The woman who did my last refi calls and says she can get me a new loan 1% less than my current jumbo loan. She did not charge me much last time, and I know her, she isn’t a shark. But what should I expect in these times? Should I be expected to pay points? Fees? Is there really anyting as a “no-cost” loan that makes sense? I know points = lower rate, but are there any rules of thumb? Any advice from those in the biz? I will not be moving EVER.
Yes, there is such a thing as a no cost loan that makes sense. One situation in which they make sense is if you don’t plan to own the house for very long.
But, there generally is no such thing as a free lunch. There is a tradeoff between up front costs and rates. Less of one means more of the other. The choice partly depends on how long you’ll have the loan. The fact that you don’t plan to move suggests it could be a long loan, in which case you’ll probably want the lowest fixed rate you can get, even if it means paying more up front. But, you might find an even lower rate later on, in which case you’ll want to refi again and thereby wish you had paid less up front. There are some rules of thumb about how long you need to own the place in order to justify paying 1% up front in exchange for 1/4% lower rate. You’d need to understand the tax consequences of those two options as well as make an assumption about the time value of money.