Friday, May 3, 2013

Refinance Updates

So I got a new Good Faith Estimate in the mail the other day... and it wasn't pretty.

Because the original guy I spoke with at BOFA put my home value at $180 k-- not the $150 k it came in at, all of our rate information was done under the impression that our home would have much much more equity (like 60% loan to value).... and so on paper, it looked like we would qualify us for the best of all deals in terms of a lower rate with no points what so ever.

Well, we got our new Good Faith Estimate in the mail... and it had $1,130.00 in "discount points" added to it to keep out 3.5% rate...

After a few emails and phone calls, I asked our lender how much we were saving each month if we paid the "points" to keep the lower rate...

He told me $6..... a month

I asked if he was joking...

He said no...

I asked why anyone would pay over a grand to save $6 a month... It would take 15 years to break even.... He seemed a bit surprised I had caught the change and did the math to see if it made sense...

**Cricket Cricket**

So needless to say, glad I called about the new GFE when I saw it in the mail. We obviously decided not to pay any points for our loan. We will be getting a new GFE in the mail in a few days but it looks like we will be getting a 3.75% rate with no fees and a 1/3 point credit in our favor... (which is just under the amount we paid for our home appraisal...)

AND it might look like we don't actually have to cut them a mortgage check this month at all because right now with our current loan, our next payment isn't due until June 1st and late by June 16th... and they are projecting that we close and finish this all in the next week or so... and someone at Bofa said if we close in May, our next payment on the new loan wouldn't be due until  July 1st so i'd normally pay that in June... so I might not have to part with $802 this month!

But i'm keep the money set aside just in case!!!!

3 comments:

  1. That's ridiculous. I can't believe your lender didn't do the math before adding on the points.

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    Replies
    1. I know... seriously... Who would pay that???

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  2. Interest is paid in arrears. So, whenever you close, you will pay interest to the end of the month (which is why most closings happen towards the end of the month). Then, you have a month when you don't pay anything, and then the following month you pay your 'interest in arrears'. Does that make sense? If you closed today, you would pay interest from 5/6 to 5/31 at closing, and then nothing for a month. But yes, that is how it works.

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