Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:We are doing a refi with penfed with closing costs paid for.... We locked in at 3 percent for 5 years after which the rate goes up to 5 percent for 5 years... God willing we hope to be out of our townhome within the next year or two

I think you mean the rate could go up to a max of 5% after 5 years - it's not certain rates will rise that much. Anyway, this is a good illustration. By all accounts this is a great mortgage product. But if you wanted to pay closing costs up front, you could have done at least 25 bps better on the rate - and possibly 50 bps or more - which means after a few years you would be ahead if you paid the closing costs up front (depending on size of loan). But this sounds like a great option considering you might be out of the house in a couple of years (as long as you don't have to pay a prepayment penalty).

We're currently refinancing w/Pen Fed using the 5/5 arm and locked in at 3% rate. We noticed that the rates have since dropped to 2.875%. It costs .0625% of the total loan amount to re lock at 2.875% and our loan will be about $720K. I cant figure out if we should even consider doing this or not. I'm not totally certain I'm calculating this correctly, but I think it would cost $4,500 to re lock at the lower rate and that we'd save only about $1800/year, so the breakeven point would be at about two and a half years. Does this sound about right?

To calculate breakeven, you should look only at your incremental interest savings. I calculate a little less than $900 total savings in that first year. So that is more like a 5 year breakeven if you paid $4,500 for it. And that is pre-tax, so the real difference to you is even less. And after 5 years, your rate would reset anyway. So no, doesn't seem worth it to me.

Thanks PP - I thought my math was off somehow-

I double-checked with Pen Fed yesterday...there are no pre-payment penalties for the 5/5/5 loan, if you sell in less than three years, prior to what the PP had stated

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:We are doing a refi with penfed with closing costs paid for.... We locked in at 3 percent for 5 years after which the rate goes up to 5 percent for 5 years... God willing we hope to be out of our townhome within the next year or two

it's paid for by you the borrower. check your HUD-1. i know coz i just closed the exact same product.

I checked the HUD....all closing costs are paid for except for the real estate taxes, escrow account, a bit of interest to cover the gap between when pen fed takes over the new loan fr our other mortgage company and home insurance. What did you pay for?

compare Amount Financed in Truth In Lending to loan amount in HUD-1

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:We are doing a refi with penfed with closing costs paid for.... We locked in at 3 percent for 5 years after which the rate goes up to 5 percent for 5 years... God willing we hope to be out of our townhome within the next year or two

I think you mean the rate could go up to a max of 5% after 5 years - it's not certain rates will rise that much. Anyway, this is a good illustration. By all accounts this is a great mortgage product. But if you wanted to pay closing costs up front, you could have done at least 25 bps better on the rate - and possibly 50 bps or more - which means after a few years you would be ahead if you paid the closing costs up front (depending on size of loan). But this sounds like a great option considering you might be out of the house in a couple of years (as long as you don't have to pay a prepayment penalty).

We're currently refinancing w/Pen Fed using the 5/5 arm and locked in at 3% rate. We noticed that the rates have since dropped to 2.875%. It costs .0625% of the total loan amount to re lock at 2.875% and our loan will be about $720K. I cant figure out if we should even consider doing this or not. I'm not totally certain I'm calculating this correctly, but I think it would cost $4,500 to re lock at the lower rate and that we'd save only about $1800/year, so the breakeven point would be at about two and a half years. Does this sound about right?

To calculate breakeven, you should look only at your incremental interest savings. I calculate a little less than $900 total savings in that first year. So that is more like a 5 year breakeven if you paid $4,500 for it. And that is pre-tax, so the real difference to you is even less. And after 5 years, your rate would reset anyway. So no, doesn't seem worth it to me.

Anonymous wrote:

Anonymous wrote:my PenFed no closing cost refi had language in the contract that if we get rid of the loan within 3 years - we owed the PenFed the closing costs.

Really? Where did you see this language? Do you not see it until closing?

this info is on the website - I knew about it before closing

I just wanted to share with people that the no closing costs options sometimes had this aspect so they needed to be aware.

I have been VERY happy working with PenFed and the products that they offer.

Anonymous wrote:

Anonymous wrote:We are doing a refi with penfed with closing costs paid for.... We locked in at 3 percent for 5 years after which the rate goes up to 5 percent for 5 years... God willing we hope to be out of our townhome within the next year or two

I think you mean the rate could go up to a max of 5% after 5 years - it's not certain rates will rise that much. Anyway, this is a good illustration. By all accounts this is a great mortgage product. But if you wanted to pay closing costs up front, you could have done at least 25 bps better on the rate - and possibly 50 bps or more - which means after a few years you would be ahead if you paid the closing costs up front (depending on size of loan). But this sounds like a great option considering you might be out of the house in a couple of years (as long as you don't have to pay a prepayment penalty).

