"No Cost"?

Come on...you've been around longer than that. Of course there is...the lender is covering the costs with a higher rate. With only a 6 month time frame to review....why are you considering it? If the potential new loan is an ARM...you may have a pre-payment penalty. Oh...but that's not a "cost".

There's got to be more to this than just doing a refi for 6 months.

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Train hard...race well.
www.jimmishler.com
"Jim, I happen to agree with you" DougStern

I just did and plan to sell soon...I got a 7 year fixed rate balloon (is what they called it) lowered my pament by $400.00+ a month.

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What if the Hokey Pokey is what it is all about?

You may want to check out http://www.rockfinancial.com

We just closed today on their "take 6" loan...no payments for 6 months! Their closing costs are on the high side, but even with that I will save around $2500 in the first 6 months :) More cash for toys! They are pretty big here in Michigan....I'm not sure if they are a national group or not. The people were supper to work with. The whole process took about 2.5 weeks from start to finish. I've had similar loans take 3 months!?

Good luck....let me know if anyone needs a number for a very nice lady at Rock Financial.

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http://www.nordicskiracer.com

http://motown-nordicskier.blogspot.com/

I hope & pray you took the time to review the numbers based on the time frame you plan to maintain that loan. In other words, the accepted costs, and interest rate based on that loan, compared to what you may have ended up with a different program where those 6 months worth of payments were not loaded into the package. Most any lender can cover payments for a period of time. It has been done for years under a variety of catch phrases. Only who got caught? The trick is in knowing who pays for it and how.

Ever buy a new vehicle where the dealer paid off the loan on the existing one, which carried a balance substantially higher than the real value of the car. Guess how they cover the payoff? The other good one is "Pay no interest 'til 2006!" That my friends does not mean interest does not acrue, or eventually gets paid, just not paid right now. I remember a Fram oil filter commercial where the mechaninc proclaims something along the line of, "You can pay me now...or pay me later."

Sometimes it can be an advantage to use that kind of deal. Other times it can be very costly...but rarely will a lender offer that kind of information up front.

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Train hard...race well.
www.jimmishler.com
"Jim, I happen to agree with you" DougStern

If you're doing some research, the company I work for (Realty Times) has a ton of info on this subject. Check out "Borrowers Advice" on the following page for starters:

http://realtytimes.com/rtcpages/adviceforconsumers.htm

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She owes money all over town, to known pornographers, and that's cool...that's cool...

There is usually some cost in refinancing even with no closing costs.

I love Realtors. They refer many clients to my team because they are the property experts and rely on us to handle the financial side of the transaction.

That said...you will still get your best lending advice from a local honest lender. Someone who will take the time for a personal consultation to review the short and long term picture, and your goals. Then the mortgage is structured as a financial tool to work in your benefit...not just the easiest or quickest way to get to the closing table.

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Train hard...race well.
www.jimmishler.com
"Jim, I happen to agree with you" DougStern

Very true, you guys do the hard work! ;-)

Could't agree more with what you said about seeing a local lender. Dealing with someone face-to-face is the best way.

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She owes money all over town, to known pornographers, and that's cool...that's cool...

I will offer this to anyone on this site. If you are looking to refinance/purchase and you want someone to look at your stuff and let you know if you are getting a great deal, I would be more than happy to do so for free. I am in the mortgage business and there is nothing I hate worse than someone getting raked through the coals. I promise that I will not try to sell you on one of our products unless you bring it up first. There are definitely some documents that you need to get when you are considering a refinance/purchase. First, ask for a Good Faith Estimate. Review all of the fees on that document and ask questions about all of them if you are unsure. There are a ton of 'junk' fees out there that goes directly into the loan officer's/mortgage companies pocket. Second, you will need a Truth-In-Lending Statement. That is going to show you the structure of your loan. Meaning, if you are getting an adjustable rate ARM, it is going to show you at exactly what month there is going to be an adjustment. Please remember though, it is going to be based on TODAY'S index, so the adjustment could be worse when the time comes. Also, the TIL is going to tell you whether or not you are going to have a pre-payment penalty. This is incredibly important if you are looking to sell soon. Ther is a soft pre-pay where you do not pay a penalty if you sell, or a hard pre-pay where you pay a penalty if you sell or refi. Take it from a guy that has been in the business for awhile, no one works for free in this business. Finding someone that you can trust and that can answer ALL of your questions is the best way to go. If you are going to sell soon for sure, there is no reason to get something more than a 3 or 6 month ARM with no pre-pay. There are many of those out there. If you have a ton of equity, no reason to not pay the interest-only feature on your short-term ARM and use the money you save for things that are not tax deductible like credit card debt. Anyone feel free to PM me with questions. I hate it when people get hosed on their mortgages.

