Advice on Refinancing a Home

Messages
708
Location
Indiana
Thinking of refinancing our home, we could drop the rate 1.5%.
We have had enough dealings with home loan officers over the years that most of them give me a shady used car salesperson vibe. Its questionable if it would be worth it to refinance depending on our future here, however we are exploring the idea.

Dealing with the different companies usually has the same outcome, you have to talk to a person, in this day and age why is this? Why cant I just put my information in and they give me an offer subject to all the hoops you jump thru? I get the feeling the way they call you back right away they are desperate like a shady car dealer.

We bought our house before the housing crash, getting the mortgage was very easy, they were giving loans out to anyone for anything it seemed.

Our house is assessed by the county at 225k, we owe 115 on it. It ticks me off that an appraisal is necessary with some lenders when we clearly have some equity in it. The land and garage are almost worth would be new loan value. The lender we spoke with requires an appraisal.

They told my wife they were not doing cash out refi's due to covid... Seems some lenders are, some are not. We are not really looking to do a cash out, I want to pay this thing off eventually not prolong it.

I just dont know what to think, over the years we dealt with several frustrations when getting a home loan.

Years ago we bought a house and were going to put down 40k, that would have brought the loan down to 90k or so, the mortgage broker told us that the rate would be higher if the loan was under 100k.....I didn't quite believe that at the time, however In the end I trusted him and we took a loan for 101k. I assume he got a better commission or something.

We refinanced this home a few years after the crash to get rid of the PMI and get the better rates available (long story on why we had pmi, involved owning two houses at once, I suggest everyone do this at least once in life, lol) and the appraiser came out and started measuring our knee walls in our bedrooms stating if they were not 5 foot tall they wouldn't count as bedrooms, I about blew my top. Things like this are never an issue when I buy something, but when I go to sell it or in this case refinance gets nitpicked to death. The appraiser got out a tape measure and had me hold it while she took a picture to document they were over 5 ft tall. Anyway we were ok there and all we got a new mortgage and everything was wonderful.

Have you ever successfully negotiated lower fees, appraisal price ect... I mean the whole game reeks of used car sales so why not play the game?

I am going to contact a local bank we have used before, see what they say, I am just looking for advice I guess.
I always get done with the home loan process feeling ripped off.
 
Messages
18,534
Location
Michigan
I myself am turning into this one. I myself am not really a fan of lenders (even worked for one for a short time) We bought at the end of the housing crash, and picked up a clean HUD home. I wouldn’t mind refi”ing myself, but we own less than 50k on it now......
 
Messages
827
Location
TX
I‘m currently in an FHA, about to do a streamline refi to get a much better rate. Why do I have to pay for another title insurance policy there’s no change in ownership? I don’t know, but lenders have their reasons. Everything they require is for a reason. I wouldn’t sweat an appraisal. They need to make sure they’re not financing a burned out meth house or something like that. The bank is within their rights to protect their interests. Just think, every way someone can screw a lender has happened. Shop around.

Yes, loan officers are eager to get your business. They earn their livelihood by loans.
 
Messages
1,007
Location
PR CA, USA
Found a friends sister did loans, Refinancing etc. Makes life so easy when it’s someone you know and trust. Ask around to get a real known person, not just someone looking to make some quick cash off you that you may never see again.
 
Messages
1,025
Location
Virginia
We refinanced back in October. I had used BB&T since we built the house back in 2008, but I figured this was going to be our last refi (due to such low rates) so I searched for the lowest rate and fees I could, which ended up being a 15 year at 2.25% and about $1k in closing costs with Amerisave. Hoping to pay it off in 10 or less.

The process was pretty simple - you just upload requested documents to their website. They didn't require an appraisal and we were done in just a few weeks. Throughout the process there's a representative assigned to you who you can call or email for guidance, but for the most part it's driven by the website.

The closing was outsourced to a contractor in the area who came to our house (which is the middle of nowhere) and he was no nonsense. In and out in no time. I've made a couple of payments at this point via the website and everything is fine so far.
 
Messages
5,044
Location
South Carolina
Go right to the source. Mortgage brokers HAVE to earn a commission to make a living, which is ok, after all they are providing a service. But don't think you are going to get the best rate. You will pay, either a fee or point.
Its really simple, go to your local credit union or savings bank and LARGE commercial bank and get rates.

