Ridiculous offer from Wells Fargo

[frugalecon]

I am currently two years into a 15 year mortgage at 3.125. Wells Fargo is the servicer. Today I received a letter from them, offering a new 15 year mortgage with a 3.625 rate. But look! The payment is $180 lower!  Even stranger, they offered a 10 year mortgage at 3.75, which they pointed out would lower my total interest. Uh, yeah, but if I wanted to retire it in 10, why wouldn't I keep my current mortgage at a lower interest rate and just make extra principal payments!?! How stupid do they think I am??

[Another Reader]

When Wells Fargo took over Wachovia, I had a number of five year Wachovia CD's at 5.35 APY.   I bought them not too long before the takeover, when Wachovia was offering above market interest rates on CD's to survive.  A couple of years ago, I started getting letters from Wells Fargo offering to cash them in with no penalty.  Of course, the market interest rates on new 5 year CD's were 2 percent or less by then.  The letters went to the recycling bin.  Sadly, the last of those CD's matured a few months ago.  I was careful to redeem them before they could renew them at their paltry rates. 

As banks go, Wells Fargo is shrewdly managed.  Can't blame them for trying.   However, they haven't bugged me about refinancing my 30 year 3.125 percent mortgage yet.

[dragoncar]

I am currently two years into a 15 year mortgage at 3.125. Wells Fargo is the servicer. Today I received a letter from them, offering a new 15 year mortgage with a 3.625 rate. But look! The payment is $180 lower!  Even stranger, they offered a 10 year mortgage at 3.75, which they pointed out would lower my total interest. Uh, yeah, but if I wanted to retire it in 10, why wouldn't I keep my current mortgage at a lower interest rate and just make extra principal payments!?! How stupid do they think I am??

I don't blame them for trying, but why the hell is the 10 year rate higher than the 15 year???

[frugalecon]

I am currently two years into a 15 year mortgage at 3.125. Wells Fargo is the servicer. Today I received a letter from them, offering a new 15 year mortgage with a 3.625 rate. But look! The payment is $180 lower!  Even stranger, they offered a 10 year mortgage at 3.75, which they pointed out would lower my total interest. Uh, yeah, but if I wanted to retire it in 10, why wouldn't I keep my current mortgage at a lower interest rate and just make extra principal payments!?! How stupid do they think I am??

I don't blame them for trying, but why the hell is the 10 year rate higher than the 15 year???

Fannie and Freddie don't purchase 10 year mortgages, so it is not unheard of for them to have higher rates than 15 year mortgages.

[TreeTired]

I am currently two years into a 15 year mortgage at 3.125. Wells Fargo is the servicer. Today I received a letter from them, offering a new 15 year mortgage with a 3.625 rate. But look! The payment is $180 lower!

How can the payment be lower on the new 15 year loan with a 3.625% rate vs your existing 15 yr loan at 3.125%....  unless they propose lending you less money than your outstanding balance?    ???   Is that their offer?   

no, wait...  in 2 years have you paid the loan down enough so that refinancing the entire remaining balance at a higher rate results in a lower monthly payment?   wow!   Go for it!!   LOL

[Jamesqf]

How stupid do they think I am??

Don't take it personally.  You nay not go for it, but I bet they'll find enough stupid people to cover the cost of the mass mailing :-)