Any advice for refinancing?

[jimbiggs]

We've been wanting to refinance for a couple of years now, but don't have any experience with it. We were pretty ignorant when we bought our home and I feel we got screwed for not doing our homework. We could have gotten a much better rate at the time we purchased.

So we've been stalling on refinancing because we don't want to get screwed again and we don't know how big the hassle will be. I was going to do some shopping around online and make some phone calls to local lenders to see if we could figure out what the best deal was. I'm also thinking about trying Lending Tree for the frequent flyer miles.

Other than that, all I know is we don't want to buy points, take out cash, or pay rediculous fees. We just want a lower interest rate on a fixed 30 year loan.

So I'm hoping to get as much information or advise as I can get from the brilliant folks here at TUG. Thanks for any help you can offer.

 

[bigrick]

Look at bankrate.com. They have information and long lists of lenders. I've used them several times to find rates and companies for myself and others.

Since you feel you were taken last time, resolve to learn the process this time so you can take the lender and get the terms that serve you best. Don't worry, the lender will still make money but you'll be happier in the years ahead.

 

[Icarus]

Try to find a lender that locks in all your closing costs, except accrued interest on the new and old loan.

-David

 

[Big Matt]

You should try to find a site that explains the mortgage process so that you won't feel so intimidated.

You mention not wanting to pay points and closing costs which I understand, but avoiding them may be a mistake. What you really want to do is avoid unnecessary fees and add ons that only pad the wallet of the lender.

You need to ask yourself a simple question which is: "How long am I going to be living in this house?"

If the answer is longer than about five to seven years, then getting the lowest rate possible would be the best option even if it means paying some points. If you are going to move within five years, don't buy the rate down with points since you'll never recoup the savings over the long run.

I also wouldn't advise going for the lowest and cheapest alternative unless it is with a company that you already do business with in some other capacity (bank, credit card, etc.). You seem to need someone that you trust and who will help you through the process. In my mind, the headaches of dealing with a fly by night company (and there are many) aren't worth it.

I would also look at places like Costco that offer good deals to members.

The easiest option of all is simply to call you current lender and tell them you want to be refinanced. Since you don't want to take cash out, it may be as easy as signing some additional paperwork and having the loan reset. It could be the least hassle of all, and the cheapest.

 

[bogey21]

The easiest option of all is simply to call you current lender and tell them you want to be refinanced. Since you don't want to take cash out, it may be as easy as signing some additional paperwork and having the loan reset. It could be the least hassle of all, and the cheapest.

This is a good idea. You may not get the absolute lowest rate doing this but it will be by far the least complicated. Also if you are paying for Mortgage Insurance and your loan has been paid down to where it is less than 80% of value, you should be able to get the insurance removed.

GEORGE

 

[elaine]

Before you call your lender--go to your bank

tell them you are thinking about refinancing and ask what is BEST deal they will give you--DO NOT SIGN ANYTHING--then, armed with that interest rate, call your lender and tell them that your bank is offering x% and will they match it,or come close--ask to speak to a supervisor, if necessary.
When you call with more specific info, like "I've been the my bank and here's what they are offering" your lender might tend to be more receptive to a "real threat" that you are leaving them vs. the generic "I want to refinance."
And, even if the rate is not as low as E-loan, etc., it's no hassle and your lender should be willing to pay all associated fees--then you just work the math to decide if a point or two is worth it--also, I think (??) points are deductible on taxes.

 

[Rose Pink]

Credit Union

The best refinance we ever made is with our credit union. We paid no fees at all (penalty if the loan is paid off within 2 years--like that is going to happen LOL.) The interest rate was lower, too. Our paycheck is deposited directly into our credit union account twice a month. I simply log on to our account and transfer funds each time to pay down the balance. It is soooo easy and by paying twice a month, we are able to pay the principle balance down faster.

Good luck in finding the right lender and product for your situation.

 

[jimbiggs]

Great ideas so far. Keep them coming.

 

[bogey21]

My last two refinances have been with a Credit Union. They are often easier to work with as they are not-for-profit. They divide my monthly payment by two and take it automatically out of my account every two weeks which means I am effectively making 13 payment a year rather than 12. The benefit is that a 30 year loan will be paid off in something like 23 years saving mucho interest.

