Posted on: 28th Jun, 2010 02:33 pm
We are refinancing with the same bank for a lower rate. The new loan amount is $1200.00 less than the current balance, plus the GFE states we will get $72.00 at closing. the loan officer said that the reason we don't have to pay anything is because we got a premium rate. How is that possible to refi for less than the current balance and pay nothing out?
It's not unless your loan officer works for free and feels like paying off some of your mortgage. It's likely either a mistake or your loan officer is full of *%^$#. One of the two.
you didn't say what the rate is. it's possible if "premium rate" is code for a rate higher than normal to cover all costs. on a 30 year fixed, if i gave you a 5% rate when you should have a 4.25% rate i too could refinance you for less than what you owe. post what your rate is.
Greg,
Not following. Supposedely the yield premium is to be applied to the principal balance of the old loan. Haven't seen this. Perhaps the payoff is LESS THAN the principal balance (credit for escrow or whatever) and new loan is not escrowing for T&I. More likely the LO is a tenderfoot.
Not following. Supposedely the yield premium is to be applied to the principal balance of the old loan. Haven't seen this. Perhaps the payoff is LESS THAN the principal balance (credit for escrow or whatever) and new loan is not escrowing for T&I. More likely the LO is a tenderfoot.
On a rate and term refi you can get up to $2000 back at closing. If the YSP covers all of the closing costs and the cash back at closing would exceed $2000 and rather than take the extra as compensation, I have been able to use the remainder as a principal reduction. Not all lenders will allow this, but it has and can be done. I don't know your LO or what they are doing, they very well may be a crook, just letting you know that the scenario by itself is not indicative of crookery.