Prefer to talk in person? Find a mortgage specialist on Zillow
Profile picture for lloydri

Are there any companies left that do no cost refinancing?

I have perfect credit and lots of income.  Is there anyone you know of?
  • April 02 2009 - South Reno
  • 0
    0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Be a Good Neighbor. Be respectful and on-topic. No spam or self-promotion! See our Good Neighbor Policy.

Answers (59)

Best Answer

Profile picture for prfstrkr
socal_engr,

I see the reason for your post ... but i believe the majority of the consumers, including OP and Steve, who seek for no-cost options fully understand how to do the math and figure out which option is more meaningful ...

it is very frustrating to see the original question being digressed so much ... a lot of the responses seemed very intent on steering people away from the option by saying no-cost will not benefit consumers ... because the loan officers know that the only ones not benefiting from no-cost would be themselves 
  • April 05 2009
  • 1Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Profile picture for prfstrkr
Andrew, no one but you started talking about rates shooting up, which led to the factor of inflation ...

I have always and will agree again with your opinion that the longer you are in a loan the less likely you are to want to finance the costs
  • April 06 2009
  • 1Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Profile picture for Mr.SteveH
Andrew,

Yes, I do realize with rates this low that you probably have lots of work to do.  So, when I say that I will analyze your numbers a little more closely, you are done with this thread.   I hope I didn't offend you by trying to actually make sense of what you are spinning.  

In case you are interested:
Your numbers are in fact way off.  Think about it like this 

180 months X $37.23(difference in payment) = $6,700 minus $3000 to pay the closing costs due with your loan.  Conclusion  Option 3 is only $3700 less expensive over the entire 180 months of the loan    Yet you are suggesting that option 3 is ahead by $3828 after only 33 months.   This is simply inaccurate.  You are adding the sum of the difference in principal and the difference in payments to the difference in interest paid. You should not be adding these together.  They are one in the same.  You are counting them twice. 

Based on your balances after 33 months:
  1228.59   the difference in payments
+   680.90  the difference in principal applied
   1910.49   the difference in interest paid

The no cost loan is ahead at 8 months, 20 months, 33 months and   even still at 54 months.   I do agree that finally after about 5 years the numbers favor option 3....more and more so with every passing month.
  
A small percentage of mortgage loans are actually still outstanding after 5 years.

I have appreciated your feedback.   You can get back to your work now.  If you are dilligent you might hit the 6000 post mark and earn your Golden Zillow badge.  : )
  • April 06 2009
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Sorry but I can't resist...

Yes the 3 year calc was wrong...Rushing since this is not a real review. 
If you want to start playing the $3000 today will be more like 5-6,000 5 years from know have at it.  I'll let So-cal handle that analysis...I am not ashamed to admit that is above me...way too many variables and unknowns. 

My opinion is that the longer you are in a loan the less likely you are to want to finance the costs. 

  • April 06 2009
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Profile picture for prfstrkr
andrew,

1) your calculation about 3 years was wrong ... no-cost is still a better option after 3 years

2) Let's assume your projection about rates shooting up comes true ... part of the reasons why rates would shoot up is due to inflation ... which means $3000 closing costs the borrower pays today will have a value of $4000 or $5000 in 5 years ... no-cost is still a better option after 5 years
  • April 06 2009
  • 1Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Steve,

This may be a shock to you but I actually can't spend hours reviewing scenarios...I actually have loans to write.

We will have to agree to disagree on the likely hood of rates hitting 4%, I don't see that ever happening on 30 year fixed rate money.  I hope I am wrong!  I expect rates to be on the rise in the next 12 months and whe nthe Govt stops propping them up they will shoot up overnight!

You can review the numbers all you like.  Regardless of how you look at it if you are in this loan 5 years from now you made the wrong choice.  I'll check back in 5 years...I'm done with this thread!

  • April 06 2009
  • 1Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Profile picture for Mr.SteveH

Andrew,

What are you double counting?  I'm not sure.  They are your numbers.  They don't look right to me.  Let analize them a little more closely. 
Did you agree with the numbers that I posted 2 hours ago?

