Mortgage

[Doc]

I refi'd my variable rate mortgage earlier this year to a 15-year 4.25% loan with no points and no pre-payment penalty. I paid the standard closing costs. In the interim, I've watched the rates drop down even further.

 

So I get an e-mail from my mortgage broker yesterday saying he'd refi my loan to 3.75% with no closing costs and still no pre-payment penalty. I asked him "what's the catch" and he said there wasn't one. I looked over the forms he sent me and it appears that it's legit.

 

My question is, is this something that's not uncommonly done? Should I be concerned about anything in particular?

 

Thanks in advance.

Edited September 9, 2010 by Doc

[Chef Jim]

I refi'd my variable rate mortgage earlier this year to a 15-year 4.25% loan with no points and no pre-payment penalty. I paid the standard closing costs. In the interim, I've watched the rates drop down even further.

 

So I get an e-mail from my mortgage broker yesterday saying he'd refi my loan to 3.75% with no closing costs and still no pre-payment penalty. I asked him "what's the catch" and he said there wasn't one. I looked over the forms he sent me and it appears that it's legit.

 

My question is, is this something that's not uncommonly done? Should I be concerned about anything in particular?

 

Thanks in advance.

 

He just got his Porsche payment bill in the mail. He's churning your mortgage and getting paid on it again.

[Doc]

He just got his Porsche payment bill in the mail. He's churning your mortgage and getting paid on it again.

I figured he's getting something out of the deal since he's eating the closing costs. But that's no reason for me not to do it.

[KD in CA]

Call the mortgage company and see if they will do a rate adjustment.

 

I'm doing that right now -- no need for a full refi process.

[Doc]

Call the mortgage company and see if they will do a rate adjustment.

 

I'm doing that right now -- no need for a full refi process.

I'll do that. Thanks for the tip. Worst case scenario, if they won't match the 3.75% rate, I just go with my broker.

[DrDawkinstein]

I refi'd my variable rate mortgage earlier this year to a 15-year 4.25% loan with no points and no pre-payment penalty. I paid the standard closing costs. In the interim, I've watched the rates drop down even further.

 

So I get an e-mail from my mortgage broker yesterday saying he'd refi my loan to 3.75% with no closing costs and still no pre-payment penalty. I asked him "what's the catch" and he said there wasn't one. I looked over the forms he sent me and it appears that it's legit.

 

My question is, is this something that's not uncommonly done? Should I be concerned about anything in particular?

 

Thanks in advance.

 

this is very common in the Mortgage biz. companies like Lenox Financial here in Atlanta made fortunes doing no-cost refi's back in the boom a few years back. the broker gets paid by the bank.

[Doc]

this is very common in the Mortgage biz. companies like Lenox Financial here in Atlanta made fortunes doing no-cost refi's back in the boom a few years back. the broker gets paid by the bank.

I'm just trying to find the angle on it/if there is any drawback to me doing it. My new loan amount will be the payoff amount of the previous refi, over a 180 month period. I'll be extending the loan a little (9 months or so), but saving ~$1100 a year.

[Stussy109]

The bank is most likely paying him 1 percentage point of the entire loan as a commission, and he waives the other costs for you. Do it as long as no fees or hidden costs are built into the loan.

[/dev/null]

One of the guys I work with did the same thing. He got a 15 year mortgage a couple years ago (4. something percent). He financed thru the bank, not a mortgage broker.

 

Earlier this year the bank called and offered to refinance at a lower rate at no cost.

 

Well, no direct cost. This is all subsidized by the government to help prop up the housing market, so we're all paying for it

[DrDawkinstein]

I'm just trying to find the angle on it/if there is any drawback to me doing it. My new loan amount will be the payoff amount of the previous refi, over a 180 month period. I'll be extending the loan a little (9 months or so), but saving ~$1100 a year.

 

as long as this is the "business as usual" no-cost refi that happens 99.9% of the time, then there is no drawback for you doing it. As Lenox's commercials say "It's the biggest no-brainer in the history of mankind".

 

now i dont know everything about your guy and your deal, so i didnt put 100%, but from the sound of it this is the typical, no-rub deal.

 

do it.

[Alaska Darin]

I've done it a couple of times to get a better rate at no cost to me. My bank does it to keep the business and the only "catch" is I can't skip a payment between mortgages. That means they keep getting their interest payment.

 

With the cost of money being so low, it's really a pittance for them to essentially shuffle paperwork.

[Doc]

The question is, should I go to my lender and ask for a rate adjustment to something less than 3.75%, or just take this deal through my mortgage broker? I can't see the lender giving me a better rate than (or even the same rate as) 3.75%, without me paying points or closing costs.

[DrDawkinstein]

The question is, should I go to my lender and ask for a rate adjustment to something less than 3.75%, or just take this deal through my mortgage broker? I can't see the lender giving me a better rate than (or even the same rate as) 3.75%, without me paying points or closing costs.

 

It's worth asking at least, see if the bank can do a no closing cost refi at a lower rate. it wont hurt to ask, might as well.

 

worst case scenario, you come back to the broker and take his deal.

[Doc]

I called the lender and I'd have to pay closing costs. So I'll go with my mortgage broker.

[Chump Change]

Doc,

 

Thanks for starting this thread. It got me to thinking and after reading KD's post about rate reductions, I called my current lender (Citi) and asked them about it. They said only if I lost my job! WTF? After telling the guy that wasn't the case I had him quote me on a refi. The idiot quoted me a 15 yr fixed at 4.1%! I had another window open displaying cirrent rates and told the dude to pound sand. I hate Citi! BTW, I have a great FICO (780ish), so that wasn't the reason.

 

Then I checked my credit union and got a 15 yr fixed @ 3.65% w/ no points. Now I will have to pay a few closing costs, but I managed to shave 1.1% of my existing.

 

BTW, what state are you in? I no closing cost deal is pretty awesome.

[Doc]

Doc,

 

Thanks for starting this thread. It got me to thinking and after reading KD's post about rate reductions, I called my current lender (Citi) and asked them about it. They said only if I lost my job! WTF? After telling the guy that wasn't the case I had him quote me on a refi. The idiot quoted me a 15 yr fixed at 4.1%! I had another window open displaying cirrent rates and told the dude to pound sand. I hate Citi! BTW, I have a great FICO (780ish), so that wasn't the reason.

 

Then I checked my credit union and got a 15 yr fixed @ 3.65% w/ no points. Now I will have to pay a few closing costs, but I managed to shave 1.1% of my existing.

 

BTW, what state are you in? I no closing cost deal is pretty awesome.

I'm in CT (like KD). And good show on getting the 3.65%!

[Just Jack]

I hate Citi!

Citi almost screwed me over on the sale of my house by dragging their feet till the last week the tax credit was available for new home buyers this spring.