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Working on a mortgage refi...advice please...

lizzyann

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Dec 23, 2009
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After seeing minmin's thread on her closing costs when buying her home, I was curious on what I should be expecting to see when I do my refi. Today I am going to be reaching out to my current lender and a local bank to get quotes on rates for a 15 year refi and closing cost estimates. We have good credit and our mortgage is almost half way paid down so I don't know if that helps negotiate at all. Anyways, what would be appropriate to pay on closing costs? My current bank online talks about a 1% origination fee which seems ridiculous. Also, what is the difference between your mortgage rate and APR? Thanks in advance!!
 

pregcurious

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Shop around to at least 3-5 places to get the best rate, and get a full list of all the costs. Then go to the 2 best and negotiate.
 

rubyshoes

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Husband and I just did the re-fi process and in fact closing is this evening at our house. I will ask him all the details of the process and type up an answer this evening. I do know he enquired from 3-4 different people and went with the most competitive quote. Stay tuned for a detailed answer soon.
 

lizzyann

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Pregcurious, thank you. I have already make two phone calls and am waiting on estimates.

Rubyshoes, thanks so much! My current lender said that closing costs will roughly be $5000 which includes the prepay of insurance and taxes. ($3000 fees/attorney, $2000 prepay), but I've asked him to do a more formal quote and send to me.

Thanks!
Liz
 

NewEnglandLady

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We're just starting the re-fi process as well and I think our closing costs are estimated to be around $3K. I'm literally just faxing over the authorization to pull our credit history this week, so that estimate isn't broken out by line item.

For those who've done this, how long does the re-fi process take? I have to admit I've put this off because I remember what a headache pulling all the financial paperwork was when we bought our house.
 

Dancing Fire

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lizzyann|1363874077|3410260 said:
After seeing minmin's thread on her closing costs when buying her home, I was curious on what I should be expecting to see when I do my refi. Today I am going to be reaching out to my current lender and a local bank to get quotes on rates for a 15 year refi and closing cost estimates. We have good credit and our mortgage is almost half way paid down so I don't know if that helps negotiate at all. Anyways, what would be appropriate to pay on closing costs? My current bank online talks about a 1% origination fee which seems ridiculous. Also, what is the difference between your mortgage rate and APR? Thanks in advance!!
if you are paying 1 point then you should get a lower rate compared to a no point no fee loan.

pros and cons? if you planning on stay in this home for a long peroid of time (6+ yrs?) then pay the 1% b/c you'll come out ahead.now,if you are planning on moving soon say (< 6 yrs) then don't pay the 1% but instead pay the higher rate.

APR= the true rate that you will be paying.
 

partgypsy

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We refinanced at the end of 2010, beginning of 2011. We paid just under 3K in closing costs, with an additional 1200 in prepayments. We actually started in November with a different company, got a bad appraisal, they refused to review/reassess the appraisal. Gave up on them, signed on with another company beginning of December. I think we closed early January (going from memory) and I can't remember but I think February was the first month we paid on the new mortgage. So the second time especially it seemed like it went relatively smoothly (and what I mean by that, around a month). I hear 6 weeks is more the average for a non-complicated refinance. We actually didn't hit it the lowest it got, but we weren't going to go back for 1/2 a percent at this point.
 

rubyshoes

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Hi LizzyAnn,

This is rubyshoes' DH.

Closing costs: Our "good faith estimate" (GFE) of closing costs was $1300 and our closing cost is supposed to be $1230. A lender/broker is required to provide a GFE so that should be transparent. Not included in the above amount is prepaid taxes/insurance if you decide to escrow so be sure to consider that as a cash outlay.

Process: I first went to bankrate.com to get a general sense of rates (you can enter some parameters and get a free estimate) and then went to lendingtree.com and got quick callbacks from 5 different lenders. Yes, gathering all the income and other documentation/proof is a big pain but hopefully the interest savings are worth it.

APR vs rate: the interest rate plus any fees have to be captured and disclosed to you through an APR (annual percentage rate). So if the APR is much higher than the interest rate, then you should assume that the fees are high.

Bottom line: depending on your personal situation, you should be looking to reduce the APR as much as possible since that means the least interest+fees paid over the life of the loan. Ofcourse you personal cashflow considerations and how long you intend to stay in your home etc will also figure into your decision.

Hope this helped. In case of more questions, let us know.

DH
 

TooPatient

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We have a VA loan through a bank. I'm not sure how different VA is from other loans?

Anyway, we did a refi about eight months ago. Once I had all of the paperwork to the guy it took about 6 weeks to close. There was something like a $1,000 fee but the bank paid it for us. Due to a slow down in processing due to additional documents needed, there was an additional $300 fee charged that we had to cover but they wrapped into the loan.