Steve

  • April 06 2009
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Profile picture for Mr.SteveH

Andrew,
Yes, I agree that rates are at historic levels.  They were also considered to be at low levels 8.5% in 1988 when I bought my first house.  They were even lower on my 2nd house in 1992, lower still when we bought our 3rd home in 1998 and we are refinancing it for the 3rd time.  
I also agree that property values could continue falling, preventing many from refinancing. True.  I am not suggesting that people should  try to time the market to get the rock bottom lowest rate.  Nope, I'm not suggesting that at all.  If the numbers make sense, it is better to go ahead and refi now ...and then if rates were to continue falling further, one could refi again.  This startegey is more effective when one is utilizing no cost loans.  : )  
If home values do continue falling is it possible that the Govt could push rates even lower in an attempt to stimulate demand?  4% or below, call me crazy...but, it could happen.  Look at a chart of interest rates over the last 20 years...it certainly looks like a downward trend to me.
There are many reasons that people refinance.  The interest rate is just one variable.  I am refinancing our home, not because the rate is lower, but in order to reduce our minimum monthly payment.  $400 will help if I am out of work for an extended period. When I do find a job, we will aggressively pay it down.  You are also dismissing the fact that the average length of homeownership is what maybe 6 or 7 years?  Sorry, for me and probably a significant % of others, the no cost alternative just makes sense. 

  • April 06 2009
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Profile picture for TCMW
  • TCMW
  • 46 contributions

Most of us do, yes.  You won't have a problem finding someone that will no a "no cost refi" with that loan amount.   There are always closings costs.  The lender just pays them on your behalf in a "no cost" loan.  Typically, you can get a slightly better rate if you pay your closing costs and an even better rate if you pay extra closing costs (often referred to as "points.")

  • April 06 2009
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

At the end of 54 months you will have saved $2010.52 in monthly payments and have an additional $1007.05 in Principle reduction.  If you really want to confuse things how does applying the monthly savings of $37.23 to the principle amount benefit you, since the higher payment is not an issue?

  • April 06 2009
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Fundamentally we will continue to disagree!

Anyone getting a loan today....in my opinion....will not be refinancing for lower rates.  The reality is that most folks will be holding loans they take out today longer than they have in a very long time. 

Consider this:

1. Rates are at historic lows
2. Property values have not stabalized and are continueing to fall

Folks won't refinance for lower rates and will not be able to refinance for cash out because of value!

What exactly am I double counting.  How are you accounting for the savings/cost of the interest portion of your payment?

  • April 06 2009
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Steve,

I don't care what the best option is....it is irrelevent to me!

I used 33 months because the amortization schedule I am using started with 1st payment in April. April - December is 9 months! 12 months in a year...by January 1, 2012 you will have made 33 payments!
  • April 06 2009
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Profile picture for Mr.SteveH

Andrew,
What?  Now you are switching to 33 months to determine which is better???  Why?
Clearly the no cost loan is still ahead after 33 months!  Your explanation of the numbers is flawed.  You are counting the same dollars twice and conveniently forgetting to factor in the closing costs into Option 3.  Andrew revisit your numbers and be honest with yourself and you will see what I am saying.  I'll try again.

First, lets compare Option 1 to Option 2
After 33 months, Option 1 has a remaining balance of $125,683 which is $1,906 lower than the remaining balance of $127,589 on option 2.  If I then subtract $477 (33x14.47)  to account for the higher payments with Option 1, it is still ahead by $1,429.  Will you agree that the break even is in fact 67 months?

Now lets compare Option 1 to Option 3: 
After 33 months, Option 3 has a remaining balance of $125,002 which is $681 lower than the remaining balance of $125,683 on option 1.  and we stii have to add $1,229 (33x14.47) to that  to account for the higher payments with Option 1, for a total difference of $1,910.  so at first Option 3 may appear to be the better deal, but as I pointed out that these calculations do not include any closing costs.  Where did they go?  So if they were not added to the loan amount then the borrower must pay them at closing!  Yes?  These costs must be added back in to make a fair comparison.  When we factor these into the calculations you will find that after 33 months Option 3 is still $1,090 more expensive. 

Yes, I will conceed that there does come a point in which Option 1 is the least attractive, but my opinion is that a considerable percentage of all loans originated will never see that break even point. 

  • April 06 2009
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Steve,

I am giving it 1 more try.  You have to look at 3 things Loan balance, Interest paid and cash flow savings.

Option 1 Rate of 4.875% and loan amount of $145,000.  At the end of 3 years you will have paid $19,316.25 in principle and have a remaining balance of $125,683.  You will have also Paid $18,213.34 in interest over those 3 years.

Option 2 Rate 4.375% and Loan amount of $148,000 (if you cannot pay the costs at closing).  At the end of three years you will have paid $20,410.93 in principle and have a loan balance of $127,589.  You will also have paid $17,239.29 in interest.  In addition you will have saved $14.47 per month for 33 months or $477.51. You will have saved $974.05 in interest payments and you remaining blance would be $1,906 higher.  If you were to sell or refinance at this point you would have been better off under option 1.

