Why can't I get a good mortgage refinance rate?

[Anonymous]

I am mystified as to why I can't snag a super low mortgage refinance rate. I've shopped around multiple lenders (both local and national) and can't find one willing to offer an APR lower than 3% for a zero-cost refinance. Meanwhile, I see daily ads and forum posts about rates in the mid-2s and falling. I have excellent credit (800+) and $600k remaining on the loan with LTV of 75%. Is it because I have a DC rowhouse and not a SFH in the suburbs? Does location matter that much? I did all the tips recommended on Bogleheads and the like, and still can't lock down a lower rate.

[Anonymous]

It’s because you’re looking for a no-cost refinance. The lender has to make money somewhere. Therefore, they will offer you a higher rate to compensate for eating your closing costs.

Try doing a comparison where you pay closing costs or roll them into the loan.

[Anonymous]

Anonymous wrote:It’s because you’re looking for a no-cost refinance. The lender has to make money somewhere. Therefore, they will offer you a higher rate to compensate for eating your closing costs.

Try doing a comparison where you pay closing costs or roll them into the loan.

It's not about doing a no-cost. Most of the super low rates talked about in this thread are no-cost.

[Anonymous]

They are getting a lot of applications, so they are increasing rates to decrease demand.

[Anonymous]

This is my exact situation as well, with 700k mortgage. A couple of things:
- even in HCOL areas where conventional loan limits are higher, anything over $510k ($548k in 2021) is a higher rate, high-balance loan. Under $510k and <60% LTV gets the absolute lowest conventional rates.
- some of the rates are area specific. I’ve been following the same thread on Bogleheads, and for example Loan Cabin quotes me a 2.375% with about a quarter point, but they don’t lend in Virginia. Same with a few of the other frequently listed lenders.
- lenders are at max capacity, so if you don’t have a pre-existing relationship they would typically rather keep margins high than compete on price. That will change the longer rates stay this low.

[Anonymous]

Anonymous wrote:

Anonymous wrote:It’s because you’re looking for a no-cost refinance. The lender has to make money somewhere. Therefore, they will offer you a higher rate to compensate for eating your closing costs.

Try doing a comparison where you pay closing costs or roll them into the loan.

It's not about doing a no-cost. Most of the super low rates talked about in this thread are no-cost.

I guess you would have to explain what you mean by “no cost” - as in no lender or origination fee or no closing costs? There are transfer taxes and settlement fees that have to be paid regardless of what the lender charges. Who do you think is going to eat that cost if not absorbed into your rate?

Sorry, I’m a bit confused. If you mean just no lender-charged fees, then sure, but that doesn’t explain why you’re not getting a good rate with excellent credit and under 80% LTV. There’s also a new 0.5% fee going into effect for conventional refinances so that may also explain it assuming you’ll close after the new year. You may have just missed the mark for good rates.

[Anonymous]

I think it is your loan balance as another PP has flagged. I have a lower credit score (760, same for DH), and also did a no cost refi (actually received a check at closing) meaning no lender fee and appraisal waved + rolling all the unavoidable closing costs in the loan (settlement fee, Escrow etc..). And I was offered 2.5 for 20yloan, 2.75 for 30yl (I ended up buying a point to get 2.5 for 30yl). But my balance was 400k on a 625k house

[Anonymous]

Loan balance probably.

I’d go to Costco website and apply through there. We got 2.75% a month or two ago.

[Anonymous]

Anonymous wrote:This is my exact situation as well, with 700k mortgage. A couple of things:
- even in HCOL areas where conventional loan limits are higher, anything over $510k ($548k in 2021) is a higher rate, high-balance loan. Under $510k and <60% LTV gets the absolute lowest conventional rates.
- some of the rates are area specific. I’ve been following the same thread on Bogleheads, and for example Loan Cabin quotes me a 2.375% with about a quarter point, but they don’t lend in Virginia. Same with a few of the other frequently listed lenders.
- lenders are at max capacity, so if you don’t have a pre-existing relationship they would typically rather keep margins high than compete on price. That will change the longer rates stay this low.

OP. Thanks. This makes sense.

