Is there any catch to this?
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Anonymous
| My current mortgage provider is offering to refinance our home with 0 closing costs. The only fees are some Maryland tax thing for ~$40 and another fee of $97. I spoke with a representative who insists there will be no other costs. They will not require an appraisal, and they will also pay the title company costs. My interest rate will be reduced by 0.9 %. It sounds too good to be true? What do you think? |
Anonymous
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I did a no-cost refi through Eagle National Bank, and it was the real deal. I did have to pay for an appraisal (I'm surprised that's not required - you'd think they'd need one), but they basically paid me back for it.
The downside is that you are restarting your mortgage at 30 years or whatever # of years you choose. Also, you may not like your new mortgage lender as much as your current one. I am saving money, but I miss Wells Fargo a lot. |
Anonymous
| Are you changing the terms of your loan? Will there be a prepayment penalty? Something doesn't sound right. |
Anonymous
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you always pay, it is tucked in there, not a line item, but over the 360 payments they add a few $$$ each month.
Banks get their money, nothing if for free |
Anonymous
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OP here,
Good points everyone. I will find out about whether there would be a pre-payment penalty. The refinance is through Greentree which is my current mortgage company. And our current term is 15 years with 9 remaining. The new loan would be for 10 years, but they would let us put down more money to reduce the principle payment even more. That would really help our current cash flow situation. It would let us put more money into 401k's and other tax deferred savings. |
Anonymous
| We did a no cost refinance through our existing mortgage holder a few years ago. They also did not require a new appraisal. We had the option of resetting to a new 30 yr, keeping the term the same (25 yrs remaining), or shortening the term to 20 yrs. From what I could gather the catch was that the interest rate was slightly higher than what we would get doing a regular refinance with closing costs. But since we didn't intend to stay in the house for very long, we wouldn't recoup our closing costs anyway. |
Anonymous
| There is nothing for free. If you want to refi, get at least three different quotes. If they are pressuring you, run away. Look these people don't work for free and are not giving you anything. |
Anonymous
Odds are they are offering you a slightly above market rate and the money they make is on the spread between the true market rate and the rate you sign. Just hypothetically, this might be 25 bps. If you plan on paying the loan over the entire amortization period it's likely better to pay closing costs than not, but given the opportunity to shift funds to a tax deferred status that math becomes more complicated. Short version is id spot check the rate with another bank and then pull the trigger if it's not as absurd |
Anonymous
Right. Basically negative points. Rather than pay points up front to get a lower rate, you are likely paying a higher interest rate so that extra money will be available to be used for closing costs. Compare the rate against other quotes. Regardless, you will wind up with a lower payment with no costs to you, which is good. |
Anonymous
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Actually, therevarevthings for free. If lender thinks they will lose you they mayoffer great rate. I had lender offer us mo cost refi with .75 pointblowering of rate.....
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Anonymous
OP here. I think the above comments are correct. I've done a little online research, and there definitely are lower rates out there, but they would require closing costs. Since we're not sure how long we want to stay in our house, this deal makes better sense for us. I know it's always recommended to get 3 quotes, shop around, etc, but the truth is we would never refinance if we went through all that! I guess that's what the "catch" is: we're paying more for convenience. But since it will decrease our monthly payment and not add significantly to the life of the loan, I think we will do it. Plus I love the idea of being able to throw down a little more money into the house. Thanks for all the feedback! (I checked and there's no prepayment penalty) |
Anonymous
+1 |
Anonymous
The catch is that you have to pay 12 more payments or 11%. |
Anonymous
| The banks are cleaning up their act after the mortgage crisis and will offer sweetheart deals to good customers with high credit scores and good histories so that they can eventually bundle them all together and make them into a derivative. Check the facts, but take the deal. |
Anonymous
| They roll the closing cost into the new loan. Say your payoff statement is 600K. Then you new loan would become 600K + xxx closing cost. |