Option 3 Rate 4.375% and Loan Amount of $145,000.  At the end of 3 years you will have paid $19,997.15 in Principle and have a remaining balance of $125,003.  You will also have paid $16,302.85 in interest.  In addition you will have saved $37.23 per month for 33 months or $1,228.59. You will have saved $1,910.49 in interest payments and your remaining balance would be $680 less than option 1.  Add that up and at the end of year 3 you will have saved $3,828 in Principle reduction, monthly cash flow and interest paid.  If you opted for Option 1 and still have the mortgage in 3 years it was not the right choice!

  • April 06 2009
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Profile picture for Mr.SteveH
Andrew,
Sorry for the delayed reply.  It was a busy, beautiful weekend.
In your previous post you stated that the "no cost" loan would cost me an additional $723.45 after only  8 months and a whopping $1865.57 after only 20 months.  Yikes!  I can see why most borrowers would run, run away from the no cost refi... with the numbers as you've presented them.   However, no matter what I do, I cannot get my calculations to match yours...not even close.  Are you using magic math?  ...or am I missing something?  Just to be sure that we're not mixing up my loan with the hypothetical example that you used in an earlier post, remember that I am borrowing $145,000 for 15 years at 4.875% on a no cost refi.
Here are my numbers.  Can you show what I am doing wrong? Please enlighten me.  
My "no cost" loan:
$145,000 at 4.875% payments = $1137.23
Your loan:
$148,000* at 4.375%  payments =$1122.76
...*I added $3000 to the loan amount to pay all the typical fees and closing costs.
So can we agree that with my loan the monthly payments are only $14.47 higher per month? 
After 8 months, my loan has a remaining balance of $140,551.79 which is $2,722.84 lower than your balance of $143,274.63 after 8 months.  If I then subtract $115.76 (8x14.47)  to account for the higher payments with my loan, I am still ahead by $2607.08.
After 20 months, my loan has a remaining balance of $133,603.01 which is $2,320.55 lower than your balance of $135,923.56 after 20 months.  If I then subtract $289.40 (20x14.47)  to account for the higher payments with my loan, I am still ahead by $2031.15. 

So when do we reach the break-even with your loan?  My numbers suggest 67 months! A far different scenario than the numbers that you presented.  So what am I missing?

Steve 
  • April 06 2009
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

PRF,

That was exactly my point. Every refinance or loan has a cost which was the OP's questions. 

"Are there any Companies doing no Cost Refinances?"

The Answer is no.  You can't debate which is better until you have a real person so that you can review their specific situation.  The answer will vary depending on the situation and truth be told even then you will only know you made the right choice after you have sold or refinanced the next time.  The biggest factor is how long you hold the mortgage.

  • April 06 2009
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Profile picture for prfstrkr
okay andrew ... i guess u were focusing on debating the term "no-cost" rather than which option makes more sense ... then i agree w/ u in that area
  • April 05 2009
  • 1Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

PRF,

Every loan has a cost...even the 3 step at .25% higher in rate...that's a cost! 
  • April 05 2009
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Profile picture for prfstrkr
bob, you caught the key word ... "some"
  • April 05 2009
  • 1Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Profile picture for prfstrkr
socal,

the OP's question is "Are there any companies left that do no cost refinancing?"....

not "is your company offering no cost refinance?"

  • April 05 2009
  • 1Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

"because the loan officers know that the only ones not benefiting from no-cost would be themselves "

Prf, loan officers would make the same either way.  Some just have opinions and don't like that some say it is "no cost" loan when in fact there is a cost since your are paying for it in the rate.  There is always a cost of doing business.  They will charge it in fees or charge it in rate, but either way the consumer is getting charged.

I think both options work very well and it just depends on the consumer's goal and how long they plan to keep the loan.
  • April 05 2009
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Profile picture for SoCal Engr

Two thoughts...

First, most every post from a lender on this issue attributes the lack of "no cost loans" to the fact that they are not profitable in the current market. The lender discussions focus on YSP and other factors. My "consumer read" of the "lender speak" is that lenders are being more conservative and not competing amongst themselves to lend money to people who can't/won't bring the closing costs to the table. That means the lenders charge a higher premium if you want to use this approach, and the brokers have no way to absord this premium without serious impacts on the rates. So, why push an approach that either results in non-competitive rates or little-to-no profit?

Second, I think you give the consumers too much credit. If they were really that astute, we wouldn't be in the situation we're in now (i.e., just because banks/lenders offered the poison, there was no need to eat it). Some consumers get it, many don't.

