Should I shop more? Do refi 1.5 points make sense?

11 Replies

Hi Everyone,

Would really appreciate your input on this.  

For a $360K, 2 fam investment 30 year conventional refinancing (excellent credit, LTV 75%), I got quoted for the below today 11/19/2020:

2.875%, 1.5 points, other closing cost $4000

Lender said that the no point options would not make sense as the rate would be 3.5%.

What do you think? Should I shop more?

@Jennifer Rado Sounds like the points are a part of a buy down to lower the rate, and looks like its worth it. You could ask for an interest calculation on the 3.5% over the life of the loan(or however long you plan on keeping the home) versus doing the buy down, but over the life of the loan you will save a lot more with that buy down.

Thanks David. I did a calculation yes you are right it does make sense. 

Originally posted by @David Robinson :

@Jennifer Rado Sounds like the points are a part of a buy down to lower the rate, and looks like its worth it. You could ask for an interest calculation on the 3.5% over the life of the loan(or however long you plan on keeping the home) versus doing the buy down, but over the life of the loan you will save a lot more with that buy down.

 

Always compare the benefit of the cost. With & without, what does your loan scenario look like, in terms of total savings? Does it match with your exit timeline? For example, doing a rate buy down might be more sense if you have a longer deal horizon planned, because you will be saving money each month, whereas taking a higher rate with no points, might make more sense with a shorter horizon, since you can keep that equity when you sell.

Is this a refi or a purchase? If a refi, then that's another hit for pricing. Purchase deals of like kind take priority of refi deals of like kind. 

Thank you Eric! It's a refi. Yes I plan on holding the property for a while. 

Originally posted by @Eric Johnson :

Always compare the benefit of the cost. With & without, what does your loan scenario look like, in terms of total savings? Does it match with your exit timeline? For example, doing a rate buy down might be more sense if you have a longer deal horizon planned, because you will be saving money each month, whereas taking a higher rate with no points, might make more sense with a shorter horizon, since you can keep that equity when you sell.

Is this a refi or a purchase? If a refi, then that's another hit for pricing. Purchase deals of like kind take priority of refi deals of like kind. 

 

Sent you DM with lender info ;) 

Originally posted by @Joe Edwards :

@Jennifer Rado

Seems like a good deal MF here in NJ. If your holding it the points are a big deal giving the 2.875% rate. Do you mind sharing the lender info. Send me a DM if you dont. Thanks