Author Topic: Thinking about refinancing  (Read 7206 times)

mom22boys

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Thinking about refinancing
« on: September 25, 2015, 03:40:41 PM »
I've been seriously considering refinancing my home from a 30 yr to a 15 yr. First I contacted my current mortgage holder (USBank) and they couldn't get me a better rate than my current rate for a 30 yr, which I found pretty odd. So next I used Lending tree to get some quotes, which honestly kinda turned me off.  I barely hit Submit and I literally had 3 calls on my cell phone within 1 second. I'm kinda turned off by the slick sales callers (sorry to anyone in sales...it's just not for me).

Here's some of my current info:

Home value - $350,000
Mortgage - $160,000 with $156,000 remaining at 4.125%
30 year mortgage, and only 9 months into the 30 years.
I'll probably live in this house until my kids graduate, which is about 10 years. My payments are $775, but I add $225 each month, since I want to pay it off earlier.  Yes, I know that it's better to invest that money, but I'm doing a hybrid approach.  I'm maxing out all my other investment options (401K, MEGA backdoor 401K, HSA, and backdoor roth IRA).

The best quote I received was for 3.25%, no closing fees except for 3rd party costs (about $1,600). The bank was unknown to me, and the reviews for others weren't the best. My quote from Quicken Loans was pretty reasonable at 3.37% with lowers fees + 3rd party costs totally around $2400. With the new rates, my payment would almost the same as what I'm paying now. Running the numbers shows that I'd save about $30K+ in interest plus pay it off 5 years sooner that just making my small extra payments now.

But I'm still hesitant to do this.  Why? Is this a face punch to NOT do this?


DaveR

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Re: Thinking about refinancing
« Reply #1 on: September 25, 2015, 04:28:07 PM »
Another way to look at a couple of numbers: What if you took the $2400 in fees that you have to spend for the refi and paid down principle on the current loan? That will save you thousands in interest over the life of the loan. Those fees have to be paid somehow (banks like it when you refi...fees!) and evaporate instantly just like interest dollars. You'll need to run full amortization schedules with different scenarios. A refi at a lower rate isn't always a good deal--so no face-punch quite yet.

Another Reader

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Re: Thinking about refinancing
« Reply #2 on: September 25, 2015, 04:48:47 PM »
Lending Tree is an aggregator.  They sell the sales leads.  Skip them.

Try AimLoan and PenFed Credit Union.  AimLoan shows the purchase rate for 15 years fixed with no points as 2.875 percent today.  Refinance rates are a little higher.  Enter your info in their web page to see what your rate would be.  You would pay the normal closing costs, including title fees.

mom22boys

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Re: Thinking about refinancing
« Reply #3 on: September 25, 2015, 05:28:19 PM »
Thanks for tip Reader on the other sites. According to AimLoan, I can get anywhere between 2.875 and 3.375, depending on what I pick for closing costs. I could get lower if I pay points, but not sure its worth it.

Dave, I'm pretty new to this. What do I look at for the amortization comparison? I've already used calculators online to digure the difference in the interest. What else do I look for?

Appreciate the help!

mom22boys

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Re: Thinking about refinancing
« Reply #4 on: September 25, 2015, 05:52:18 PM »
And yes, the closing fees are the biggest concern. But from what I see on AimLoan, I can get those down to almost zero, and still get 3.375. It just seems too good to be true..... which it what concerns me.

DaveR

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Re: Thinking about refinancing
« Reply #5 on: September 25, 2015, 06:18:14 PM »
Credit score 850? Income $900,000/yr and you only need to borrow $50,000? You might not get the lowest advertised rate once they take your full application.

Amortization schedule: A quick Google for "amortization schedule with extra payments spreadsheet" turns up some options. The first result looks like it should work for you: https://www.valwoodpark.com/Excel/Loan%20Cal_w_extra_pymt.xls

Just play with it and see what the month-by-month balances look like with different scenarios.

Another Reader

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Re: Thinking about refinancing
« Reply #6 on: September 25, 2015, 08:13:32 PM »
My file is difficult to underwrite because of rental properties, so I go the broker route.  If you have a simple application - high credit score. W-2 income, long time on the job, and so on, you should have no problem.  AimLoan is a low cost operation with no bricks and mortar offices.  I believe a number of forum participants have used them and been happy.  Haven't checked the PenFed rates, but they are usually good.  Their back office is not as strong.  SwordGuy had problems with a HELOC IIRC.

jinga nation

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Re: Thinking about refinancing
« Reply #7 on: October 07, 2015, 01:16:16 PM »
I refinanced last month with First Internet Bank, went from 30-yr 4.375% (6.25 years into the mortgage) to a 15-yr 3%. I have several rental properties, they wanted to see insurance was current on each one. Apart from that, no issues, since I gave them W-2, last 2 1040s, etc. Mobile closing agent, met us at Starbucks.