I felt like the OP's question was answered. For the majority, this type of loan is just not competitive/profitable in today's market - so it's not generally offered as a solution.

  • April 05 2009
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Profile picture for prfstrkr
As for "financing the closing costs, either thru rate or principal"

only financing the closing costs thru rate is entitled to be called "no-cost", adding extra to the principal is simply 1000 times worse than paying closing costs up-front
  • April 05 2009
  • 1Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Profile picture for SoCal Engr

prfstrkr,

You're missing the reason for my post. The rates are made up, so it makes no sense to argue anything based on these rates and the deltas. I'm not sure where the $3K closing costs came in, but it wasn't from me.

The entire point of my post was two-fold...

1.  The cost associated with a "no cost" loan is amortized over the life of the loan. So it's not really "no cost", it's "financed cost".

2.  The informed consumer should be aware of this fact and use it in their decision as to whether to pay the costs up-front, or finance them thru either increased rates or by adding them onto the principal.

Because each situation is different (i.e., actual rates, balances, terms, closing costs, etc.), it's not really productive to take my example and argue the specific numbers. If, however, a consumer were to apply my example to their specific situation (i.e., with actual quoted rates), then they could determine in a very short time the short/long impact of either choice - and make a more informed decision.

  • April 05 2009
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Profile picture for prfstrkr
yeah i believe steve knows how to do the math well by heart .... no one needs to be lectured on simple stuff like that ... 
  • April 05 2009
  • 1Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Profile picture for prfstrkr
in my case it takes 65 months to make sense of a conventional refi ... how many people in average keep the same mortgage for 65 months? how much is a dollar worth in 65 months?

and don't forget the above is calculated using 3K closing costs ... which is unrealistic in my state ... 5K is about right and the break-even will be 109 months, WOW
  • April 05 2009
  • 1Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Profile picture for SoCal Engr

I don't know about "heavily biased", I'm just saying that if you put the numbers down and run the math, then it's easier to make an informed decision.


As for "financing the closing costs, either thru rate or principal", that depends on the individual borrower and their time horizons. Personally, I never use short horizons on my principal residence, so it typically makes more sense for me to pay-up-front than to bet on what might happen over the next 2-5 years.

  • April 05 2009
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Profile picture for prfstrkr
socal, couple months ago a lot of brokers and lenders kept saying rates would only go up soon due to inflation, but what just happened couple days ago?

in today's market, it makes more sense to take on a no-cost if the conventional refi will take more than 1 or 2 years to get ahead of the game ...

btw, $3K closing costs is far less enough to cover closing costs on a $300K refi in CA, right? So the example provided is heavily biased in favor of the conventional refi

 
  • April 05 2009
  • 1Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Profile picture for SoCal Engr

I really wanted the "pasted table" to work, but here are the pertinent numbers if you're having a hard time reading...


Loan Amount: $300K

30yrs @ 4.875% -v- 5.125%

  Year 1:  $550 extra payments, $198 less principal, $748 total cost

  Year 2:  $1,100 exra payments, $395 less principal, $1,496 total cost

  Year 3:  $1,650 extra payments, $589 less principal, $2,239 total cost

  Year 4:  $2,200 extra payments, $780 less principal, $2,980 total cost

  Year 5: $2,750 extra payments, $966 less principal, $3,716 total cost


I'll pass on the second table.

  • April 05 2009
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Profile picture for SoCal Engr
Steve,

I understand where you're coming from, but I am annoyed that "cost financed thru..." loans are pushed as "no cost". I even take exception to "no out-of-pocket", since it's really "no out-of-pocket...now". However, every product has it's place and use. It's just that too many consumers don't know what they're getting, or why.

The bottom line is, with just a little time (literally, minutes) and effort, it is possible to do your own numbers in Excel using the PMT(), PPMT(), and IPMT() functions. Also, this helps put some context and objectivity on the discussion.

The tables below (not sure how to get them uploaded for best viewing) are comparisons on a imagetype="8" 00K mortgage over 30 and 15 years. They show notional rates (used just for this comparison, so please don't hit me with "those aren't the rates I was quoted"), and the annual costs/deltas in payments and principal reduction (I was interested when Andrew brought the interest/principal angle up, hadn't thought of that aspect before).



Anyway, you can see (if you squint) that there is a cost resulting from both the increased rate and the effect of the rate on principal reduction. Personally, I have been raised to be a "pay as you go" person, and it has kept me out of some situations that I have only been able to appreciate in hindsight. However, that doesn't mean that "deferred cost" does not have a place in the market, as long as consumers take the time to understand what they are doing.
  • April 05 2009
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

  1. 1
  2. 2