UPDATE IN POST #9 -- refinancing - how do you find a lender & determine points

[hellokitty1]

for those that have recently refinanced, how did you go about searching for a lender? did you go to your current one, a local place, the internet, etc. i have gotten more info on some loose ends and am now ready to search for a new mortgage but not sure where to look. i did read that someone said wells fargo had a good rate but we don't have any local offices, at least not til the wachovia takeover is complete. the last time i did a refi, i went through quicken loans and it was very easy. i guess my #1 criteria is the best rate.

tia.

eta: how do you determine points to buy? i know points lower the rate and thus the monthly payment. and in or case we have every intention of staying in this house for a long time and i'd probably roll the points into mortgage depending on how it impacts monthly payment so how do i decide?

[o_mom]

We used the same lender that holds our current mortgage - a regional bank that does their own underwriting. We found them through a friend. I did check rates with our CU and a mortgage broker, but they are very competative with lower costs.

If you have access to a credit union, I would start there. If nothing else, find out what the CU rates are because they are usually in the ballpark. If you know a real estate agent, they can usually point you to a good broker to shop rates with. Knowing your credit score ahead of time can let you shop easier.

[daniele_ut]

We are using a mortgage broker. It doesn't cost us any more, we don't have to do a ton of legwork, and he has access to a wide variety of lenders.

[LBW]

We're using our existing lender, our bank.

[BabyMine]

I found a wonderful site www.loansafe.org (http://www.loansafe.org)
They deal with banks and have a forum for people who are midifying or refinancing. I would modify. With my loan holder they don't restart the loan so you don't have to loose any years you have alreadey paid for.

[KrisM]

I called around. I found a huge difference between lenders on the same day. As much as 5.25% and $2500 to close and as little as 4.75% and $1200 to close.

We restarted the term, but since we can pay ahead with no prepayment penalty, we'll just end it when we want :). I will not have a mortgage in 2039 when I am 69!

[HallsofVA]

We're in the process of refinancing. I compared rates, points, closing costs with our current lender (Wells Fargo), our 2 credit unions, and USAA, and ended up going with Wells Fargo because they have a program with my employer where we get additional perks and lower rates.

One thing to consider when looking at points is to be sure to check out the tax deductibility of points on a refinance. Whereas points paid to purchase a house are immediately deductible in the year paid, points paid for refinancing may need to be amortized or spread over a period of time for tax deduction purposes. May depend on your location and tax situation, but definitly something to check out lest you be surprised later.

[vonfirmath]

Note even if you are planning to stay in the house, if you refinance all the money spent on the points goes to waste.

I'd see what the best you could get was without points and see if that is worth a refinance or not.

If you are going to spend points, even if rolled into the mortgage, it ends up being extra money spent so money you have to account for in "how long do we have to stay (without refinancing again) before we break even with the refinance"

[hellokitty1]

So today I locked in at 4.625% with 1% origination fee and about 2k in closing costs. This sounds reasonable, right?

[veronica]

So today I locked in at 4.625% with 1% origination fee and about 2k in closing costs. This sounds reasonable, right?

Wow-that sounds amazing to me. We called around a few weeks ago and were quoted at 5% with 4K closing costs.......I am jealous. I thought that with the recent rebound, that rates would have been going up and since we are in the "not sure how long we are staying in this house mode" we have been stalling. May I ask what lender you went with? I know NJ can be a bit more expensive than some states so I wonder if we can still get a comparable deal........

[daniele_ut]

So today I locked in at 4.625% with 1% origination fee and about 2k in closing costs. This sounds reasonable, right?

That's very reasonable. We expect our rate to come in the same with similar closing, but our broker doesn't charge an origination fee. We should find out later this week.

[mpatient24]

So today I locked in at 4.625% with 1% origination fee and about 2k in closing costs. This sounds reasonable, right?

I was a loan officer for over seven years, until I quit my 2 year stint with Countrywide a couple of years ago to stay home. Talk to your loan officer and ask them to charge you a discount point - not an origination. An origination is not tax deductible whereas a discount point is. You only want to consider refinance if you will be saving at least 1% or more on your interest rate. Don't pay any points to lower your rate unless you plan to be in the home, and would not refinance for at least 5 - 7 years. I don't usually recommend buying down the rates in general though. There are only a few cases where that is a good idea.