I understand your desire to do everything on line. Well, that could not be more simple and some of them get outstanding reviews.
My choice to try would be Rocket Mortgage which is owned by quicken loans, its all on line.
OR
Another OUTSTANDING online mortgage lending is BetterMortgage. www.better.com it can't be more easy, its all online.
Don't overthink it. its a loan, easy stuff. the two online lenders have it down to a science.

https://www.nerdwallet.com/best/mortgages/refinance-lenders
 
Messages
10,699
Location
MA
Real estate broker here. Yes, minimum loan amount is about 100k. They get paid based on a percentage of the loan so it's not really worth it to do a loan lower than that. Traditionally mortgage brokers did better with large loans, credit unions and local banks did better with smaller loans, in the middle it's a toss up, just have to shop around. I have a small list of lenders I always recommend and it basically varies on who has the best rate and term. I think it basically boils down to how busy they are, if they're busy the rates are slightly higher, if they're not, they're slightly lower.

When you put your info into those sites, they're basically reselling your info to various lenders and the lenders know that the first one to call them will probably get the business. That's why they're so aggressive, they probably pay a few hundred per lead and probably because of that, they might not be that cheap. Which is why it might be cheaper at the credit union/local bank as they're not paying for leads. Lenders have always required appraisals, when they didn't they'd end up lending on a house that didn't exist.

Also to answer the title insurance question, you need title insurance on the loan amount. If you bought title insurance with the house, that title insurance covers the owner for life. Once you get a new mortgage, that mortgage needs title insurance.
 
Messages
1,746
Location
TX, USA
In most cases, people refinancing is just spreading the payment to a longer term, so actually you are not staying ahead even when the interest rates go down. Obviously, with smaller amount to (re)finance (what left over in your mortgage) and longer term, the payment will go down whether or not the interest rate goes down.

So they ended up paying more for the interest.

I would suggest that you do a proper amortization using a spreadsheet and you will see quantitatively whether you should refinance or not.
That way you can see exactly how much you have to pay now and how much you have to pay after refinance.
Also add all the cost to do a refinance in the calculation because they are not "free".

I hope it makes sense.
 
Messages
17,318
Location
Silicon Valley
Thinking of refinancing our home, we could drop the rate 1.5%.
We have had enough dealings with home loan officers over the years that most of them give me a shady used car salesperson vibe. Its questionable if it would be worth it to refinance depending on our future here, however we are exploring the idea.

Dealing with the different companies usually has the same outcome, you have to talk to a person, in this day and age why is this? Why cant I just put my information in and they give me an offer subject to all the hoops you jump thru? I get the feeling the way they call you back right away they are desperate like a shady car dealer.

We bought our house before the housing crash, getting the mortgage was very easy, they were giving loans out to anyone for anything it seemed.

Our house is assessed by the county at 225k, we owe 115 on it. It ticks me off that an appraisal is necessary with some lenders when we clearly have some equity in it. The land and garage are almost worth would be new loan value. The lender we spoke with requires an appraisal.

They told my wife they were not doing cash out refi's due to covid... Seems some lenders are, some are not. We are not really looking to do a cash out, I want to pay this thing off eventually not prolong it.

I just dont know what to think, over the years we dealt with several frustrations when getting a home loan.

Years ago we bought a house and were going to put down 40k, that would have brought the loan down to 90k or so, the mortgage broker told us that the rate would be higher if the loan was under 100k.....I didn't quite believe that at the time, however In the end I trusted him and we took a loan for 101k. I assume he got a better commission or something.

We refinanced this home a few years after the crash to get rid of the PMI and get the better rates available (long story on why we had pmi, involved owning two houses at once, I suggest everyone do this at least once in life, lol) and the appraiser came out and started measuring our knee walls in our bedrooms stating if they were not 5 foot tall they wouldn't count as bedrooms, I about blew my top. Things like this are never an issue when I buy something, but when I go to sell it or in this case refinance gets nitpicked to death. The appraiser got out a tape measure and had me hold it while she took a picture to document they were over 5 ft tall. Anyway we were ok there and all we got a new mortgage and everything was wonderful.

Have you ever successfully negotiated lower fees, appraisal price ect... I mean the whole game reeks of used car sales so why not play the game?

I am going to contact a local bank we have used before, see what they say, I am just looking for advice I guess.
I always get done with the home loan process feeling ripped off.

I ran through this exercise a few years ago and this is my experience:

1. You cannot negotiate with a particular agent or bank, they get their whole sale program and they do not negotiate. You either take it or leave it. You could pick your agent based on how much he or she make off the program and find one that cash back to you out of his or her pocket, into an escrow account for your property tax / insurance, or send you a check but you need to pay tax on it as an income.

