Profile picture for megarcia

I refinance FHA loan and the new loan went up. No cost refinance? Why did the loan go up?

  • March 31 2009 - Old Bridge
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Answers (8)

What yaegermike is referring to is that even though the hard costs were paid by the lender, the borrower is still paying for those expenses in the form of a higher rate/payment. Today, the premium paid on higher rates is lower than in the past so you have to move the rate even higher today to cover the fees. The question put up by the poster could mean many things and if the "closing costs" were actually paid by the lender, I think John hit it on the head. If it was already an FHA loan and 3 years old, there was no credit for existing UFMIP and the new UFMIP at 1.75% was tacked on. Also, many borrowers look at their principal balance and think that should be their payoff, which it isnt. Of course the skipped payment offsets that if they paid that interest at closing. The time to question why the loan amt is higher than expected is not after closing, it is before you sign all the paperwork, which is why I asked what the lender had to say when the GFE was reviewd and the question was asked.
  • April 01 2009
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Profile picture for Mr.SteveH
"Simple. There is no such thing as a "no cost" refinance."

yaergermike,

I respectfully disagree. 
Of course there are costs that are unavoidable that must be paid by someone.  Appraisal, inspection etc...   but, what if the lender is paying these costs  and is factoring them into the interest rates quoted...is this not a no cost refinance from the borrowers perspective?

I was quoted a 30 year fixed rate at a very competitive rate with NO closing costs.  Nothing upfront and nothing added to my loan amount.   Now, I will agree that I could have gotten a very slightly lower interest rate elsewhere, but it would have come with hundreds or even thousands in fees to save that fraction of a percent.     So, I and any other borrower could refinance our existing loans  at absolutely no cost.  No?  


  • March 31 2009
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"No cost" is percieved differently with each lender you speak with... Most of the time it only means no fees from the institution they work for and doesn't include the other expenses of doing a  mortgage loan. 
  • March 31 2009
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how did your lender explain it when you looked at your good faith estimate and the loan amount was higher than your loan balance? 
  • March 31 2009
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Profile picture for prfstrkr
either bait&switch or unpaid interests
  • March 31 2009
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Profile picture for John Paunan
Unless the lender agreed to pay for your upfront MIP, which isn't possible based on current lender rebates, doing a true no-cost refinance with an FHA loan isn't going to happen.  1.75% for the MIP, which is probably what was added to your loan, is a nice chunk of change. 
  • March 31 2009
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Some lenders call it "no cost" if it does not directly come out of your pocket.  Shady
  • March 31 2009
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Simple. There is no such thing as a "no cost" refinance.
  • March 31 2009
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