I'm looking into refinancing my home loan but not too sure which bank should I go with. It seems like most bank are offering about the same interest rate, the difference is probably the closing cost. My question is should I refinance with my current bank or with a different bank? My current bank is offering a 1% cash reward program with a interest rate of 4.25-4.5% and the closing cost around $3,800, 30 yr term. The second bank that I spoke with is offering an interest rate from 4.25-4.5%, closing cost about $2,500-$2,700 with a 30 year term. The third bank offer 3.83% for a 15 yr. term with a fee of $1,200 only. I have gotten some advice through friends. Some has suggested that I should stick with the current bank because it would be a lot easier and plus they are offering the 1% cash back reward. Other thinks that the third bank seems like it would be a great loan but doesn't seem to real to be true because the fee is just $1,200. Is there something I should be looking into or ask my loan agent when I'm serious about refinance. My current interest rate is 6.125% on my loan so I know it time to refinance now. If you were in my situation, which bank would you refinance with? Any advice would be greatly appreciated. Thanks
Call me so we can discuss I am a loan officer and I can help you get the best deal!!
G. ###-###-####
Compare at APR % of all the banks. APR is interest rate plus the fees the bank is charging. It is the true cost of the loan not the interest rate. The one with the lowest APR is the best value. Big question is can you afford to the monthly payment of the 15 year loan. The amount of money you save paying your house off in 15 years in huge, if you can do it.
Hi H. M,
Well I am a loan officer for one of the largest banks in the world so hopefully I can help you navigate through this process.
1. Rates are all pretty similar in these examples- and good-
2. As far as what you have been quoted for closing costs- this is sometimes different for two reasons- 1 actual bank fees like origination, discount points, lender processing, doc prep underwriting fees and 2. Because computer programs are a pain in the butt and sometimes they populate the wrong info. Bottom line fees like title, docs stamps, gov’t fees etc are going to be the same no matter who you choose. So just look at the bank fees mentioned.
3. Nothing is free! Don’t believe any hype- that 1% cash back is hidden somewhere- now it could be they just don’t want to lose the loan so they are passing on the rebate- but look closely at their fees. In addition I would ask your current lender if they will have to reset up your escrow account or if they are rolling it over- if they are rolling over that saves you money in the long run.
4. Yes, if you can swing a 15 and you qualify for it do it- interest is crazy!
and that rate on a 15 year seems a little high but am guessing that’s because they are paying some closing costs for you that’s why they are only “charging you” $1200- see nothing is free!
I hope this was helpful- if you need further help please contact me
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Always go for the 15 year if you can swing it!
Compare the APR offered from each bank. The APR is what levels the playing field and allows you to truly compare the deals for each lender. It makes it a comparison of apples to apples instead of apples to oranges.
The APR is a calculation of the interest rate and fees, over the life of the loan. So, for example, if your rate is 4.5% then your APR may be 4.6%. You really must know the APR to be able to make a good decision. Going with your current lender may not be what's best and it doesn't guarantee an easier process.
Oh, and ANY mortgage professional should guide you to the APR...if they don't, then walk away and find somebody more knowledgable.
Also, ask the lender what their processing times are. Lots of lenders, especially the bigger National companies are having really slow turn times. My M. works for one of the big ones and feels that company is headed for a bad place because of the customer service with being able to get the loans done in a quick manner. Bigger does not mean better!
(I've worked for two Bigger lenders, now I'm with a smaller company and I love it because we focus more on the customer and less on the deal. Best decision I've ever made going to a smaller lender.)
Hmm..someone said they had no fees but the closing costs rolled in well, the fees are in the closing costs...they are all put together and normally all rolled into the note so you don't have to pay for anything out of pocket. If anyone says there are no fees they just mean no fees to pay at closing...no one can do the loan for free or with no closing costs trust me people as and expect that all the time. It takes money to close the loan and do all the paperwork, etc.
Anways, you need to decide on whether you need a lower payment right now or if you can handle the payment you are at, most likely your payment would stay about the same at a 15 yr note going down with the new rate, then you can pay off your house sooner but if money is tight then it's better to take the lower payment and whenever you have extra money just send in extra and you can pay off sooner. Or if you plan on moving in a few years then take the lower payment, so you won't be strapped knowing you will be leaving eventually. If you can, some people offer a 20 year term and that's normally the best and by the way, the 3rd sounds too good to be true, if they maybe quoting that to you on the phone but in the end they rack up the fees, it's against the law but it happens. Good luck!!
Hi H. - I'm not exactly sure what they are talking about with a 1% cash reward program. Are they waiving your origination fee? We're in the process of doing refi and our rate is going to be 4.25 on a 30 yr with no origination. Closing costs are very similar to yours since we have to purchase a new title policy.
All banks have very strict requirements as to disclosing up front their costs, etc. Ask for a cost estimate to be emailed or faxed to you so you can compare apples/apples.
Good luck!
Using the information you've obtained add up the costs and subtract incentives and go with the one that will cost the least. Do consider the banks' reputations and success with mortgages. Investigate the bank its self as well as the cost.
As to the fees. I've refinanced my house when there was no fee and the closing cost was rolled into the loan. Refinancing is a business. When they have money to loan and a good candidate they may not need to charge anything.
