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PleaseHELP with re-fi GFE


The last post in this topic was posted 5318 days ago. 

 

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Friend is panicking, trying to re-fi. Is this okay? I think I see junk, plus how does this help her, other than her estimated payment increase will only be $52.00

 

Basic situation:

3 yr ARM @ 3.75% coming due next month. Payment will adjust upwards minimally $109.24, max $186.00.

Good credit, but broker says expected equity is not there. Was planning on appraisal at $165,000, broker says likely to come in at $145.000. Money very tight!

 

Broker is suggesting:

 

5 year I/O

80% @ 5.87%

20% @ 9.05%

 

This will make payments go up total of $52.00 per month

 

Loan Amount $112,500

 

801 L/O .750% 843.75

 

802

803 Appraisal 325.00

804 Credit Report 50.00

809 Tax related service fee 60.00

810 Processing Fee 500.00

811 Underwriting Fee 595.00

812 Wire Transfer 17.00

FLOOD CERT. 12.00

 

 

1101 Closing or escrow Fee 150.00

1108 Title Insurance 500.00

ENDORSEMENTS 80.00

 

1201 Recording Fees 150.00

 

 

 

Esitmated closing costs $3282.75

 

Interest for 5 days @ 18.3594 91.80

 

Tax reserve 9 mos @ 81.25 $731.25

 

Total estimated prepaids $823.05

 

Total estimated settlement charges $4105.80

 

 

Payoff $118.065. New first mortgage (blank)

Loan $112,500. Subfinancing $10,000

Closing $3282.75 New 2nd mtg closing $205

Prepaids $823.05

 

 

Total funds to you $124.05

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If it were me.....

 

I'd first want to determine 'how long' I'm going to be there. If I planned on moving during the next 5 to 10 years, or at least thought there'd be a VERY good chance I would, I'd look for the best rate to cover that period.

 

From your quote, the payments will go up $50. *But you'll pay 'closing costs' that add up to $4K (thats $167/mo for the next 2 years). If you do nothing, the pmt may rise to $180.

 

*Also, is there a pre-payment penalty, or similar 'feature' in the loans?

 

IMO: a vigorous markets keeps rates low. The future forecast is getting worse with each passing month, which means mortgage rates will probably continue upwards (if you're riding a variable vehicle, I think its going up, up, up). Alright, if it were me.... and I'm looking at 5+ years, I'd probably look for a fixed rate product.

 

Good luck! :angry:

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Lending terms and fees are pretty much a product of an individual's credit worthiness. Given this and the highly competitive mortgage market, Nina's comment about anticpated time in the residence after refi'g is a factor to consider as well as looking for a 2nd GFE.

 

The closing costs, can be practically eliminated with exception to taxes and insurance simply by using a lender who doesn't charge for all the BS services as your current broker has listed for you. But, closing costs alone are just one consideration. The interest rate and its terms is / should be the primary factor.

 

IO loans are real money makers for the lenders but offer little for the unsavvy borrower except to allow them to get "more" home than what they could otherwise get with traditional mortgage financing. IO loans favor the lender more than the typical borrower so a person getting this style loan already has the odds tilted to a degree against them from the onset. Again, this is likley the result of the individual's credit worthiness. To combat this, shopping around for the mortgage is necessay. Excellent fixed rate loans and refi's are available, just have to do your homework. I suggest getting 3 GFE's and evaluating each beofre committing.

 

Good luck.

Edited by Rickyracer
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