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Posted by AJ M. on June 30, 2005, 7:37 pm
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Hello everyone. I am interested in refinancing my home. I have a 30 year
fixed-rate mortgage at 6.00%. My PITI payment is $1717.00. The initial
loan value was $191,700. After 1.5 years, I owe ~ $188,000. I am
interested in refinancing down to 20 years, for the sole reason of chopping
the 8.5 years of my mortgage. I lender friend of mine says that I can get a
20 year note at 5.125 from him. He says his company can only do that by
charging me 1.5 points. All in all, he gives me a high estimate of 7000 in
closing costs, which would be rolled into my new note. So my new note would
be for 195,000, at 5.125%, for 20 years. My principal and interest alone
would go from 1150 a month to 1300 a month, however, I would drop PMI by
reapprasing, so my monthly payment would only grow by ~ $50.
Does this all sounds reasonable to everyone? The only thing that sticks out
to me is the $7000 closing costs. It seems high, even including the 1.5
points.
Thanks.
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Posted by Joel Britt on July 1, 2005, 1:33 am
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Lets just say your "friend" isn't doing you any extreme best-buddy favors.
For that loan amount, I would charge about $7000 in fees as well. Here
would be the breakdown:
Approx. $1200 - title fees
Approx. $650 - lenders fee - covers underwriting, flood cert, etc.
Approx $300 - appraisal fee
Approx $750 - pack - gets paid to the broker before commissions on every
loan
Approx $2000 - loan origination fee
Approx $2000 - broker fee
You have to remember, even though he is your friend, it is still a business
and there are costs to doing business. His broker may require him to charge
a minimum based on loan amount, etc. I just refied my parents and still
charged them $2850 on a $110k loan/ Nobody - including you - works for
free.
Bottom line is you are going to save about $275k by refinancing over the
life of the loan for a cost of just shy of $10k. If your friend met you on
the street and said give me $10k, and I will give you $275k in return -
would you do it? You probably would.
> Hello everyone. I am interested in refinancing my home. I have a 30 year
> fixed-rate mortgage at 6.00%. My PITI payment is $1717.00. The initial
> loan value was $191,700. After 1.5 years, I owe ~ $188,000. I am
> interested in refinancing down to 20 years, for the sole reason of
> chopping
> the 8.5 years of my mortgage. I lender friend of mine says that I can get
> a
> 20 year note at 5.125 from him. He says his company can only do that by
> charging me 1.5 points. All in all, he gives me a high estimate of 7000
> in
> closing costs, which would be rolled into my new note. So my new note
> would
> be for 195,000, at 5.125%, for 20 years. My principal and interest alone
> would go from 1150 a month to 1300 a month, however, I would drop PMI by
> reapprasing, so my monthly payment would only grow by ~ $50.
>
> Does this all sounds reasonable to everyone? The only thing that sticks
> out
> to me is the $7000 closing costs. It seems high, even including the 1.5
> points.
>
> Thanks.
>
>
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Posted by AJ M. on July 1, 2005, 8:08 am
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Joel,
Just the kind of answer I was looking for. Thanks!
AJ
> Lets just say your "friend" isn't doing you any extreme best-buddy favors.
> For that loan amount, I would charge about $7000 in fees as well. Here
> would be the breakdown:
>
> Approx. $1200 - title fees
> Approx. $650 - lenders fee - covers underwriting, flood cert, etc.
> Approx $300 - appraisal fee
> Approx $750 - pack - gets paid to the broker before commissions on every
> loan
> Approx $2000 - loan origination fee
> Approx $2000 - broker fee
>
> You have to remember, even though he is your friend, it is still a
business
> and there are costs to doing business. His broker may require him to
charge
> a minimum based on loan amount, etc. I just refied my parents and still
> charged them $2850 on a $110k loan/ Nobody - including you - works for
> free.
>
> Bottom line is you are going to save about $275k by refinancing over the
> life of the loan for a cost of just shy of $10k. If your friend met you
on
> the street and said give me $10k, and I will give you $275k in return -
> would you do it? You probably would.
>
>
> > Hello everyone. I am interested in refinancing my home. I have a 30
year
> > fixed-rate mortgage at 6.00%. My PITI payment is $1717.00. The initial
> > loan value was $191,700. After 1.5 years, I owe ~ $188,000. I am
> > interested in refinancing down to 20 years, for the sole reason of
> > chopping
> > the 8.5 years of my mortgage. I lender friend of mine says that I can
get
> > a
> > 20 year note at 5.125 from him. He says his company can only do that by
> > charging me 1.5 points. All in all, he gives me a high estimate of 7000
> > in
> > closing costs, which would be rolled into my new note. So my new note
> > would
> > be for 195,000, at 5.125%, for 20 years. My principal and interest
alone
> > would go from 1150 a month to 1300 a month, however, I would drop PMI by
> > reapprasing, so my monthly payment would only grow by ~ $50.
> >
> > Does this all sounds reasonable to everyone? The only thing that sticks
> > out
> > to me is the $7000 closing costs. It seems high, even including the 1.5
> > points.
> >
> > Thanks.
