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Answers (13)
Best Answer
- Justin Sheftell, "Courtesy Mortgage"
- Contributions:3427
Well 5.125 with 3,000 in costs certainly isn't doing you any favors.
Assuming you aren't opposed to setting up the reserves, I think you are on the right track with the other lender, but their rate/fee structure is poorly chosen and not to your advantage. On 185,000 loan, comparing 4.25 rate to 4.375 rate usually results in about 1,500 different in closing costs.
I would suggest you see what costs would be at 4.375 and what costs would be at 4.750. Then do a trade-off test and decide.
- Jeff Nunley, "Jeff Nunley CMPS"
- Contributions:23
It sounds to me like taking the lower interest rate makes more sense because the spread between the rates is so high. One question to ask though is how long you plan on being in the home. If you are there for the long term then under normal circumstances the lower rate is the better deal.
You really need to look at the total cost of having each loan over time. I use a special loan analysis program called EDGE that can help make these decisions much easier. If you are interested in having me run your options for you let me know. We're based in Oregon and do loans in the Medford area all the time.
You really need to look at the total cost of having each loan over time. I use a special loan analysis program called EDGE that can help make these decisions much easier. If you are interested in having me run your options for you let me know. We're based in Oregon and do loans in the Medford area all the time.
- Jsilvey10
- Contributions:6
I was told by my current lender that I will not have to setup any reserves. On the other loan 4.25 I will have to setup reserves. No PMI either way.
- Justin Sheftell, "Courtesy Mortgage"
- Contributions:3427
MHA and HARP are the same program. I don't think either offer sounds particularly great.
If you are 105 LTV, I suspect you will have to setup impounds on any refinance.
- Jsilvey10
- Contributions:6
Current loan balance is around 179,500. New loan worst case scenario would be around 188,000 to 189,000 with all fees and reserves set up. credit scores should be above 750. No money to closing.
- Jsilvey10
- Contributions:6
The 6000 is closing cost only due to points on the harp loan. I will be around 105% LTV. Correct the 5.125 is from current lender.
- HomeSand.net, "White Picture"
- Contributions:4396
$183K mortgage, 5.125%, 30 years, the monthly mortgage payment is $996.41, if you keep paying $996.41 on the $186K mortgage, 4.25%, the principal balances are break-even at the 24th month, the mortgage life is 306 months, you save 54 payments compare with the 5.125%, $183k mortgage, in other words $186K mortgage at 4.25% is much better.
$183,000 + $3,000 = $186,000 VS $189,000 ??????
$183,000 + $3,000 = $186,000 VS $189,000 ??????
- Clay Branch, "Georgia Loans"
- Contributions:7837
I assume the 5.125% offer is from your current lender, turn that down. Does the 4.25%/$6000 offer include your new escrow or is that closing costs only? If it includes a new escrow, take it. What is your current principal balance, what is the new loan amount on the 4.25% offer, how much $$ do you have to bring to closing, and what are your credit scores?
- Corri Klebaum, "CorriKlebaum"
- Contributions:199
I would ask for each lender to structure a rate and fee quote both ways and compare it against your overall goals. You are not going to make the best decision unless you can compare apples to apples. Basically the lender can afford to eat some of the fees if they charge you a higher rate. Make sure not to consider the taxes and prepaids into your "fees" but just consider your hard costs since you are paying those regardless.
- Jsilvey10
- Contributions:6
One is the MHA program the other the HARP loan. No MI according to the lender. Also credit is above 740. Two different lenders as well. One is current mortgage lender the other is a local branch.
- Corri Klebaum, "CorriKlebaum"
- Contributions:199
Are these two quotes from the same lender? The spread seems a little bit off unless you are getting a significant lender credit toward some of the costs. Look at your break even point like Andy recommended and also it will depend upon how much of a savings it is over your original loan. Do you have an MI waiver? You will need take that into account if you go over the 80% threshold if not. Might not hurt to get another estimate if you are not already committed as much as getting shopped sucks but compare fee and structure as well as rates (keep in mind these fluctuate daily so ask for an updated one from the 1st lender too) so you can get a better idea.
- wayne lancaster, "funds2"
- Contributions:1177
Your rate is impacted by your credit score so it is hard to give input without knowing your score. If 740 and above, neither option is very attractive. I would seriously consider doing your own escrows so you can keep loan to value below 80% and avoid MI and keep loan amount lower.
Post a loan request on Zillow and compare quotes, but be aware Zillow quotes are without cost to waive escrows.
- Andy W. Harris, Crms, "Andy W. Harris CRMS"
- Contributions:27
It will depend on the life of the loan and recapture of costs. I would compare the payments on both and divide that number by the closing costs to determine how long you must keep the loan to make sense of it. You would want to do the same with your existing loan on the new loan obviously as well.
On a side note, you might want to get more quotes to ensure you are being quoted more competitive rates and fees.
On a side note, you might want to get more quotes to ensure you are being quoted more competitive rates and fees.
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