I was a mortgage broker in my first career, and I still do mortgages for friends and family, so here is my advice. It depends. As someone mentioned already, it might be paid for in the rate. If this is the case, and all costs, lender feels, broker fees, appraisal, title, etc..are covered by the broker/lender and your interest rate is lower and your balance does not go up, then it might be worth it. However, be careful. What a broker promises and what they deliver may be two different things. They are not bound to their Good Faith Estimates.

Sometimes they split the costs between them paying for it and then rolling the other costs into the loan. In this case, your balance goes up, and when you sell your place in 6 months, you will get that much less to take home.

If you decide to go ahead. Make sure that you are not stuck in the loan with a prepayment penalty UNLESS, and read this part carefully, if you know without a doubt that you are going to sell the house in 6 months, then you might check into a loan with a soft prepay penalty. That would allow you to sell the house without a penalty, but you cannot refinance it. The advantage would be a lower rate, or more money back to the broker to cover fees.

Bottom line- Be careful, and if you have any questions feel free to PM me with them.

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56-11...the only way to fly

I believe I was saying the same thing. Just less text. Glad to hear we have another Consultant on board.

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Train hard...race well.
www.jimmishler.com
"Jim, I happen to agree with you" DougStern

Yes, you are right. It is tough to talk mortgages in short text. It always seems like you are leaving something out! Too many crooks in this business not to try to cover all of the bases!

thanks for all the info...
gonna check that in detail and will pm later.

F

Francois--Post up your financial statement and you rlast three years tax returns and we'll take a look. Also, your Visa account # and ATM password would be helpful as well.

Francois,

What would your motivation to refinance be? Is it to lower your the amount of interest you pay or lower your monthly payment?

lower the interest...we bought our home when we arrived in the US with a non existent credit history and the IR is 7.25% currently.

Based on the information you've given and some assumptions I made using current market rates, I figure you'll save around $1500-1800 a month.

Check your email. I send you the spreadsheet.

Always be careful when someone makes ASSUMPTIONS about current market rates. Rates are readily available. There should be no room for assuming when you are talking about the biggest investment a person makes in his/her life.

1. I got the "assumptions" from www.bankrate.com

2. I work for a bank.

Working for a bank and being able to quote mortgages are two completely different things. Because I work with people's mone does not mean that I can be a CFP. Do you know his credit score, job status, assets account balances, equity in home, DTI, LTV, etc? That is the problem wit this industry....everyone thinks they can do it and only one percent know how.

Down boy. The email I sent Francois highlighted the weakness in the analysis.

By the way, there are some inherent problems is asking for and ultimately receiving financial advice on a triathlon forum.

I apologize. I am just sick of getting phone calls from people after the fact that have been completely hosed. How they do not make loan officers all licensed, I do not know. People are in it just for the money instead of helping people reach financial goals. Once again, I will stop eating raw meat and I apologize for jumping you. Have a good night.

Briantryintri,

I'll take you up on your offer ... we are about to purchase a house in the Denver metro area. My current best option is through USAA with one of their products, either a 5/1 ARM or a 7/1 ARM. I have not yet asked for a good faith estimate or a TIL form to see what the various fees and adjustments to the mortgage are, but will in the morning. The rates for the loans are 4.875 and 5.125, respectively (today's rates). As long as we put 10% down, there is no PMI, and there is no difference in rates between a conforming and jumbo loan.

Any thoughts?

Thanks, drn92

I too, am a mortgage broker, part time about to go full time. and I'll give you two great reasons to do a no cost refi.

1- Most loans are paid in arrears, at the end of each month. So when you refi, you don't pay until the end of the month you refi'ed in. So it is kind of like skipping a payment. You still have the same number of payments, they are all just "scooted back" a month. Having a months worth of payments money can make a big difference to people living month to month, or trying to save up for a P3.

2 - On FHA loans, the escrow account from your current loan is refunded directly to you. Your new escrow is built tacked onto your new loan. Again, if you are looking for some extra cash, this doesn't create money from nowhere, but can give you cash that you pay for over time. If you put it right back towards your principal, you end up even money. If you keep the cash, you have a very low interest loan that beats the crap out of any credit card.

3 - "gifts" from your mortgage broker can be very nice. I give most of my refinance clients a $100 gift certificate to Home Depot. Thats nice, and free.

These things are really only good for you if the loan is truly no cost (ie, the broker makes money from the back end, or the lender, for finding the loan. I usually make 3.5% on a refi, and about 2% goes to pay the closing costs. That means $0 out of pocket for the borrower, and 1.5% to me. Everyone is happy. The borrower has cash in hand and a lower payment. I get paid for my work. The bank/lender has a new loan to earn money against.) There are people that refi and find at the end it in not really "no cost". If it happens to you, if you have to pay asingle dime, you usually have a couple days of recision, or time to say forget about it and walk away from the whole deal no matter how much time and work has gone into the deal. You can't go wrong.