beat your rate from another lender, and you close with them we will send you a check for $1000. No questions asked. But I do think that our technology and ease of the service outweighs the potential rate savings at other lenders. Shoot me a PM if you feel like you want to discuss, definitely willing to talk to anybody! Good luck!
     
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  13. nostresshere

    nostresshere Mr. Anti Debit Card

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    Very helpful.. Thanks.
     
  14. hammie

    hammie VIP Whale

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    When I think about refinancing, it brings me back to the horrible experience we had with TD Bank two years ago and say that I can’t go through with it again. I use that bank for my business, and I had not gone through the mortgage process for the past 20 years, but it seemed as if no one did their job. Horrible and confusing communication, missed deadlines, a total shit show. I am self employed and they had 8 years of my banking history, gave them every document, tax return, loan to value was 65%. I’m two years into a 4.5% mortgage.

    Maybe it’s me, but when I got a call from the mortgage person at my bank inquiring as to how the process was going I felt like screaming into the phone “you work for the fucking bank, why are you asking me”?
     
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  15. Multifarious5

    Multifarious5 VIP Whale

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  16. The Toddster

    The Toddster Don't be an egg-suckin' dawg!

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    It sounds like you're tired and don't want this to be complicated. We looked at everything for ours (also 5 into a 30) and decided against it. Our rate is below 4% and we were going to refi into a 20 or 15. There's the caveman brute force method and the more finessed intellectual method and our situation is close enough to the middle that either one would work for what we want to do. We ran the numbers and saw that there wasn't much more of a net savings from refinancing than there would be to just paying enough extra on toward the principle each month to pay the loan off in 20 or 15. Plus there's the benefit that we don't have to make that extra payment to principle in a month if there's an emergency or if something comes up.

    Good luck to you.
     
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  17. nostresshere

    nostresshere Mr. Anti Debit Card

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    About 90% through the process. Got started due to this thread and an offer via AMEX to get $2,500 credit after closing.

    * Did application with 6 lenders. Easy online. Does not hit FICO if all done within a short time period. (rate shopping)

    * Initially was thinking about 15 year to pay off faster. Good advice I read. Still do the same term to make comparison easier. AND, if you want a 15 year, then make principle payments to pay off in 15 years. You can always revert to 30 year payments, but not the other way around

    * Get a formal Loan Estimate from each company. Then send best offer to the next one to get them to lower rates. Started out closer to 3.5% and lots of closing costs. In the end, I knocked at least $2k off the cost and now at 3%. No points. No orig. And got escrow removed.

    * Enter EVERYTHING into spreadsheet. Do full comparisons of all costs. Do not try to do this just looking at estimates.

    * Know which items can (and will) change on the estimate. And the ones that are fixed.
     
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  18. Slidey1

    Slidey1 Low-Roller

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    Let me know when you’re wrapped? Would love to hear any feedback you have.
     
  19. Marky147

    Marky147 VIP Whale

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    If you were in the UK I'd have been able to help, as I work for several brokers at a big firm on this side of the pond.

    Have absolutely no knowledge of how the market works that side of the pond, but glad you've almost managed to get things sorted :)
     
    Social Distancing in the Penthouse
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  20. ToroAzul

    ToroAzul Tourist

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    I looked at refi a few weeks ago, the numbers didn't make since.

    I was looking to pay off sooner and not pull equity from the home.

    After closing, it would cost an additional $150 a month to to go to a 20 year note (we owe 26 years).

    By simply paying that as extra principal, it would drop my current pay schedule to 20 years and a month.

    We locked in at 3.25% when we bought four years ago. 2.8% isnt much of a drop when you have to pay $3500 to refi.