2. Local bank clear relatively fast, but they never have the best deal. I only use them for home purchase.

3. Appraisal or not, how picky is their "signature" notary policy, has to do with the financial institution, not the agent, you don't get to decide whether "that signature is not his, tell him to sign again" or "no appraisal is necessary". You need to talk it all up front with the agent to see whether it works with you or whether it is the best deal.

4. Appraiser ask me up front how much is my loan and then decide how sloppy of a job he or she needs to do. They know if there is a big safety margin (i.e. you are refinancing only 50% of the market value), they can just do a quick one and they will never be in trouble (you foreclosed and the bank is up side down on a repo, and they need to pay out of their appraisal insurance).

5. The rural agents from low cost of living states are the one to get, they will do refi even for California (maybe Hawaii too) living in Nebraska as long as they have a license, and everything over the phone. I have never, ever, met any agent in a refi, even the one 5 miles away from me. So why bother with a local bank?

6. It is just business, don't take the appraisal and the paperwork too seriously. Sometimes they have policy that "you have to pay this and that" but the agent promise up front that they will reimburse you for it in writing, then it is all good. Those are usually "cash back" refi at a slightly higher apr but in the end still lower than competition (i.e. company A's cash back refi is same rate as company B's no cost refi, but the cash back is larger than the cost of all other paperwork like appraisal and title insurance).

7. You have time in a refi, shop well, and relax.
 
Messages
17,318
Location
Silicon Valley
In most cases, people refinancing is just spreading the payment to a longer term, so actually you are not staying ahead even when the interest rates go down. Obviously, with smaller amount to (re)finance (what left over in your mortgage) and longer term, the payment will go down whether or not the interest rate goes down.

So they ended up paying more for the interest.

I would suggest that you do a proper amortization using a spreadsheet and you will see quantitatively whether you should refinance or not.
That way you can see exactly how much you have to pay now and how much you have to pay after refinance.
Also add all the cost to do a refinance in the calculation because they are not "free".

I hope it makes sense.
... if the original loan is from the same interest rate bracket as the new loan ...

Say the original loan was with 6% APR 30 year fix, refi to 10 year fix that same time would likely land you 5.5% APR. However if you have a 3/1 ARM and you need to refi anyways, then it make sense, or if you had that 6% APR 30 year fix and now that same 30 fixed is 3.5%, and you decided to refi to a 10 year fixed, then you are going to get 2.75% or something like that. This would be a huge saving.
 
Messages
5,044
Location
South Carolina
In most cases, people refinancing is just spreading the payment to a longer term, so actually you are not staying ahead even when the interest rates go down. Obviously, with smaller amount to (re)finance (what left over in your mortgage) and longer term, the payment will go down whether or not the interest rate goes down.

So they ended up paying more for the interest.

I would suggest that you do a proper amortization using a spreadsheet and you will see quantitatively whether you should refinance or not.
That way you can see exactly how much you have to pay now and how much you have to pay after refinance.
Also add all the cost to do a refinance in the calculation because they are not "free".

I hope it makes sense.
Bingo!
PERFECTLY said.
Any refinance should be into a 15 year loan not 30 OR a 30 using an amortization sheet and paying it like a 15 or less mortgage, though most of the public do not have that discipline.
Its silly to refinance with a 30 year mortgage as you just paid almost no principle for the first 7 years and still owe the same amount of money on your home with your current mortgage, you only paid interest and now by doing another 30 year mortgage you would be starting off doing the same thing over again, worse is people take out extra cash and buy stuff with a home mortgage, the interest of buying that stuff on a 30 year loan cost you way more then you paid for it, just in interest.
 

5AcresAndAFool

Thread starter
Messages
708
Location
Indiana
Real estate broker here. Yes, minimum loan amount is about 100k. They get paid based on a percentage of the loan so it's not really worth it to do a loan lower than that.

Very good info in these replies, We live in Indiana and its still possible to buy a house here for under 100k (though getting harder). The would be loan for under 100k in my story happened almost 20 years ago, It seemed to me he was just pushing for the higher loan amount saying under 100k and you pay a higher interest rate. It was interesting because there were many homes for sale under 100k, so if what he said was true you could theoretically be ahead buying a house for 105k vs 85k.

I almost dropped that broker over an incident where he physically showed up to my employer, which was right down the street from his office, asking questions. My employer at the time was a very large corporation, not a fly by night operation. I chewed him out and started the process with another broker, but in the end his rate was better and we needed to get the deal done. However I will never use that person again (last I looked he was closed up anyway).
 