We're currently refinancing w/Pen Fed using the 5/5 arm and locked in at 3% rate. We noticed that the rates have since dropped to 2.875%. It costs .0625% of the total loan amount to re lock at 2.875% and our loan will be about $720K. I cant figure out if we should even consider doing this or not. I'm not totally certain I'm calculating this correctly, but I think it would cost $4,500 to re lock at the lower rate and that we'd save only about $1800/year, so the breakeven point would be at about two and a half years. Does this sound about right?

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:We are doing a refi with penfed with closing costs paid for.... We locked in at 3 percent for 5 years after which the rate goes up to 5 percent for 5 years... God willing we hope to be out of our townhome within the next year or two

it's paid for by you the borrower. check your HUD-1. i know coz i just closed the exact same product.

I checked the HUD....all closing costs are paid for except for the real estate taxes, escrow account, a bit of interest to cover the gap between when pen fed takes over the new loan fr our other mortgage company and home insurance. What did you pay for?

my PenFed no closing cost refi had language in the contract that if we get rid of the loan within 3 years - we owed the PenFed the closing costs.

Really? Where did you see this language? Do you not see it until closing?

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:We are doing a refi with penfed with closing costs paid for.... We locked in at 3 percent for 5 years after which the rate goes up to 5 percent for 5 years... God willing we hope to be out of our townhome within the next year or two

it's paid for by you the borrower. check your HUD-1. i know coz i just closed the exact same product.

I checked the HUD....all closing costs are paid for except for the real estate taxes, escrow account, a bit of interest to cover the gap between when pen fed takes over the new loan fr our other mortgage company and home insurance. What did you pay for?

my PenFed no closing cost refi had language in the contract that if we get rid of the loan within 3 years - we owed the PenFed the closing costs.

Anonymous wrote:

Anonymous wrote:We are doing a refi with penfed with closing costs paid for.... We locked in at 3 percent for 5 years after which the rate goes up to 5 percent for 5 years... God willing we hope to be out of our townhome within the next year or two

it's paid for by you the borrower. check your HUD-1. i know coz i just closed the exact same product.

I checked the HUD....all closing costs are paid for except for the real estate taxes, escrow account, a bit of interest to cover the gap between when pen fed takes over the new loan fr our other mortgage company and home insurance. What did you pay for?

We locked in at 3.625 with no closing costs ($3k lenders credit) with a company from Zillow.com. Our loan is super conforming (over $415 but not jumbo). I wasn't able to find anything better out there. The regular conforming were lower and the 15 year were lower but there is usually a premium for the higher loan value and most included points or closing costs. The guy told me they make money by not servicing the loans and selling the servicing rights in bulk (30 million loans) to companys who bid to be the servicers. Sounded good but not sure if it was a lot of BS. Haven't closed yet but they had a A+ rating with BBB and good ratings online.

Nothing is free.

Either rolled into loan or higher rate.

Free coke with burger, but you still gotta buy the burger.

Just because loans are slightly more complex than burgers, doesn't make them free.

See: Madoff, Bernie.

Anonymous wrote:We are doing a refi with penfed with closing costs paid for.... We locked in at 3 percent for 5 years after which the rate goes up to 5 percent for 5 years... God willing we hope to be out of our townhome within the next year or two

it's paid for by you the borrower. check your HUD-1. i know coz i just closed the exact same product.

Pen Federal has great rates right now but we paid closing costs, points and origination fees.

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:If you're paying a slightly a higher rate, but is lower than your original rate and you don't have to dish out additional money, then how do you always pay for them no matter what? I'd really like to know what the fine prints are as we're about to refi on our house and it's a no closing cost...
Your comment 15:35 makes me paranoid that I'm really am not getting a good deal. TIA

15:35 here, if you are saving money and you have had your financial planner review your loan and figure out where yoru beakeven point is based on how long you are going to be there etc.

bottom line is if you are saving money in the short term you are going to pay it in the long term. You might move or refi by the time it reaches that breakeven point so you will be paying less but it only really matters if you save the money and not spend it. Most people don't save that extra $$ each month.

Yeah but if his no cost refi has a lower rate that what he has now, is it not a win win situation?

I'm not 15:35 but I will answer anyway. Yes but you should still compare against different refi options - might be better off in long run with a different refi product.

Anonymous wrote:We are doing a refi with penfed with closing costs paid for.... We locked in at 3 percent for 5 years after which the rate goes up to 5 percent for 5 years... God willing we hope to be out of our townhome within the next year or two

I think you mean the rate could go up to a max of 5% after 5 years - it's not certain rates will rise that much. Anyway, this is a good illustration. By all accounts this is a great mortgage product. But if you wanted to pay closing costs up front, you could have done at least 25 bps better on the rate - and possibly 50 bps or more - which means after a few years you would be ahead if you paid the closing costs up front (depending on size of loan). But this sounds like a great option considering you might be out of the house in a couple of years (as long as you don't have to pay a prepayment penalty).