GEORGE

 

[Joan-OH]

Being and independent closer, I see rates all over the board. Local S&L's and credit unions are pretty consistent with lower closing costs, but I have seen some really good rates this past month with CitiMortgage and 5th/3rd.

Beware of lending tree. My niece got her credit dinged 30+ times and by the time she was done, her credit rating stunk and she wasn't able to get financing. From what I understand, each ding will cost you some credit score points.

Personally, I think researching online is a great tool, but I would never apply online. Do it over the phone or in person.

Good Luck

Joan-OH

 

[rlblack]

I have been a Realtor for over 25 years- I have found that major lenders- i.e. Wells Fargo, Bank of America etc- and Credit Unions are very competitive. They have high quality employees and have many different loan programs to choose from. Normally, the major lenders service your loan, and do not sell it to other companies, so you will be dealing with the same company- unlike a morgage broker, that packages a loan and sells it before or after closing. And you really never know who owns the loan and get confused as to where to pay.

The interest rates change, daily- and it is a quessing game, but a good loan officier can show you the history, and you can see which days historically, the rates are higher.

Often if you do not want to pay out of pocket for closing costs, the interest rate will increase, or the amount of your debt, so you will be paying those fees, through the life of the loan- so figure out how much interest you are paying on those funds.

You should not accept a pre-payment penalty- no matter what, since we can never predict what life will deal us- and you may have to sell prior to the 2-5 year period- due to job transfer, death, illness or what ever life changing event happens. It is so sad when a homeowner that has to sell has to pay out a good hunk of equity for a prepaymenet penalty.

You should take your time, selecting a lender- get references, check with appraisers, Realtors, and title companies. They know the quality lenders.

good luck- rlb

 

[2Blessed]

jmbiggs,

You did not mention what your current interest rate is. I know the interest rates were considerably lower when we purchased four years ago. Is it really in your best interest to refinance at this time? I believe the rate are probably a little higher now. Oh, and don't forget that you will also have to pay closing costs again. I guess all that needs to be figured into the refinancing equation? Just my 2 cents . . .

Brenda

 

[Rose Pink]

You should not accept a pre-payment penalty- no matter what, since we can never predict what life will deal us- and you may have to sell prior to the 2-5 year period- due to job transfer, death, illness or what ever life changing event happens. It is so sad when a homeowner that has to sell has to pay out a good hunk of equity for a prepaymenet penalty.


good luck- rlb

You make a good point but the "gamble" paid off for us. We could have paid fees upfront or had them rolled into the mortgage (thus paying them with interest over the life of the loan) but it made much more sense to us to bet that we would still be in our home two years later. The $250 reconveyance fee that we might have had to pay is paltry compared to the cost of loan origination fees, etc. Other lending companies may have far more excessive fees for early pay-off, so it is worth looking closely at them but I would not say that one should not accept them "no matter what." If the fee is less than what you would have to pay upfront, then it makes sense to me go with this type of loan. The fixed interest rate we locked in was also less than what we could find anywhere else. It is a shorter term loan, not the standard 30 years.

Far scarier, to me, are ARMs, balloon payments and interest-only mortages. As you said, we can't always predict the future.

I love the flexibility of my credit union mortgage. As long as I pay the minimum each month, I can pay as much or as little as I want, as often as I want, whenever I want (on-line and at the comfort of my own desk in my pjs).

 

[geekette]

Don't let them talk you into a 15 year. With no prepayment penalty, you can always make extra payments on the principle without being locked into it. That way, you can get ahead on the flush months, but not be against the wall in those months when you have more than normal financial obligations.

 

[elaine]

definitely 30 year fixed-if you can afford it

rates are still very low (Bank of Amercia today was 6.25% for 30 year, 5.75% for 15), so it's not worth it to get the 15--you can always make your own 15 year by paying extra principle. Lock in a decent 30 year and don't worry anymore.

I recall when a 7 year ARM went from 8% to 10.25%---they CAN go back up that high or higher again.

 

[UWSurfer]

I've always been told to deal with a direct lender as opposed to a broker. The difference generally is the broker tends to charge additional fee's to pay for their services.

Regarding the bi-weekly mortgage payment, another way to achive the same result is to take your monthly payment, divide it by 12, and take that amount and add it to your monthly payment.