Posted on: 24th Jun, 2010 12:04 pm
i have a house that my bank ( us bank) sent me a letter that i can refinance. it is a 30yr fixed 4.875 % / 5.017 apr principle and interetst payment will be $983.53 . my current mortgage is 6.375% principle and interest rate is 1159.77 . my credit score is 800 and excellent. my two questions are is it worth it to refinance and pay the closing costs to do this refinance and also with my score being so high do you think i can get a better rate somewhere else. thanks so much.
With your loan amount of roughly $186,000, the rate offered to you is much too high. Yes, it would be worth it to refinance, no it would not be worth it to overpay on rate and fees. Find a good broker in your area and get a new quote.
thanks so much. I live in Windsor CT is there any website I could use or can you recommend a bank? Thanks so much. Also what rate and APR should I be looking at? Thanks.
Does the new mortgage include all of your closing costs?
If you do a new mortgage at 4.875% and the monthly principle and interest payment would be $983.33, that would be a starting mortgage amount of $185,811 or about $186,000 as Gregorio notes.
If your present mortgage is at 6.375% and your monthly principle and interest payment is $1,159.77, that would be for a starting mortgage balance of $185,899.
It is not likely you got the 6.375% mortgage last month.
Does the new mortgage at 4.875% (or lower if you shop) include all of your closing costs??? Then it makes sense to refinance at 4.875% or lower.
If you do a new mortgage at 4.875% and the monthly principle and interest payment would be $983.33, that would be a starting mortgage amount of $185,811 or about $186,000 as Gregorio notes.
If your present mortgage is at 6.375% and your monthly principle and interest payment is $1,159.77, that would be for a starting mortgage balance of $185,899.
It is not likely you got the 6.375% mortgage last month.
Does the new mortgage at 4.875% (or lower if you shop) include all of your closing costs??? Then it makes sense to refinance at 4.875% or lower.
You can decide on what rate works for you, there is more than one rate available on any given day. 4.875% should work well for you given your scenario because you should have very little closing costs. Your break even will be very quickly and you will start saving money. Lower closing costs = higher rate and higher rate, "should" = lower closing costs. At 4.875% you should have very little closing costs, I come up with 4.875% with an APR of 4.897%. I do not originate in your state, but certainly someone can achieve that for you. Since you received that offer in the mail, it's most likely outdated.
The closing costs I believe where 3,000 so the APR rate includes the closing costs. MY current mortgage is 181699 the new mortgage after the refinance will be 185850 hope that helps and thanks.
The costs of $3,000 from US Bank may be lower than you could get anyplace else. They have your escrow account and have probably not increased your costs to an amount covering the new escrow account set up costs that would be required at a new lender.
It is also not possible for us to determine if they are quoting a rate of 4.875% and in that rate covering some of the closing costs
In other words, a rate of 4.875% and that loan amount could be a good deal. Only shopping and comparing will decide.
If US Bank sent that rate in a letter, call them now. Rates have dropped a little the past couple of days and maybe they will tell you a lower rate.
Other lenders may have a lower rate but higher costs to cover whatever US Bank does not have to cover because they already have the loan and the escrow accounts.
It is also not possible for us to determine if they are quoting a rate of 4.875% and in that rate covering some of the closing costs
In other words, a rate of 4.875% and that loan amount could be a good deal. Only shopping and comparing will decide.
If US Bank sent that rate in a letter, call them now. Rates have dropped a little the past couple of days and maybe they will tell you a lower rate.
Other lenders may have a lower rate but higher costs to cover whatever US Bank does not have to cover because they already have the loan and the escrow accounts.
"It is also not possible for us to determine if they are quoting a rate of 4.875% and in that rate covering some of the closing costs "
It is possible because we have an APR listed at 5.017%
"Other lenders may have a lower rate but higher costs to cover whatever US Bank does not have to cover because they already have the loan and the escrow accounts."
If there is an escrow account, whatever is in there will be refunded; escrows are NOT closing costs and should never be compared as such. An "escrow setup" fee, if someone charges one, is minimal and would be part of the APR. An APR of 5.017 tells you what the fees are and they are too high for that loan amount at 4.875%. $3000 in fees as of this minute, is too much. Yes you should call US Bank bank and see what they can offer you now, but do shop elsewhere as well. The fact that they already have your impounds is irrelevant.
It is possible because we have an APR listed at 5.017%
"Other lenders may have a lower rate but higher costs to cover whatever US Bank does not have to cover because they already have the loan and the escrow accounts."
