ukemigrant

It's all about the finances this month... Anyone have any recent direct experience refinancing a mortgage? I have an offer from Wachovia Bank at the moment through lendingtree.com and was wondering if anyone had refinanced recently.

They aren't looking for title insurance so it brings the closing costs way down (currently about $700 in total compared with the next best from other lenders of $1600).

Thanks.

evoal2003

Fat brit is your man for this...

ooops to fast I never thought to see if your in AZ

ukemigrant

Not in AZ, but then Wachovia Bank operates all over the US for example.

BritGuyTN

as far as i am aware title insurance is a one-off when you purchase the house - you don't need additional when you re-fi. I could be very wrong

try these guys out

www.madrate.com

they always seem to have a reasonable deal and don't give me too much BS when i speak to them

fatbrit

You need to consider the whole deal. Here's an explanation:
There are two places to make money: the front in fees or the back in rate. It's not a problem to have a "no-fee" loan; the lender/broker simply rolls their profit and expenses into an increased rate. But whether this is good for you depends on how long you're taking the loan . Banks and similar are pretty inflexible: here's the deal and take it or leave it. Also, their portfolio of loan types is usually pretty limited which is fine and will get you the best deal if you fit very snuggly in their box ,but not so good if you don't. You generally cannot negotiate with them. A broker will have access to many lenders (including the banks' mortgage arms who often offer different terms to brokers than their own branches) and is more likely to find you a snug fit. Both are going to make a profit, but at least with the broker you can ask to have the profit moved to where it is most beneficial for you and otherwise negotiate. Your only interest is the best deal, and since this is going to probably be your biggest budget item, it's worth sweating it out, frustrating though it may be.

Generally, anything marked broker fee, loan origination fee or discount points is profit (and operating costs); the title insurance is not. I'm unsure why Wachovia are not putting it in as the title insurance normally included is there solely to protect the lender.

You need to take all the offers and run them up in XL using scenarios for how long you intend to keep the loan to find the best deal for your particular circumstances. If you shop other lenders do them very soon so you only get one hit on your credit score

ukemigrant

Thanks for those tips - that's generally the way I work - just wanted other people's recent experiences.

Brit'n'TX

we are in the process of refinancing and have just found out we are the victims of a shady mortgage broker ... we bought our house just over two years ago and got our 1st mortgage - having been in the country only 12 months and having a crap credit score, we were glad to take what we could get and settled for a 2 year ARM (adjustable rate mortgage) which starts off with a 2 year fixed rate but can then be hiked up to 4% .. the broker told us that wasn't a problem, as we'd be able to refinance after 2 years anyway - what I can't believe is that I missed the smallprint where it said that there was a prepayment penalty of 4.5% if we settled within 3 years!

as luck would have it, shady mortgage co. sold the debt to HSBC and as long as we refinance through them, there is no penalty ..

they have a pretty good scheme at the moment - as long as you make your payments on time every month, your interest rate drops .25% per year for the first 12 years so, by year 13, your rate has dropped 3% - keep your payment the same and the term of your mortgage is considerable shortened .. do as we do and pay bi-weekly (the equivalent of 13 months payments per year) and it comes down even faster ...

we also bought the rate down 3 points (1.05%) and have rolled all the closing costs (3% of the loan - a little higher than most of the online lenders) into the loan (ie no out of pocket expenses), so we have a pretty good deal now

Lynne

My mortgage is with Wells Fargo. Recently, and out of curiosity, I called them to find out what deal they could give me. If I refinance for what I owe and go back to 15 years (am currently at 11) the rate is 2% less than I had, the payments would go down and, here's the kicker, no appraisal, no closing costs, no points, all I would have to pay is the cost of getting the documents notarized and since I work in a law office where everyone but me is a notary, I could do the whole deal for nothing.

fatbrit

Prepayment penalties are a usual feature of subprime loans; you can buy them out with a higher rate, but this is often quite punitive, too.

The problem for newcomers is not just the lack of credit score but the lack of sufficient US work history preventing them qualifying for prime mortgages. Still, it's often better, especially if house prices are rising, to take the subprime or even an FHA rather than waiting to get on the ladder and paying somebody else's mortgage instead. And nothing is better for your credit score than a good few solid years of mortgage history.

Brit'n'TX

what I didn't like (and think is immoral) is to be faced with either paying a hiked up interest rate for the 3rd year or the prepayment penalty!

fatbrit

Yep -- you were lucky with HSBC taking it over and being able to refinance. The gods were smiling! Prepayment penalties can be draconian in the subprime market, and they like to position you between a rock and a hard place as this is where you are at your most profitable (for them!). However, the "benefits" with subprime are you don't pay mortgage insurance (which can be a factor if you're > 80% LTV) and you don't need the sterling credit scores.

AmerLisa

ding, ding, ding.....that's what we've just done (bought a house with virtually no credit - they used alternative credit) However, we had to buy the mortgage insurance which put a higher cost on things...s'ok we can deal with that until we re-mortgage. But, here's hoping interest rates will be within a comfortable spot when we re-mortgage, which our broker said we could do in a year.

Brit'n'TX

agreed - and I would advise anybody intending to stay here to take out a mortgage as soon as possible (just read the bloody smallprint and don't believe what your broker tells you!) - yes, you'll have to settle for subprime and it's accompanying rates but, as long as you're careful (or lucky, like us) it will only be for a couple of years and it will do wonders for your credit rating ..

fatbrit

Yep -- you get super-weird mortgage insurance with FHA, but cheaper interest rates than subprime instead. Swings and roundabouts. Congrats on becoming a homeowner BTW.

AmerLisa

Yes the interest rate is pretty good, all things considered, helps with the mortgage insurance jacking up the total price. Its all doable and that's the bottom line in the end. We love being in our own house again.... Unfortunately we are still trying to get the security deposit from our rental.....it looks like I'll have to get tougher and I'm so not wanting to do this, I want to close that chapter (the rental house) and move on!