Profile picture for NJPaolo

Wells fargo "NO COST REFINANCE"? Truly a NO COST?

Wells Fargo offered me a 5.375%  "NO COST" "Freddie Mac to Freddie Mac refinance"

Closing cost paid by Wells fargo "$3,516", *Estimated Prepaid Items "$2456.70"  PAID BY THE SCROW REFUND ?.

Wells Fargo original loan amount $318,000 @ 6.25%, 30 y, fixed. With $310,647 balance & 28 years & 1 month to go. NO PMI. House appraised @ $360,000 in 2008.

 

AT first WF said no appraisal needed, but now they will order a new appraisal, since their system shows the house is only worth $315K

Points to reduce the rate: 5.25% would come with .50 points, 5.125% wth 1.0 point &  5.00% with 2.0 points

I have no plans to move anytime soon, but who knows what might happen in a couple of years.

 

Is this truly a "NO COST" refinance?

What do you think?? Should I pay any points to reduce the rate?

 

* CREDIT SCORE IS EXCELLENT @ 750+

  • June 23 2010 - Union
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Answers (20)

If your loan balance increased OR you had to bring cash to close then there was a cost. Pretty simple answer there.

Run scenarios with closing costs and the current market rate 4.00-4.25% and compare them side-by-side...that's the easiest way to tell. Look at both your monthly and long-term savings taking in to account how long you plan to be in the home. Determine your break-even point...the point where the increased loan amount (or out of pocket fees) will be zeroed out by monthly savings.

Should be easy to determine the smart move (if any exists).
  • October 20 2010
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Kelly, did you purchase that 400 lb pumpkin?
  • October 20 2010
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Nothing like dragging out old threads for advertisement purposes...

  • October 20 2010
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how much lower will your monthly be with the new rate and how many years of savings equal the cost of the points at say 2 points?

  • October 20 2010
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didn't his opening sentence say he'd already contacted WF?
  • October 20 2010
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[Deleted for self promotion]
  • October 20 2010
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You can do better but would have to put up new escrow acct. funds with other lenders as Wells would not net out the current escrow acct. unless they did loan.  You would get back your current escrow balance in a few weeks after closing though.  Post a request on Zillow and you will be able to compare.
  • June 30 2010
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with the LTV <95% based on the info provided, a comparable "no cost" refi would be about 4.875% to 5.000%.
  • June 30 2010
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The LTV does present some challenges but there maybe better ways to structure your loan so you are not paying such a high rate and still not have monthly mortgage insurance.
  • June 30 2010
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The appraisal came back @ $330K

5.375 no cost refinance is the best Wells fargo can offer.
  • June 30 2010
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Let us know the rate options once the appraisal is back.... with lower MI rates, etc. there may be better options than Wells will offer.
  • June 24 2010
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I would get them to tell you what the rate would be based on different values.  Without knowing the value, it is hard to tell whether or not you are getting a good deal
  • June 24 2010
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The appraisal is being done Tomorrow. WF says that is the appraisal comes in higher than the $315K on their system I might be able to get a better rate. I am positive the appraisal will come at least @ $330-340K.

* The Zestimate is 352K

  • June 24 2010
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Has that value been confirmed or is it based on what there system is telling them.  I think you mentioned that an appraisal was being done.  What value did that come back at.
  • June 24 2010
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Wayne Lancaster: Wells Fargo gave me the following Reply:

"If you pay for the closing costs the rate would go down to 5%. Remember you are doing a Freddie to Freddie Mac refinance, 97% loan to value with no mortgage insurance. The 4.75% rate would cost 1 point to get there"

What do you think?

I  plan to stay in the house for at least another 10 years...

  • June 24 2010
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Profile picture for Scobe
There is no such thing as NO COST!!!  There is a fee somewhere.....
  • June 24 2010
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No such thing as "No Cost"...you may not be paying anything out of pocket but your rate is .375-.75% higher than the market. 
  • June 24 2010
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Profile picture for shapiroamg
you should shop around. better rates are out there.
  • June 23 2010
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Ask for the option of you paying or rolling closing cost into the refinance... if it is at current market rate of 4.75% no points that would be a better option if you plan to be in the property long term. Payback would be about 36 months if closing cost were rolled into loan. Transfer of escrow should be available with any option they are offering.....  

  • June 23 2010
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The only thing they have going for them is that they are able to just transfer the escrow account from one loan to the next.  Depending on the value, that seems like a high rate for the credit towards closing costs that they are giving.
  • June 23 2010
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