Mortgage refinance offers

Have you tried showing them the ol' brown eye and see if they make offers for enemas too? If so, shit's legit.

Call up local lawyers and get quotes on doing a mortgage closing. Find out from the mortgage company what the rate is and ask if that includes any points (1 point = 1% of the remaining balance of the mortgage). Ask them if they charge an origination fee (usually 1% of the remaining balance of the mortgage as well). Figure on spending about $400 on a house appraisal. Add all that shit up. Compare what you'll save each month with your out of pocket costs and do the math.

Hey Chippa, don't worry. The way refinancing works is you get a closing fee of usually a few thousand bucks every time you do it. So add that on to your total. Aside from that, while they may be saving you money on a month to month basis, you're actually paying more in the long run. Lower % rate aside, if you're already 6 years into a mortgage and they bump you back to a new 30 year date, then the 6 previous years have vanished. And 6 years in is when you finally start making a dent in the principle of your house. Prior to that, you're paying 99% interest rate.

This is an over simplification, but figure the first month you pay your 2,000 mortgage, only $100 goes into principle. The 2nd month, $105 does. So on and so forth. By year 6, you're paying roughly 25% of your money towards principle and the rest to interest. By year 28, you're like 10% interest, 90% principle. It's all a money game. If you get out now, all of that interest you've paid thus far is a wash. And look at how much you're paying overall. Figure a $200,000 house ends up paying around $450,000 over the life of the mortgage. It's pretty crazy how much they get, even with low interest rates.

Xarpolis_sl said:

Hey Chippa, don't worry. The way refinancing works is you get a closing fee of usually a few thousand bucks every time you do it. So add that on to your total. Aside from that, while they may be saving you money on a month to month basis, you're actually paying more in the long run. Lower % rate aside, if you're already 6 years into a mortgage and they bump you back to a new 30 year date, then the 6 previous years have vanished. And 6 years in is when you finally start making a dent in the principle of your house. Prior to that, you're paying 99% interest rate.

This is an over simplification, but figure the first month you pay your 2,000 mortgage, only $100 goes into principle. The 2nd month, $105 does. So on and so forth. By year 6, you're paying roughly 25% of your money towards principle and the rest to interest. By year 28, you're like 10% interest, 90% principle. It's all a money game. If you get out now, all of that interest you've paid thus far is a wash. And look at how much you're paying overall. Figure a $200,000 house ends up paying around $450,000 over the life of the mortgage. It's pretty crazy how much they get, even with low interest rates.

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It's actually closer to your 15th year in where you start to make a dent on your principle on 30 year terms. But yes, if you're going to refi also shorten the term to a 15 or 10 year to make it actually worth it.

Just to clarify: the number of years you're in a loan makes no difference. It's all about the payments and interest.

Suppose you had a 20 year $200k mortgage at 4% and paid off $50k after 10 years. If you now took on a new mortgage at 4% for $150k, you'd end up having paid it off within 10 years at exactly the same monthly payments as before.

The reason refinancing may make the total cost more expensive is because many people would end up refining with a 20 year loan (that is, they'd double the length of the remaining loan). That lowers monthly payments, but adds to the length of the loan and hence the amount you pay in interest.

When you refinance with a lower rate, you should keep your monthly payment fixed. That way, you reduce the length of the loan and can end up saving significant amounts of money. You don't have to notify the bank when you do this: you just pay more than the required amount. So if your previous payment was $700 and your refinanced payment is $500, you just continue to pay $700.

The exception to this is if you choose to send an extra check in addition to your usual payments (i.e. you make $500 payments and every two months, you send 2 $500 checks). Then the bank may not know whether to apply it to next month's payment or to count it as an extra payment, so you can add something like "apply to principal" to make your intention clear.

There's also a misconception about "applying to interest" vs. "applying to principal" -- there's no such distinction. Any payment you make lowers your loan balance, which in turn grows every month by the interest charged to it.

If you're planning on making extra payments to cut into principle faster thus shortening the term you may as well refi for a shorter term mortgage. Reason being shorter terms almost always get better interest rates than 30 year terms.

most likely scams. Well, not SCAM scams. But it's a way for loan officers to make money. It might make a lot more sense if you're only 5-10 years into a 30year. But a couple of years ago I had one pestering me to refi an old mortgage and if you do the math on that (which you obviously should)... they were basically wanting to take 90% of the "savings" back in fees for even offering the deal.

What really got me though was this drive-by appraisal deal they were trying to push when I was reluctant about another appraisal. I'm perfectly fine with an undervalued house. The market around here is still stupid, and I don't need the state to suddenly decide I owe them more property tax. But they wanted me to give them a fair amount of cash to get one of THEIR appraisers to DRIVE PAST what is technically THEIR house and re-appraise it.

What. The. Fuck.

You just wanna make sure it hasn't burned down? Service your own god damn loan. I do my part, I pay you.

I don't even want to get into the bullshit that I've had to go through while refinancing my house this past month. I have about 4x the savings and make over double what I made when I first bought the house. The mortgage is obviously for less than when I bought it 5 years ago. Yet it has been way harder for me to get this deal done than it was when I first bought it.

I get re-fi offers in the mail every week for 2.75% 15-year VA. Not sure if worth it because I'm sitting on a 3.75% VA loan 30-year with no PMI (due to being VA).

One thing I always notice is there is some bold-face "AS LOW AS 2.75%" but then there is some bullshit fine print "APR 3.058%". Anyone care to explain that?

Khane_sl said:

If you're planning on making extra payments to cut into principle faster thus shortening the term you may as well refi for a shorter term mortgage. Reason being shorter terms almost always get better interest rates than 30 year terms.

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I did 30-year because of "just in case" I lose my job (or whatever), the payments will be lower. Also with the lower payments it is easier for me to stay 3-5 months ahead and throw in $500 toward principal every payment.

APR is the "true cost" of the loan. It's what the loan's interest rate comes out to be after they factor in all expenses (or estimated expenses) like closing costs, origination fees, points, appraisal, etc.

So a loan with a rate of 2.75% but an APR of 3.15% ends up costing you more money than a loan with a 2.95% interest rate and an APR of 3.05%. Or at least, that's what it's supposed to signify.

Wow, I'm surprised there hasn't been a more recent thread on this topic?

Anyway, I'm looking to refinance my home. I'm really not interested in doing a ton of research. Is there any disadvantage with just going with "Rocket Mortgage" or any of the other lenders you hear on the radio 24/7?

ShakyJake said:

Wow, I'm surprised there hasn't been a more recent thread on this topic?

Anyway, I'm looking to refinance my home. I'm really not interested in doing a ton of research. Is there any disadvantage with just going with "Rocket Mortgage" or any of the other lenders you hear on the radio 24/7?

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I've done Rocket Mortgage and it was pretty easy. My first mortgage was with someone my realtor recommended and it was ok. When I started to look at refinancing a few years back, I thought to use Bank of American as that's who I do my regular banking with. I may have had a bad agent working with me but that shit was a nightmare. Days in between communication, they requested multiple documents, I would send it in, then hear back 3-5 days later, oh we need this too. I then tried one of those rate shopping sites and I got bombarded with emails and calls. Eventually, I did Rocket mortgage on a whim and it was super easy to upload everything on there. I think most people recommend checking out their credit union, but I will say Rocket mortgage was super easy for me to use.