If there is an escrow account, whatever is in there will be refunded; escrows are NOT closing costs and should never be compared as such. An "escrow setup" fee, if someone charges one, is minimal and would be part of the APR. An APR of 5.017 tells you what the fees are and they are too high for that loan amount at 4.875%. $3000 in fees as of this minute, is too much. Yes you should call US Bank bank and see what they can offer you now, but do shop elsewhere as well. The fact that they already have your impounds is irrelevant.
Greg, come on, esrows are relevant.
Costs of $3,000 are not high. Between appraisal and title and closing agent and recording, the costs are right around there.
If taxes are paid twice a year and taxes were just paid or soon to be paid, and, not knowing if taxes are high or low, a client can be paying thousands in taxes into escrow or paying taxes next due at closing and there could be something or nothing in the escrow account to get back depending on whe taxes were last paid. At the time of closing with a new lender the client has to pay all that or increase the loan amount to cover. With the existing lender, there is no escrow problem that must be covered.
All of your comments and advice above is on the money and excellent but you can not say escrows are not important. I was not referring to an escrow fee, I was referring to the fact that it may take thousands to set up the new escrow account with a new lender and it takes no money at all to cover escrows with the present lender. The client may not have thousands of $ to do that and you and I have no idea how many thousands that is and it is important because must have that money at a point in time.
Escrowing is not a cost in mortgage terms, but it is money the client must come up with at a point in time--closing.
Costs of $3,000 are not high. Between appraisal and title and closing agent and recording, the costs are right around there.
If taxes are paid twice a year and taxes were just paid or soon to be paid, and, not knowing if taxes are high or low, a client can be paying thousands in taxes into escrow or paying taxes next due at closing and there could be something or nothing in the escrow account to get back depending on whe taxes were last paid. At the time of closing with a new lender the client has to pay all that or increase the loan amount to cover. With the existing lender, there is no escrow problem that must be covered.
All of your comments and advice above is on the money and excellent but you can not say escrows are not important. I was not referring to an escrow fee, I was referring to the fact that it may take thousands to set up the new escrow account with a new lender and it takes no money at all to cover escrows with the present lender. The client may not have thousands of $ to do that and you and I have no idea how many thousands that is and it is important because must have that money at a point in time.
Escrowing is not a cost in mortgage terms, but it is money the client must come up with at a point in time--closing.
John, no one said escrows were not relevant ever, what I said is that they are irrelevant for comparison purposes. It all will come out in the wash the same. It may be true that the amount due at closing may be higher, but this is not a true closing cost because whatever funds are in escrow now will be refunded. Impounds are NOT part of APR so looking at a high 5+% APR has nothing to do with impounds. You are confusing the issue here. Closing costs are closing costs and impounds are impounds. Regardless of what lender they use, their impounds will be exactly the same. The only difference would be a setup fee, (if charged) and that is certainly not thousands of dollars.
Summary: They were offered 4.875% / 5.017% APR and it's too high!
If by switching lenders the borrower can save $3000, but have to establish a new escrow account, then maybe that's the best way to go. Please don't mislead them into thinking that by doing so they are actually paying more. If an escrow setup fee is $250 and they are saving $3000, they net $2750 even if they have to wait for their old impounds to be refunded to them.
Summary: They were offered 4.875% / 5.017% APR and it's too high!
If by switching lenders the borrower can save $3000, but have to establish a new escrow account, then maybe that's the best way to go. Please don't mislead them into thinking that by doing so they are actually paying more. If an escrow setup fee is $250 and they are saving $3000, they net $2750 even if they have to wait for their old impounds to be refunded to them.
"The closing costs I believe where 3,000 so the APR rate includes the closing costs. MY current mortgage is 181699 the new mortgage after the refinance will be 185850 hope that helps and thanks."
Jonathan,
What I am saying is that you can refinance your current balance of $181,699 to a 4.875% rate without raising your principal balance and without paying "closing costs". Yes, if you are required to have escrow impounds you will need to pay to establish these, but you will be refunded the impounds you currently have if you do so. These are NOT closing costs.
Jonathan,
What I am saying is that you can refinance your current balance of $181,699 to a 4.875% rate without raising your principal balance and without paying "closing costs". Yes, if you are required to have escrow impounds you will need to pay to establish these, but you will be refunded the impounds you currently have if you do so. These are NOT closing costs.