So at the end of the day we had our mortgage reduced by $600/month and dropped the interest from 6% to 4.2(?)%. Total cost to us was $300. :appl:
 

texaskj

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I finished my refinance September 14. My lender sent me a letter in July. I did almost everything over the phone and online. The guy from the title company even came to my house for all the paper signing. I was six years into a 30-year mortgage. The cost? Zip, zero, nadda. No joke.
The only thing I can figure out is they didn't want to lose the mortgage to another company. My credit rating is over 800, but everyone else wanted points, fees for this or that, you name it. My rate went from 5.5% to 4.3%
DF is right about the time you plan to spend in the house.
Most of what I've read says you should always go down at least a full point on your rate.
Your mortgage rate and APR is usually the same thing.
http://www.investopedia.com/terms/a/apr.asp
 

lizzyann

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Thank you all for your kind advice! I spoke with three companies yesterday and got one good faith estimate in. I will get the last two today and next week. My current rate is 4.75/30 years. I will be going to 3%/15 years. All three companies in my area are offering 3%. I could go to 2.875 by paying a point but it's not worth it in my opinion. And to DF's point, I'm not positive we will be in this house over 5 years. I'd like to be, but it is possible we may have to move at some point for my DH's position. My current bank is one of the big guys and they are the ones that quoted such high closing costs of $5700 including attorney and prepays for insurance and taxes. I am leaning towards a local bank who is offering the 3% rate/3% APR. The only costs from them are appraisal for $350, prepays for ins/taxes, and the rest of the fees are for the attorney ($495 plus title insurance). So they are the frontrunner. I have some CD's with them and really like their services so I hope they end up the frontrunner!

Please talk to me about acceptable costing for attorney fees! And what happens to the money that is currently in escrow with your current lender. Can they just use that towards closing costs as well or are they going to try to give me a check for that amount at closing? I'd rather use it towards the costs and prepays on the new mortgage!

Texas, thanks for posting! Awesome deal on your refi! Did you have to pay the attorney any fees?

TooPatient, awesome! $600 less a month! The local bank said it could take up to 90 days to close with them because they aren't staffed like the bigger banks, but my rate will be locked so that's fine! Did you have any attorney fees?

Rubyshoes/DH, thanks so much for your detailed reply! Are attorney fees included in your $1230 closing cost number. How much of it if so? I'm finding that those seem to make up more of the closing costs than the actual bank costs from my local bank. I think using my current big bank is out, total closing cost on their GFE is $5700!!! Includes prepays, but still! First line on their GFE says $750 for Processing fee! Their out!!!

Part Gypsy, thanks for your reply! This process annoys me to be honest, so you must have been annoyed having to switch banks and all. I am just trying to be educated so I don't miss anything!

DF, thank you! It looks like it is going to be 3%rate/3%APR, so I am feeling good about that!

NEL, I am in the same boat as you! I hate doing this stuff but I know it will be beneficial in the long haul.
 

TooPatient

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lizzyann|1363955540|3410975 said:
TooPatient, awesome! $600 less a month! The local bank said it could take up to 90 days to close with them because they aren't staffed like the bigger banks, but my rate will be locked so that's fine! Did you have any attorney fees?

We didn't have any attorney fees. No appraisal or anything either. They used some house value site to get an estimated value and it was close enough to what we paid (or the amount of the refi loan?) that they didn't need anything more.

I wonder if we didn't need any attorney fees because we stuck with the same bank?

The bank we're with isn't one of the mega banks, but isn't a tiny local thing either. They've been wonderful to work with since we purchased the house 6 years ago. Everyone is so friendly and nice.
 

diamondseeker2006

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We did ours last year. No points and no fees other than the new appraisal and attorney fees. It was a no-brainer if I have ever seen one!
 

Dancing Fire

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what attorney fees ?? :confused: we don't have to pay any attorney fee here in Ca.
 

texaskj

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Not a dime for anything. They even paid for the appraisal.
 

webdiva

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If you don't pay a dime, they're rolling it into your interest rate. People don't work for nothing.

We went with Amerisave, as did a coworker. You can choose the closing costs based on rate and if you'd prefer a slightly higher rate for no closing costs or even a credit. It's very transparent. Www.amerisave.com
 

lizzyann

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Webdiva, good point. I wonder if the rate was affected by costs.

Texas, did you have to use an attorney to close? After seeing DF's post, I'm wondering if in some parts of the country, an attorney is not used for refi's. If an attorney was used, someone must have paid them if so. Did your loan company pay them? Or did it just get rolled into your mortgage? I'm intrigued....

DF, are attorney's used for closings on loans/refi's in CA or does the bank do it all for you? In Massachusetts we use attorneys to handle the closings and they handle the title insurance, survey, title search, etc. Thus we have to pay them...

DS, that is exactly what I am aiming for - appraisal and attorney fees! I am really excited to go from a 30 year to a 15 year!!!

Too Patient, did you use an attorney for your closing? Or no? I'm thinking in some areas attorney's aren't used.
 

Dancing Fire

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lizzyann|1363986249|3411324 said:
DF, are attorney's used for closings on loans/refi's in CA or does the bank do it all for you? In Massachusetts we use attorneys to handle the closings and they handle the title insurance, survey, title search, etc. Thus we have to pay them...
we go through a title Co. maybe that is the same as you guys going through an attorney?
 

texaskj

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Well, for 5.5% down to 4.3% and it not costing me anything, I wasn't going to argue. I will be selling the house in the next couple of years anyway.
I've gotten three mortgages and done two refinances in Texas and have never talked to a lawyer. It's always been the mortgage broker and title company.
I was 12 when parents finally bought their first house. It was out of town and they took me out of school to go. It was at the bank who was doing the mortgage. My mom wrote a personal check for the down payment; can you imagine in this day and age? The house was a whopping $50,000 and the down payment was $10,000.
 
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