Refinance

I would suggest that you take cash out refinance, pay off the equity line from the cash received from the refinance. You have good equity in the house and would be able to get a refinance for a higher amount.

We are trying to keep our monthly payments as low as we can do to the fact that we just had a baby. One of the current offers we recieved was

1st Loan
Type Of Loan: ID51LIBIOR
Loan Amount: 312,000
Interest rate: 5.625%
Term: 360
Estimated Charges Due From Borrower: 15,007
Total Monthly Payment: 1,462


2nd Loan
Type Of Loan: IDBALLSECR
Loan Amout: 18,000
Interest Rate: 7.750%
Term: 180
Estimated Charges Due From Borrower: 412
Total Monthly Payment: 129

I guess i should have posted this question like this in the first place. What should I do?

HELP
Jon M

You want to keep a single payment but this offer has a 1st mortgage as well as a 2nd. If you are not planning to move out in the near future then take out a single fixed rate mortgage with a term of 30 years then the rate offers will be nearer to the current average rates.

The 1st loan with its rate seems like what would be suitable in your situation, 80% of the value of the house with a term of 30 years but do you have the division of the estimated charges they have provided of about $15,007?

From $3,12,000 after paying off the $2,40,000 you will have $72,000 to pay off the equity line & credit card debts of about $17,000.

Is there a specific area you are looking for or do you want me to type out the whole summary

Jon, why I was asking about the charges was to know what they have included in it. If it is very long then you can post the major higher amounts and leave out the smaller figures which are in hundreds.

Discount Fee: 4680
Appraisal: 350
Funding Fee: 700
Broker Processing: 995
Broker Fee: 4680
Escrow/closing Agent: 650
tittle search: 150
Title Exam: 295
Title Binder Fee: 650
Document preperation Fee: 50
Notary: 30
Borrower's Attorney: 595
Title Policy Premium: 837
Title Endorsements: 150
Reconveyance: 50
Reconveyance Tracking: 50
Escrow / Closing Agent Wire Fee: 50
Signing Fee: 200
E-Mail Fee: 75
Photocopy / Fax: 75
courier / Overnite Fee: 50
Recording Fee: 200
Mers Transfer: 4.95

Here is what I owe and want to consolidate

1)1st mortgage: 240000
2)Equity Line: 57500
3)Other Dept: 21200

(note)The two loans i described above were what I was offered to take care of my loans and other dept

Thanks again Jon m

As your house has appreciated in value, you would in a position to refinance your existing mortgage for a higher loan amount. One mortgage company has given you a estimate of how much you can expect to get from the refinance, $3,12,000. From this amount you will be able to pay off the equity line as well as major part of the other debts.

You need to contact few other lenders also and get rate estimates from them. That will give you better idea of the difference between the offers and which one to choose. A fixed rate mortgage will be what you should look for which have comparatively lower rates.

Emmanuelle

Hi jon,

Welcome to forums.

If you can go for a single loan worth $312000 for 30 year period, I think that will good choice for you rather than going for two loans. This is because you already have to clear remaining debt.

You may not wish to manage two loans just after paying off the mortgage, equity line and the credit card debt. Also, you may have to deal with high interest rate again with the second loan especially.

You may go for a LIBOR-indexed ARM as the interest rate on such loans are initially very low compared to other ARMs and there are periodic and lifetime caps which protect borrowers from wide fluctuations in interest rates. At the same time, these ARMs do not allow for negative amortization.

Thanks,
James.

Hi jon,

Welcome to the forums.

I have gone through the list of fees that you have provided but I am a bit skeptical about the broker fees and discount fee. You can just check out the closing costs with some other lenders and then compare them.

You should also check out the loan options and the rates of interest offered by different lenders. You can then compare the monthly payments and then decide upon the option that will best suit their needs.

Thanks,

Sara

Jon,

are you thinking of going for a fixed rate or an adjustable rate mortgage? Just asking so that I can provide you with some more information on the various options available in the market.

Jon,

Are you also aware that the estimate you have been given is for a 5 year fixed rate that then becomes an adjustable rate? Are you comfortable with that?

I don't know your credit score, but here's a very standard good faith estimate you could expect from Bank of America.

Discount Fee: depends on loan program...let's come back to this at the end....
Appraisal: not charged to customer
Funding Fee: 0
Processing: 719 + $200 application fee paid up front
Broker Fee: 0
Escrow/closing Agent: 250
tittle search: 150
Title Exam: 295
Title Binder Fee: 650
Document preperation Fee: 0
Notary: 30
Borrower's Attorney: 595
Title Policy Premium: 837
Title Endorsements: 150
Reconveyance: 50
Reconveyance Tracking: 50
Escrow / Closing Agent Wire Fee: 50
Signing Fee: 200
E-Mail Fee: ? are you kidding me? 0
Photocopy / Fax: 0

I'm not going to re-hash the title company fees, etc. as they muddy the water. Put it this way, they are going to charge what they charge REGARDLESS of the lender you choose.

Now, let's go back to discount. This broker is charging you 1.5% of your loan amount in discount and another 1.5% in origination. For a cost of over $9,000 you are getting a 5 year fixed rate at 5.625%

If you want a 30 year fixed rate through Bank of America (assuming you qualify) you are looking at a rate of 6.25% with no points = $0 cost. From there, you can reduce the interest rate by buying down the rate with discount points. To get an interest rate of 5.625% it would cost 2.00 points today or 2% of the loan amount. That's about $6,300.

If you are borrowing $312,000 (which is 80% of the $390,000 appraised value and by borrowing 80% you avoid private mortgage insurance) the payment at 6.25% = $1,921 per month loan payment

If you buy down the rate with 2 points ($6,240 cost) you lower the monthly payment to $1,796 per month loan payment.

The savings monthly is $125 and you break even after 49.92 months. But consider that by paying the $6,240 that's $6,240 you are NOT using to pay credit cards at higher interest rates.

My suggestion is to not buy down the rate and since you just expanded the home, a 5 year fixed rate seems like too short term of a solution for you. Let me know if I can give you more information

Ken These figures you gave seem good, my credit score is right around 700. I would like any more information you could give me cause i would definetely feel more comfortable with a 30 yr. fixed. The buy down option was never discused with this broker and the only way we could get the monthly payment down was to go with what they had offered. I am definately interested in talking some more about what you have to offer. I just have to wait untill the begining of april to finalize anything so I can avoid pre payment penalty on my current mortgage.

Thanks and I look forward to hearing from you,

Jon M

Jon,

You can e-mail me at the address at the bottom of this response. I look forward to talking with you.