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ReFi or go with rate change from existing lender?

I have an existing loan on my condo that I bought in July 2007. I'm on a 5/1 ARM that will change in July 2012. With rates being low, I decided to ReFi and move to a 30 year fixed. I was quoted a rate of 5.25 with no points on my non-conforming loan, overall it looks good. Now, my current lender suddenly reached out to me, and is willing to switch me to a fixed at a rate of 5.375, without the need for a ReFi. This means no ReFi fees, the interest I've paid is already being applied to my current loan, and I'm now on a 27 year loan. So my question: I'm having a tough time gauging which is the right way to go - should I ReFi or stick with my existing lender? BTW, already spoke to my existing lender, they're unwilling to negotiate on the rate they've quoted.

Thanks in advance!!
  • May 13 2010 - South of Market
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Answers (6)

Just make sure that your current lender is in good faith and that the rate is really going to be fixed for the remainder of the loan terms.

Good Luck with what ever decision you make.

  • May 13 2010
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Profile picture for vak555
Hi OP,

Can you tell who the lender is....I have BofA loan 10/1 ARM expiring in 2014....I have asked them to convert to 30 year fixed, at the current rate, 5.375%, to no avail.

thanks,

VK



  • May 13 2010
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I doubt the lender "suddenly" reached out.  More likely your existing 5.25 originator ordered a payoff and then all of a "sudden" the lender wants to retain their servicing.  

The 30 years vs 27 years is a non factor, interest is charged based on remaining balance and interest rate.   I would not cloud your decision with that aspect. 

I would give the original lender a chance to see if they can complete your loan at 5.375% with all closing fees paid with closing cost credit.  If they can, they are doing the same as the current servicer.

If you remain concerned about stretching back to 30 years, you can always make accellerated payments.
  • May 13 2010
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A fair rate. No fees and no appraisal to be concerned with. TAKE IT! .... Happy funding, Rudi

  • May 13 2010
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Profile picture for Bentley Advisors
Rate reduction w/out any fees?  I'd stick w/ the existing lender unless refinancing can get you into a much lower rate.  On a non-conforming loan, you'd be saving thousands in closing costs.  Just make sure you're understanding your existing lenders offer to the T.
  • May 13 2010
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In general, the lender's offer is a better deal, mostly because their remaining term will be amortized over 27 years versus the new 30 year fixed. There is also a marginal tax advantage. However, the lender's payments will be higher because of the shortened term.

If you want exact numbers, feel free to reach out to me. It only takes me a second to make the calculation.
  • May 13 2010
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