Refi on my primary: Is this a decent deal?

Question

I've decided to grab some of this low interest money.  Here's the quote:

4.75%  no/no cost cash-out a few hundred K.  60 day lock.  Forgot to ask about float down.  I believe it's some sort of streamline HARP.

Going from a 5.125 15yr.  Same monthly payment (mainly due to 30yr am vs 15).

The loan amount is well above standard conventional amount of 400K something.

My 5.125% was also a no/no so neither cost me anything.  I plan to use the $$$ for flips and/or to beef up my cash reserves a little.  Maybe do some hard money loans.

How's the rate compare given it's a no/no cost and a higher $$$ amount?  Any experience with Flagship Mortgage?

Ed O. · Answer

I'm not sure what rates are doing now, but, having worked in the 
vile industry as a mortgage broker, here's my 2 cents:

1. Pay your own costs. The no cost loans directly translate into a higher interest rate. Mark my words, this is how it works.

2. A 60 day lock raises your rate. A 30 day lock may save you an eighth, and on a few hundred k for a long time, that adds up.

3. NEVER, trust a broker on a float down. There's ways to manipulate things, but even if rates get better, it means the broker can lie to you about it.

4. Get at least 3 offers, and let every broker you speak to know, flat out, that you're shopping amongst 8 or 9 lenders and will take the best deal. Simply telling them your shopping will weed them out if they suck. Also, it tells them, give me your best offer, or you don't have a chance.

5. Don't work with a bank whose name rhymes with Bank of AScareica. You will be constantly searching for a concrete wall to run into for daily relief of the stress working with them will bring to you.

best of luck.

Cheryl C. · Answer

When I use the term "no/no", I mean that all transaction costs are zero - lender and title (recording, doc prep, closing fee, title ins., etc).  The only out of pocket is escrow for tax and insurance, which should be a wash once the paid off lender issues a refund of that escrow account.  The only cost is a slightly higher interest rate.

Jon Klaus · Answer

No points, no origination fee.

Jerry Calhoun · Answer

Cam some please explain what the no/no is? I am assuming one part is a no cost loan but can't for the life of me figure out what the other "no" stands for. I've tried searching the data base put came up with no hits... thanks much everyone....

Bryan Hancock · Answer

That sounds like a pretty good rate for a jumbo.  Amerisave.com has a great point/rate matrix that is close to par if you enter your loan scenario on their site.

Mark Fitzpatrick · Answer

Hi Cheryl, it sounds to me like you're getting a decent deal. If rates drop significantly from here, you can always do the loan again if you need to - especially considering the lender is picking up the costs for you.

And if you're comfortable working with the guy, then go with it. For people with complicated loan applications, the comfort level you have with the loan officer you're working with should be a big consideration. Loans are not as easy to get as they used to be and you're going to be working with him or her for a while to get the loan. You want to have a good rapport and working relationship with the LO.

I also think the 60-day lock was a smart move - particularly if your deal is complicated. I tend to lock my loans on 45-day locks even if they're simple, vanilla deals because there's always stuff that comes up in the process to delay things. Having the long lock does cost more, but at least you don't need to worry about your rate.

Cheryl C. · Answer

I meant to say "I can't do better".

Ed,

I never pay any costs on mortgages.  I always buy up the rate to cover lender and title charges.  I know the rate is higher.  APR is based on holding a mortgage the entire term (15/30yrs,etc.).  If you pay it off early (sale or refi) the apr goes thru the roof.  I'd rather pay to have that probability pushed off to the lender.

As to the 60 day lock, I need it.  My app is going to be quite complicated.

I am not expecting to get the best deal out there as I don't want to spend a ton of time for an 1/8th or a quarter.  Your advice is good for people who really want to get the best, best deal.  I just want to be in the ballpark.

Now...I'll see if this guy can deliver.  If so, he gets my next refi.

Cheryl C. · Answer

Having been house hunting when rates went from 13 or 14 to 17 or 18, these rates are hard to not take advantage of.  I always buy-up the rate to cover everything (lender fee's and closing - title, title ins., recording, etc., etc.).  It's free.  Escrows are a wash.

Next on the agenda is to refi my largest rental loan (350K) which is now at 6.75%.  Anyone have quotes for a no/no rental property loan loan (rate and terms - no cash-out)?  I'm figuring I can drop it a point and a half.  LTV is way low - 30% max.

I'm quite sure I can beat the interest rate on my home (4.75 not 4.25).  Having cash for flips saves alot of money.

I'm torn about giving up the 15yr (I'm 6 or 7 yrs in) but I like cash in the bank and I'm blitzing off the rental mortgages.

J Scott · Answer

I just did a 15 year refi (costs rolled in) for about $400K at 3.75%.  Sounds like you're looking for a good bit higher refi amount, so you probably want to add about a point to the rate for the jumbo, so 4.75% is probably in the right ballpark.

Bill Gulley · Answer

I'm old enough to be  able to say that 4.25% of a 30 year fixed is a great rate! Might get a better deal, but even so, it's a great rate.

Keep in mind the amortization of principal reduction, you are starting all over. Having the cash will not effect you net worth, this is a use of cash/assets decission and sounds like you have good comand of the plan. Just keep in mind that you are waging your equity that you will be successful in other ventures. I have said often that it is better to be in a position to pay off the debts and use of your equity instead of keeping cash in the walls. With property values the way they are and current market conditions, you're on the right track, IMO. Good luck

Refi on my primary: Is this a decent deal?

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