There are some good mortgage brokers out there, but there are also many that aren't very honest. I would recommend referrals from a trusted source only in this case. It may seem like it costs the same, but brokers have the ability to hide costs easier than a lender. It also effects your credit negatively if they are accessing the several lenders they have access to, because your credit will be pulled multiple times, and not just the one time the lender pulls it.

4.625% with 1 discount point sounds good. Check your closing costs though. All lenders/brokers like to throw in excess fees to make their overage.

Good Luck! :)

[o_mom]

I was a loan officer for over seven years, until I quit my 2 year stint with Countrywide a couple of years ago to stay home. Talk to your loan officer and ask them to charge you a discount point - not an origination. An origination is not tax deductible whereas a discount point is. You only want to consider refinance if you will be saving at least 1% or more on your interest rate. Don't pay any points to lower your rate unless you plan to be in the home, and would not refinance for at least 5 - 7 years. I don't usually recommend buying down the rates in general though. There are only a few cases where that is a good idea.



Good info on the points! I did want to point out that you don't need a 1% drop to make it worth doing a re-fi. It really depends on your cost and how long it will take you to break even. We are doing a second refinance in a year and only looking at a half point drop. We will break even within two months, though.

[KrisM]

Good info on the points! I did want to point out that you don't need a 1% drop to make it worth doing a re-fi. It really depends on your cost and how long it will take you to break even. We are doing a second refinance in a year and only looking at a half point drop. We will break even within two months, though.

:yeahthat: We dropped from 5.375% to 4.75% and with only $1500 in closing, we'll make it up and be ahead pretty quickly. You need to run the numbers for your own situation, of course.

1% and $2k seems slightly high to me. We just closed with no points and about $1500 in closing fees.

[veronica]

:yeahthat: We dropped from 5.375% to 4.75% and with only $1500 in closing, we'll make it up and be ahead pretty quickly. You need to run the numbers for your own situation, of course.

1% and $2k seems slightly high to me. We just closed with no points and about $1500 in closing fees.

But, did you have to pay a 1% origination or point. Our title work alone is quoted at $1,200 at two places I have called so I am wondering with application fees, survery's , etc. how you were able to keep it at $1,500. I am super jealous right now!

[hellokitty1]

Wow-that sounds amazing to me. We called around a few weeks ago and were quoted at 5% with 4K closing costs.......I am jealous. I thought that with the recent rebound, that rates would have been going up and since we are in the "not sure how long we are staying in this house mode" we have been stalling. May I ask what lender you went with? I know NJ can be a bit more expensive than some states so I wonder if we can still get a comparable deal........

i went through a mortgagr broker and the actual lender is a small local company i haven't heard of . however, the broker is a friend of my parents so i trust what he found.

[hellokitty1]

I was a loan officer for over seven years, until I quit my 2 year stint with Countrywide a couple of years ago to stay home. Talk to your loan officer and ask them to charge you a discount point - not an origination. An origination is not tax deductible whereas a discount point is. You only want to consider refinance if you will be saving at least 1% or more on your interest rate. Don't pay any points to lower your rate unless you plan to be in the home, and would not refinance for at least 5 - 7 years. I don't usually recommend buying down the rates in general though. There are only a few cases where that is a good idea.


My broker said the origination fee is deductible and this is what I found on bankrate.com:
http://www.bankrate.com/brm/itax/tax_adviser/20060621a1.asp
You cannot deduct the points if they are in lieu of paying other ordinary costs of closing that are not deductible such as title insurance and attorney fees, hence the restrictions under points No. 2 and No. 3 above. So long as you're paying the points to buy (not refinance) your principal residence, your overall cash paid through deposits and at closing exceed the points charged, and you're not using the points to avoid other traditional closing costs, your points would be deductible as an itemized deduction on Schedule A.

So I believe since I have separate closing costs, the original fee is deductible.