Whatever you do, don't contact Quicken. Those mofos call me several times a day, even after telling them not to, and that the deal was done with another bank. Luckily they call my Google number.

mom22boys

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Re: Thinking about refinancing
« Reply #8 on: October 07, 2015, 03:23:21 PM »
I ended up going with AimLoan. I got 3.375 with basically $0 closing costs. I could have gotten a lower rate, but then a lot higher closing costs. The only closing cost I might have is the appraisal, but they may waive it and then I have no cost. The only thing I'm debating is whether to put the brakes on it and wait for January. Any opinions (with your crystal balls)?

Another Reader

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Re: Thinking about refinancing
« Reply #9 on: October 11, 2015, 06:04:35 AM »
I have no crystal ball.  Rates are down a little from a couple of months ago, they could go up or down a little more from here.  With close to zero closing costs, you could refinance again if rates come down significantly.  I would probably just get it done rather than kick myself in January if rates go up.

monarda

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Re: Thinking about refinancing
« Reply #10 on: October 11, 2015, 11:21:13 AM »
Thanks for mentioning aimloan!  I'd not heard of them.
When I did the calculations, if I keep my monthly payment the same ($711 monthly, current loan 30 year, 5%), even with the high closing costs of paying some points ($711 new loan 20 year, 3.75%), I'm saving over 30K over 20 years.  I've just written to my mortgage person to see if she has anything that comes close.

Question for those of you who have used aimloan- have they sold your loan? How is the servicing? Their FAQ section claims they don't sell a lot of loans. That's one thing I'm a bit nervous about. I really like my current bank. I know they won't sell the loan. I really don't want to ever work with Wells Fargo or Washington Mutual or any of those monsters again.
« Last Edit: October 11, 2015, 11:33:16 AM by monarda »

mom22boys

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Re: Thinking about refinancing
« Reply #11 on: October 12, 2015, 11:57:06 AM »
Question for those of you who have used aimloan- have they sold your loan? How is the servicing? Their FAQ section claims they don't sell a lot of loans. That's one thing I'm a bit nervous about. I really like my current bank. I know they won't sell the loan. I really don't want to ever work with Wells Fargo or Washington Mutual or any of those monsters again.

I have the same questions and worries.  So far they have been great to work with on the application process. I'm maybe a week away from closing on the refi. My local bank, who I did my original mortgage with, DID sell my loan to USBank, who has been good so far to work with. I guess I just have to hope that it's the same with AimLoan. I'm not a fan of WF either. :-)

Jack

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Re: Thinking about refinancing
« Reply #12 on: October 12, 2015, 02:56:10 PM »
I'm looking into refinancing too. The problem for me is that I have a second mortgage that I want to subordinate, not pay off / roll into the first. (The reason is that the second mortgage is actually down-payment "grant" from the city -- a zero-interest loan with no payments that gets forgiven in another four years. Refinancing without subordinating it would cost me at least $10K.) Do y'all have recommendations for a lender who would be willing to work with that?

I'm applying for a refinance with the same company that did the mortgage the first time -- chosen because they're one of the "approved lenders" working with the grant program -- but the closing costs and rate they're quoting me are less than competitive.

Bearded Man

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Re: Thinking about refinancing
« Reply #13 on: October 12, 2015, 05:43:30 PM »
I ended up going with AimLoan. I got 3.375 with basically $0 closing costs. I could have gotten a lower rate, but then a lot higher closing costs. The only closing cost I might have is the appraisal, but they may waive it and then I have no cost. The only thing I'm debating is whether to put the brakes on it and wait for January. Any opinions (with your crystal balls)?

Hmmmm...Even with a 740 credit score and a six figure salary, 20% down, and a couple of rentals, I got 3.25 FHA 3 years ago and 4.375 a year ago when I bought my current house...Maybe I will give AimLoan a call tomorrow and see what their rates are for me.

clarkfan1979

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Re: Thinking about refinancing
« Reply #14 on: October 12, 2015, 10:02:41 PM »
I ended up going with AimLoan. I got 3.375 with basically $0 closing costs. I could have gotten a lower rate, but then a lot higher closing costs. The only closing cost I might have is the appraisal, but they may waive it and then I have no cost. The only thing I'm debating is whether to put the brakes on it and wait for January. Any opinions (with your crystal balls)?

Is this for a 30 year or 15 year loan?

fishnfool

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Re: Thinking about refinancing
« Reply #15 on: October 13, 2015, 05:08:48 AM »
I'm considering a refi too using aimloan, an agent I spoke with told me that they keep 90% of the loans and do not sell them for the most part.

Fishindude

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Re: Thinking about refinancing
« Reply #16 on: October 13, 2015, 05:16:50 AM »
Doesn't anyone ever walk into a bank anymore and talk to a human?

mom22boys

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Re: Thinking about refinancing
« Reply #17 on: October 13, 2015, 07:07:44 AM »
clarkfan  It was for a refri to a 15 year loan, w/o escrow. The rates on their site were exactly what I was given (I have excellent credit, etc).