[Anonymous]

Anonymous wrote:This is my exact situation as well, with 700k mortgage. A couple of things:
- even in HCOL areas where conventional loan limits are higher, anything over $510k ($548k in 2021) is a higher rate, high-balance loan. Under $510k and <60% LTV gets the absolute lowest conventional rates.
- some of the rates are area specific. I’ve been following the same thread on Bogleheads, and for example Loan Cabin quotes me a 2.375% with about a quarter point, but they don’t lend in Virginia. Same with a few of the other frequently listed lenders.
- lenders are at max capacity, so if you don’t have a pre-existing relationship they would typically rather keep margins high than compete on price. That will change the longer rates stay this low.

This is the truth. Also, there is a difference between no points and no cost. No-cost means that the lender is covering ALL closing costs from their title insurance to all the random fees. For us, that meant that they had to rebate us about $4,000. Which they did - but only since we have a pre-existing banking relationship. We ended up with a no-fee, no-points, no-cost, 2.5% loan on a high-balance DC mortgage (no jumbo), but it required us to move about 250K in brokerage assets from our old Charles Schwab account. The bank's goal is to somehow milk us of fees (though since we only buy and hold index funds - I'm not sure how).

If you have 150K+ in investable assets, try giving the big banks a call or wait until mortgage companies are more desparate.

[Anonymous]

Anonymous wrote:

Anonymous wrote:This is my exact situation as well, with 700k mortgage. A couple of things:
- even in HCOL areas where conventional loan limits are higher, anything over $510k ($548k in 2021) is a higher rate, high-balance loan. Under $510k and <60% LTV gets the absolute lowest conventional rates.
- some of the rates are area specific. I’ve been following the same thread on Bogleheads, and for example Loan Cabin quotes me a 2.375% with about a quarter point, but they don’t lend in Virginia. Same with a few of the other frequently listed lenders.
- lenders are at max capacity, so if you don’t have a pre-existing relationship they would typically rather keep margins high than compete on price. That will change the longer rates stay this low.

This is the truth. Also, there is a difference between no points and no cost. No-cost means that the lender is covering ALL closing costs from their title insurance to all the random fees. For us, that meant that they had to rebate us about $4,000. Which they did - but only since we have a pre-existing banking relationship. We ended up with a no-fee, no-points, no-cost, 2.5% loan on a high-balance DC mortgage (no jumbo), but it required us to move about 250K in brokerage assets from our old Charles Schwab account. The bank's goal is to somehow milk us of fees (though since we only buy and hold index funds - I'm not sure how).

If you have 150K+ in investable assets, try giving the big banks a call or wait until mortgage companies are more desparate.

That’s helpful, thanks. Do you mind sharing which bank?

[Anonymous]

Anonymous wrote:

Anonymous wrote:This is my exact situation as well, with 700k mortgage. A couple of things:
- even in HCOL areas where conventional loan limits are higher, anything over $510k ($548k in 2021) is a higher rate, high-balance loan. Under $510k and <60% LTV gets the absolute lowest conventional rates.
- some of the rates are area specific. I’ve been following the same thread on Bogleheads, and for example Loan Cabin quotes me a 2.375% with about a quarter point, but they don’t lend in Virginia. Same with a few of the other frequently listed lenders.
- lenders are at max capacity, so if you don’t have a pre-existing relationship they would typically rather keep margins high than compete on price. That will change the longer rates stay this low.

This is the truth. Also, there is a difference between no points and no cost. No-cost means that the lender is covering ALL closing costs from their title insurance to all the random fees. For us, that meant that they had to rebate us about $4,000. Which they did - but only since we have a pre-existing banking relationship. We ended up with a no-fee, no-points, no-cost, 2.5% loan on a high-balance DC mortgage (no jumbo), but it required us to move about 250K in brokerage assets from our old Charles Schwab account. The bank's goal is to somehow milk us of fees (though since we only buy and hold index funds - I'm not sure how).

If you have 150K+ in investable assets, try giving the big banks a call or wait until mortgage companies are more desparate.

I know one can't predict the future, but do you think refi rates will continue to stay this low? I'm just wondering why companies would be more desperate? That is kind of a relief because I've been procrastinating on my refi (cuz I'm kind of intimidated )

[Anonymous]

Im the PP with the 700k mortgage. Got a call from Loan Depot today (I talked to them last week) with an offer for 30Y fixed at 2.5% and lender credits that brought total closing costs to about $1k, so APR about 2.53%. They called it a “cyber Monday” special but I think rates just improved a little over the last few days. Just locked, that’s a pretty good deal from everything I’ve seen recently.

[Anonymous]

2.5 is a great rate, congrats!

[Anonymous]

To the pp with 2.5% at $700k - is this considered a conforming loan or Jumbo in your county?