5AcresAndAFool

Thread starter
Messages
708
Location
Indiana
In most cases, people refinancing is just spreading the payment to a longer term, so actually you are not staying ahead even when the interest rates go down. Obviously, with smaller amount to (re)finance (what left over in your mortgage) and longer term, the payment will go down whether or not the interest rate goes down.

So they ended up paying more for the interest.

I would suggest that you do a proper amortization using a spreadsheet and you will see quantitatively whether you should refinance or not.
That way you can see exactly how much you have to pay now and how much you have to pay after refinance.
Also add all the cost to do a refinance in the calculation because they are not "free".

I hope it makes sense.

Absolutely. People get into perpetual 30 year mortgages and never pay the house off. I work with people that have done cash out refinances and purchased vehicles or went on vacations. They act like its free money, Now they are paying on that expensive truck/suv (because in each case it was never a sensible car/small suv they buy, no suprise) or vacation. I cant think of any vehicle I want to drive or any vacation I have so much desire for I want to pay for it over 30 years.

If we stay here it makes sense to refinance, its not going to make a considerable difference, however enough that it makes sense. The plan is to knock years off our current loan, not extend it.

Very good advice!
 
Messages
6,120
Location
Texas Hill Country
We refinanced a year ago right around 3 percent. Cut 5 years off the note and 1.5 percent.

I think the cost of the loan was 6-7 grand. Break even was about 18 months. These are all rough numbers .

We used Quicken. I liked them the first time we used them but the second time had to battle them.

Both times we closed in 30 days.

We never take out money or do cash out foolishness.

When we sell the house we walk away with equity in our pocket.
 
Messages
17,318
Location
Silicon Valley
We refinanced a year ago right around 3 percent. Cut 5 years off the note and 1.5 percent.

I think the cost of the loan was 6-7 grand. Break even was about 18 months. These are all rough numbers .

We used Quicken. I liked them the first time we used them but the second time had to battle them.

Both times we closed in 30 days.

We never take out money or do cash out foolishness.

When we sell the house we walk away with equity in our pocket.
I always have some problems with Quicken, despite them being the fastest to call me back.

1st time they told me I will have to consider my loan as a cash out mortgage despite I got the loan as a family loan, registered to the county, and I am using the refi to pay back someone instead of cash out (and they cap it at 300k max).

2nd time they insist that their rule is I have to use the smaller house in the same city as the rental and the bigger house as the primary residence, despite the school district is a 6 vs 10 rating. I never call them back and they call me a few days later asking me when is a good time to start the process. Despite I told them they lose it to Union Bank already.

I think they work well for 80% of the people, like most products and companies that focus on their core strength. They just don't work for me.
 
Messages
3,128
Location
Chicago Area
Very good info in these replies, We live in Indiana and its still possible to buy a house here for under 100k (though getting harder). The would be loan for under 100k in my story happened almost 20 years ago, It seemed to me he was just pushing for the higher loan amount saying under 100k and you pay a higher interest rate. It was interesting because there were many homes for sale under 100k, so if what he said was true you could theoretically be ahead buying a house for 105k vs 85k.

I almost dropped that broker over an incident where he physically showed up to my employer, which was right down the street from his office, asking questions. My employer at the time was a very large corporation, not a fly by night operation. I chewed him out and started the process with another broker, but in the end his rate was better and we needed to get the deal done. However I will never use that person again (last I looked he was closed up anyway).
When I bought my townhouse I ran into that exact issue, only the broker didn't say anything about the loan amount despite knowing up-front how much I was putting down. Had I known that my downpayment was 'too big' I'd have done the bare minimum and gotten a better rate. Lesson learned...
 
Messages
42
Location
Florida
Shopping now for a refi. 8 years in on a 30 at 3.75. Looking for a 15. Closing cost are expensive unless you roll them in or have a higher rate. Just shopping, haven’t entered any info online until I am ready.
 
Messages
107
Location
Virginia
Also to answer the title insurance question, you need title insurance on the loan amount. If you bought title insurance with the house, that title insurance covers the owner for life. Once you get a new mortgage, that mortgage needs title insurance.
This could use explaining, seems contradictory.

Doesn't title insurance cover the transfer - previous owner(s) to new owner.
Does title insurance survive sale? (Later fault found, I get sued later, I go back down the chain, etc.)
If it does not survive, do the rebate 'unused'? (Seems this and the last are inversely complimentary.)
Does one just prove current Title Insurance on a refi?

THX
 
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