Fishindude   Nope. :-)  Actually, I would have preferred to go with my local bank, who I got my original mortgage through. They were competitive on the rate, but had closing costs of 3k+...NO thanks!

aasdfadsf

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Re: Thinking about refinancing
« Reply #18 on: October 14, 2015, 06:36:56 PM »
Quote
Question for those of you who have used aimloan- have they sold your loan? How is the servicing?

I have a mortgage with AimLoan, and after nearly 4 years, they haven't sold the loan. The servicing is fine; automatic deduction, but they send a paper bill each month anyway, which is helpful for records. They escrow the property taxes, for which they give a discount on the rate. Can't say I've had any problems whatsoever. The only annoyance was that they wanted everything short of a DNA sample to originate the loan, but I can't exactly blame them for that. We don't need a return to the days of liar loans. 

mom22boys

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Re: Thinking about refinancing
« Reply #19 on: October 16, 2015, 12:53:43 PM »
Refi is done!  Signed the papers this morning. I was overall pretty happy with AimLoan.  The whole process took me less than 3 weeks.  aasdfadsf was totally correct about the hassle with them wanting everything, but it wasn't terrible. I would expect most other banks to be this way also, and not unique to AimLoan.  My closing papers said they were NOT selling it, but they reserved the right to sell the loan.

The best part...my closing costs were only $225, most of which was the interest to cover through the end of October.  I didn't have to do a home appraisal, so the only closing cost I had was $75 (for skipping the appraisal) + interest charges for the rest of the month.

clarkfan1979

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Re: Thinking about refinancing
« Reply #20 on: October 16, 2015, 07:12:30 PM »
Congrats on the re-fi. They can sometimes be a real big pain. You will save money with the lower rate and the 15 year loan. However, you will have less flexibility with your money because the extra principle going toward the loan is not optional. If you are cool with that, it's a good deal.

monarda

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Re: Thinking about refinancing
« Reply #21 on: October 23, 2015, 10:14:58 AM »
Glad it worked out for you!

For me, it turns out my local bank's mortgage person had a better rate than aimloan. And way lower closing costs for the same rate. (4.15% for a 20 year loan)

mom22boys

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Re: Thinking about refinancing
« Reply #22 on: October 23, 2015, 11:05:30 AM »
clarkfan1979 - Yep, I'm fine with the higher payments. I was already making extra payments, so the new payment amount is almost the same as what I was paying.  I've read all the pros/cons about early payments vs investing.  I'm choosing to do a mixture.  Already maxed out all my other investment options for the year (401K, 401K mega backdoor, backdoor rIRA because I make too much). Luckily I may still have some extra money at the end of the year to invest in my personal brokerage account.

monarda I obviously don't know your personal info, but 4.15% seems high for a 20 yr.  AimLoan shows 3.25 for almost $0 closing costs for a 20 yr.  Not trying to say you're wrong, but just want to make sure you get the best deal. :-)

monarda

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Re: Thinking about refinancing
« Reply #23 on: October 23, 2015, 12:03:32 PM »
I don't want to escrow- our city has property tax payments in 4 installments per year at unusual intervals (Jan, March, May, July). We like being in control of saving for the tax and insurance payments. I've not had escrow in over 20 years. Bad experience early on.

No escrow limited the programs from aimloan available to us. Their 20 year at 4% had much higher closing costs.

on edit:

Ok, I looked back at their web site, it's not escrow. Aimloan's rates must have a really strong regional component. (my credit is 740+) Even with escrow, the 20 year loans have super high closing costs - range from 3.625% (CC $5100) up to 4.375% (CC $2050).  You must live in one of aimloan's favored areas.  My local bank is much better.
« Last Edit: October 23, 2015, 12:18:31 PM by monarda »

mom22boys

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Re: Thinking about refinancing
« Reply #24 on: October 23, 2015, 03:00:25 PM »
Glad you verified that monarda.  I don't escrow ever either....for the same reasons.  It's interesting that the region impacts the rates that much!  They must like us Minnesotans. 

tonysemail

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Re: Thinking about refinancing
« Reply #25 on: October 23, 2015, 03:39:05 PM »
thanks for posting your experience with aimloan.
i'm so lazy, I don't want to refinance again.
but the rates are so compelling... may just have to suck it up and refi again

tonysemail

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Re: Thinking about refinancing
« Reply #26 on: December 09, 2015, 02:23:15 PM »
my loan closed the week of thanksgiving.
overall, the experience was pretty good and I'm happy with the rate I re-financed to.
they were in constant contact throughout the process and I received a "Step Completed" e-mail after each of the 12 steps.
The 12 step checklist really appealed to the engineer in me =)