Options for Refinancing?

Question

BP,I'm currently looking into refinancing my primary residence as my rate is high especially when compared to the current rate environment (30-year fixed at 4.75%; bought late Q1 2019).The LTV is still >80% so whatever savings I do get from the reduction in P&I post-refi will be lessened a bit by whatever the amount of PMI I will have to pay is. Still, it's worth the savings over the life of the loan.

My question is:

Are there any lenders/credit unions/etc. that allow closing costs to be paid for using a credit card? If so - which ones?

I'm looking since at least one of my credit cards offers 2.00% cash back; may have one or more that offer a higher percent.

Thanks!-J

David Kelly · Answer

@Jared Khan

You have a couple options.  You can keep the closing costs within the loan which is typically how most refinances go. Or if you don’t have the extra equity  you can get a slightly higher rate and get a lender credit to cover the closing costs.

The only option I see you using a credit card is getting cash from that card and bringing a cashiers check to closing.  ￼

Bradley Padula · Answer

Have not heard of it, probably a reason

Imo it''s more important to have a good lender who is responsive, knowledgeable, and has competitive rates, than trying to find a lender for the reason they would let you earn $100 bucks off 2% rewards on $5k closing costs

Most owner occ 30 year rates are in the low 3's, so there is a chance for some significant savings. Don't lose sight of the bigger picture (refi experience as a whole) over one detail ($100 bucks..)

If you're trying to save on closing costs, you could always to a rate and term refi with limited cash out (i.e the cashout amount is specifically enough to cover just closing costs)

Jody Sperling · Answer

Banks win when you refinance for this reason. Even if you find a bank that allows you to pull equity out, you're going to pay thousands on fees, effectively wiping out what you might save over the life of the loan.

And PMI will erase any money you save, plus cost you more than you think in present cash flow.

1. If money is tight, consider renting a room of the home.

2. If you want money to invest, look for private lenders or hard money.

Interest rates are important, and in some cases a refinance to get better interest rates may be good, but based on what I see for your situation, you'll go backwards.

(Even if you could pay the closing costs and fees with a credit card, unless you could afford to pay them off before your first interest charge, you'd lose any cash back you earned to interest. Sometimes taking a breath and standing still is the best move forward.)