> >
> >
>
>
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Posted by Donkeydode on July 1, 2005, 3:50 pm
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Almost 5k in junk fees? What a guy you are Joel...with buddies like you who
need enemy's. Seriously your leads most be terrific to get away with
charging that much on a 195k loan amount. Where I work that kind of GFE sent
to the customer would work MAYBE 1 out of 15 times...
> Lets just say your "friend" isn't doing you any extreme best-buddy favors.
> For that loan amount, I would charge about $7000 in fees as well. Here
> would be the breakdown:
>
> Approx. $1200 - title fees
> Approx. $650 - lenders fee - covers underwriting, flood cert, etc.
> Approx $300 - appraisal fee
> Approx $750 - pack - gets paid to the broker before commissions on every
> loan
> Approx $2000 - loan origination fee
> Approx $2000 - broker fee
>
> You have to remember, even though he is your friend, it is still a
> business and there are costs to doing business. His broker may require
> him to charge a minimum based on loan amount, etc. I just refied my
> parents and still charged them $2850 on a $110k loan/ Nobody - including
> you - works for free.
>
> Bottom line is you are going to save about $275k by refinancing over the
> life of the loan for a cost of just shy of $10k. If your friend met you
> on the street and said give me $10k, and I will give you $275k in return -
> would you do it? You probably would.
>
>
>> Hello everyone. I am interested in refinancing my home. I have a 30
>> year
>> fixed-rate mortgage at 6.00%. My PITI payment is $1717.00. The initial
>> loan value was $191,700. After 1.5 years, I owe ~ $188,000. I am
>> interested in refinancing down to 20 years, for the sole reason of
>> chopping
>> the 8.5 years of my mortgage. I lender friend of mine says that I can
>> get a
>> 20 year note at 5.125 from him. He says his company can only do that by
>> charging me 1.5 points. All in all, he gives me a high estimate of 7000
>> in
>> closing costs, which would be rolled into my new note. So my new note
>> would
>> be for 195,000, at 5.125%, for 20 years. My principal and interest alone
>> would go from 1150 a month to 1300 a month, however, I would drop PMI by
>> reapprasing, so my monthly payment would only grow by ~ $50.
>>
>> Does this all sounds reasonable to everyone? The only thing that sticks
>> out
>> to me is the $7000 closing costs. It seems high, even including the 1.5
>> points.
>>
>> Thanks.
>>
>>
>
>
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Posted by Jeff Strickland on July 1, 2005, 8:45 am
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You can trim years off your mortgage by simply making bigger payments on the
loan you already have. And, it is FREE to do this.
Dropping the PMI is a valid issue to be looking at. If your Loan To Value
(LTV) exceeds 80% (divide the laon amount by the property value, if the
result equals or exceeds .8 ...) then you will still have PMI, or be faced
with a combo loan where you carry a 1st trust deed for 80% and a 2nd trust
deed for the remainder. In my opiniuon, you should have gotten a loan
structure such as this when you got your current loan. A combo loan almost
always gives a payment that is lower than the payment you got plus the PMI,
and there is the advantage that the 2nd give a tax benefit that PMI does not
have.
If your LTV is under 80%, you can petition to stop the PMI. You will need to
pay for an appraisal inspection and report to support the new property
value, but this only costs about $350.
Seven grand seems like a lot of money. Divide the closing cost by the
monthly savings to arrive at the time it will take for the new loan to pay
for itself. When I divide 7,000 by $50, I get a period of 140 months for the
new loan to pay for itself, that't nearly 12 years. Granted, you can divert
PMI dollars to the mortgage, but you can do the same thing if the value is
really there, and all you have to do is pay for an appraisal. Contact the
customer service of the lender and ask them what you can do to get rid of
the PMI.
Another consideration is, if you simply throw more money at your current
loan to retire it early, and you suffer some sort of financial difficulty
down the road, you can divert mortgage doolars back to that difficulty to
make it go away. If yo utake out a 20 year note, you will have to make the
payments come hell or high water, and this could prove to be problematic.
If you can determine what the principle portion of your current payments is,
and double it every month, then you will cut the loan term in half. You can
ALWAYS do this, and it costs nothing in closing costs.
> Hello everyone. I am interested in refinancing my home. I have a 30 year
> fixed-rate mortgage at 6.00%. My PITI payment is $1717.00. The initial
> loan value was $191,700. After 1.5 years, I owe ~ $188,000. I am
> interested in refinancing down to 20 years, for the sole reason of
> chopping
> the 8.5 years of my mortgage. I lender friend of mine says that I can get
> a
> 20 year note at 5.125 from him. He says his company can only do that by
> charging me 1.5 points. All in all, he gives me a high estimate of 7000
> in
> closing costs, which would be rolled into my new note. So my new note
> would
> be for 195,000, at 5.125%, for 20 years. My principal and interest alone
> would go from 1150 a month to 1300 a month, however, I would drop PMI by
> reapprasing, so my monthly payment would only grow by ~ $50.
>
> Does this all sounds reasonable to everyone? The only thing that sticks
> out
> to me is the $7000 closing costs. It seems high, even including the 1.5
> points.
>
> Thanks.
>
>
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