Another refinance question...

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Joy
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Joined: Tue Jan 03, 2012 6:30 pm
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Another refinance question...

Postby Joy » Tue Jan 03, 2012 8:33 pm

Hello everyone...I want to refinance my mortgage loan and need help deciding which option is the best...my current loan is for 30yrs at 5.75%...balance is $303,100...my current monthly payment is $1848 (principal & interest only)...I have excellent credit and qualify for the lowest rate...I intend on keeping the property for at least 5 more years.

My options are:

Option 1:
Interest rate: 3.75%...if I choose to pay a 1% origination fee and .375 points
Closing cost est: $10978 (this estimate includes the origination fee/points)
Monthly payment est: $1455

Option 2:
Interest rate: 4.125%...with no origination fee and 0 points
Closing cost est: $6872
Monthly payment est: $1502

I can roll all fees into the loan for both options...

Option 3:
I was also told that I can pay the 1% origination fee and .375 points out of pocket to get the 3.75% rate and roll the remaining closing cost into the loan...that would make my monthly payment estimate $1429...I would be paying approx $4100 out of pocket if I decide not to roll the origination fee/points into the loan.

They used high-end numbers for the closing cost estimates but some of the fees that were included will not be applied...so it will be lower but I doubt if it's by much.

Sorry this is so long and I'm sure to some it may be a no brainer but I honestly don't know which option to choose...my main goal is to have a lower monthly payment...I can afford to pay the origination fee/points out of pocket but I prefer not to.

I guess what confuses me is the fact that I'm increasing the loan if I roll the fees into it...but does it matter if I don't intend on keeping it for 30yrs?...and if I pay any fees out of pocket, wouldn't that be a bad move for the same reason (not keeping it for 30yrs)?

Please advise...
Last edited by Joy on Tue Jan 03, 2012 8:38 pm, edited 1 time in total.

tazdollars
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Joined: Mon Sep 29, 2008 7:32 am
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Re: Another refinance question...

Postby tazdollars » Tue Jan 03, 2012 8:37 pm

Have you looked into what the interest rate would be for a no-cost refi (e.g., -1 points)?

Joy
Posts: 2
Joined: Tue Jan 03, 2012 6:30 pm
Contact:

Re: Another refinance question...

Postby Joy » Tue Jan 03, 2012 9:16 pm

Thanks didn't know those exist and will check it out...

Also, not sure if this matters but my current loan is a VA loan...I will be using the same VA loan and do a "Streamline" for a lower rate...VA has a .5% funding fee

TCstr8
Posts: 293
Joined: Sat Jun 06, 2009 11:49 pm
Location: Cincinnati, OH
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Re: Another refinance question...

Postby TCstr8 » Thu Jan 05, 2012 1:49 pm

Not sure what state you are in, as rates will vary from state to state. Also, not sure if you are dealing directly with a bank or with a broker as the way they are compensated differs. I just took a quick look at a lender we deal with for VA loans, and here is what it looks like:

In Ohio
30 Year Fixed VA loan
3.75% (estimated APR 4.125%)
Estimated Closing Costs would be ZERO plus title fees (so ZERO would be the lender/broker fees)

Closing costs do not include your new escrow accounts or the daily interest that is dependent upon the day of the month you close. Those items are considered PREPAIDS, and would not vary from lender to lender.

So my question would be, what are the other fees.
T.C. Strait
Ohio Loan Officer / Manager @ Mortgage Broker
NMLS ID 164070
http://www.ohiomortgagesolutions.com
http://www.ohiofha.com

TCstr8
Posts: 293
Joined: Sat Jun 06, 2009 11:49 pm
Location: Cincinnati, OH
Contact:

Re: Another refinance question...

Postby TCstr8 » Thu Jan 05, 2012 1:52 pm

Also, are you including the VA Funding Fee in the closing cost figures? Generally the VA Funding Fee is added on to your loan balance. For instance:

Base Loan Amount $300,000
VA Funding Fee: $1500
Final Loan Amount: $301,500
T.C. Strait
Ohio Loan Officer / Manager @ Mortgage Broker
NMLS ID 164070
http://www.ohiomortgagesolutions.com
http://www.ohiofha.com


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