mortgage refi advice

1 Reply

So currently i closed on a deal in san diego that was all cash and had to be to close the deal out. (i would love to get into that deal later) reason i say that because it brings up the refi question. 

from the wells fargo broker here in san diego California. if i refi tje mortgage on my primary residence i would get a better rate vs doing it to the investment property i just purchased for cash. the current loan is for 300k a 4.25% over 5 years ago the property is valued at 900k.

the following was offered from wells mortgage broker when i asked what rates would be offered.

First: There are many rates available, not just one. You can “buy” a rate that is below what I can provide you with zero-points. It’s just personal preference. Lower rates cost less over a long time period, but initially have higher fees to obtain.

Next: I initially showed you 3.750%/APR 3.750% because (1) it’s really cheap and (2) we haven’t finished validating your eligible asset account balances on deposit

. 3.375%/APR 3.402%, P&I = $2,785.21/month. Standard costs plus .500% charge ($3,150) for points.

2. 3.500%/APR 3.527%, P&I = $2,828.99/month. Standard costs but zero points.

3. 3.625%/APR 3.625%, P&I = $2,873.13/month. Costs are largely offset by $3,150 lender credit to you, so this is a very cheap transaction.

any expertise would be highly helpful and very grateful.

thanks

option $2785 and $2828 are easy to compare.  you would need to hold the loan 72 months for the lower monthly to pay for its costs.  How confident are you that you will not sell or refi in the next 6 years?

The value of money gets reduced by inflation which implies the actual payoff is a little more than 6 years.

I find that because we are in a high appreciation market I seem to regularly refinance.  I have never gone as long as 10 years without a refi.  I have gone 6 years without a refi but it is a fairly small percentage of our RE loans.

So of those 2 options I would choose the $2828.  If you believe you are not going to sell or refinance for over 6 years then $2785 could be cheaper.

A similar exercise could be done for the other option but I suspect it will also be close to 6 years.

Good luck