To Refi or Not
So our bank is offering to refinance for only $400 (application fee) on our 2 family. $370K mortgage @ 4.25 for 15years. Current rate is 5.325. We plan to pay the mortgage in 10 years. We already locked and pay application fee. With the news of the FED planning to pump more money out and…
So our bank is offering to refinance for only $400 (application fee) on our 2 family.
$370K mortgage @ 4.25 for 15years. Current rate is 5.325. We plan to pay the mortgage in 10 years. We already locked and pay application fee. With the news of the FED planning to pump more money out and this possible lowering the rates, I’m getting cold feet. We also didn’t shop around, don’t want to shop around due to time constrains (and yes laziness). We plan to pay the mortgage in 10 years.
Is this a decent rate now? Would it make much difference if we would have shop around? Wait? Opinions wanted.
“Is the total refi cost really just the $400 application fee, no title insurance, appraisal fee, etc?”
ditto what petunia said…..how can there possibly be no title fees? and no bank’s attorney fee? and no fee for assignment? should be 2000-3000 there.
ire makes good points – if you leave your lender for one that is cheaper you will have to pay mortgage tax all over again IF the old lender refuses to assign the loan to another bank. some do, some don’t.
As for your original question about what effect the fed will have on mortgage rates – it’s a great question that no one has the answer to. Given the rate on the ten year treasury, mortgage rates are not as low as they should be right now. Add in the new fees that the banks are charging and the multi family overlays for 2-4 family owner occupied conforming loans – which are new in the last two years – and the banks are doing very well on these transactions.
But the fed is attempting to do what they know congress will not do – stimulate the housing market and push lenders to modify existing loans, so you never know. The fact that they are focusing their buying on the shorter end should widen the yield curve and allow the long end to fall, which would surprise a lot of people.
If rates drop another point, you can always refi again.
Quite possible that the junk fees are hidden inside a .25-.375 rate increase. Classic thumb trick by the banks.
But still, a good deal any way you slice it.
“Is the total refi cost really just the $400 application fee, no title insurance, appraisal fee, etc?”
Yes, how are they doing that? We refi’d over the summer with a $500 application, but they gave us 1/2pt towards closing fees, paid for the appraisal and the CEMA paperwork, but we still had closing costs of several thousand dollars we had to roll into the new loan. And we stayed with the same bank.
Sounds too good to be true.
Gates, did they send you a good faith estimate? Is the total refi cost really just the $400 application fee, no title insurance, appraisal fee, etc? If so, that’s an excellent deal and I’m curious to know which bank is offering it. Even with an assignment, it will still cost thousands once the various fees are added up. Our bank said they would still have to charge appraisal, title, etc. fees even though they currently hold the mtge.
I don’t see the downside in going thru with out.
How long to recoup your $400?
No law says can’t refinance again.
Refinancing with another bank will be big $$$ to recoup.
Adam???!!!
***Bid half off peak comps***
It makes most sense to stay with your present bank even at a bit higher rate, you may want to wait a bit longer and approach your present bank again if the rates drop further at which time they will most likely adjust their rates downward.
You cannot ignore the fact that your present bank is charging you a total of $400 for the modification. If you go with another bank that does not accept assignment of your mortgage from your bank or if your present bank refuses to assign your mortgage to another bank, you are looking at several thousand dollars in mortgage tax alone, you will also incur fees such as bank attorney , title policy, appraisal, etc. The total can run you upwards of $10,000.
In sum, you will save a small fortune by staying with your present bank.
The fact that you plan on paying off the mortgage in 10 years, is not that important, most mortgages can be paid off without a prepayment penalty, what is important is if you are in a financial position to pay off your mortgage based on a 10 year payout instead of a 15 year payout, if you approach your bank and tell them that you are willing to modify your loan to a 10 year payout, they most likely will offer you a more attractive rate.
With their present offer of 4.25 vs. 5.375 you are looking at an actual dollar savings of $4,162.50 the first year alone, not bad for a $400 fee.
Good luck,
@Gates ave – just spoke with amerisave, they dont do co-ops
Thanks for feedback. Our credit ratings are pretty good b/t 780 and 820 among the 4 rating agencies. We have good liquid assets and at least 30% equity. deanbh, yes, from what I’ve seen and been told, in NYC two+ family and coop/condo rates are higher than quoted rates in the web sites.
Btw, I think this is a good rate comparison site: http://www.amerisave.com/