Hi all,
I wanted to take a minute to talk about my mortgage refinance experience.
Quick back story: My wife and I bought our home for $280k in 2015. At the time, we thought that was a great deal, and we only got it for so cheap because it appraised at that level and we refused to pay more than it appraised for. In 2017, we secured an appraisal waiver for a refinance, out of 3.875% + PMI and into 3.75% without PMI; the appraisal waiver cited our home as worth $337k. Earlier this year, a neighbor sold his essentially-the-same home (same footprint, one fewer bathroom, but with a pool and a garage) for $400k.
On a whim, I started looking into another refinance. I initially found a loan for the $247k we owe on our home at 3.375%, for $2,204 in fees, plus $2k for the settlement/title. $4,200 to shave off 0.375% looked like a winner within just a couple years, so we were going to go for it.
But then, I thought hey, why not shop around? The initial company quoted me a buy-down to 3.25%, for a total of ~$4,500 in loan costs (plus the $2k for settlement), but then I got a quote from another company, which offered 3.25% for $3,000.
I still thought I could do better, so I went to another company and got quoted at 3.25% for a total of $1,200 in loan costs.
Finally, I had the idea to roll my student loans (currently ~$26k remaining at 3.75%) into the mortgage, and I locked in at 3.25% for $2,300 in loan costs.
By rolling my student loan into my mortgage and refinancing into a rate 0.5% lower than my current mortgage rate, I'll be able to invest hundreds extra per month into the market, which, if my math works out, will allow me to save more than $100,000 extra (in today's dollars) over the life of the loan than if I kept things as-is.
According to Freddie Mac, fewer than half of mortgage applicants shop around, and shopping has a direct and significant impact on the amount that borrowers ultimately pay for their loans. Just getting multiple estimates helps, but the real key for me was to go through the whole process - have them run my credit and create a formal loan estimate - and leverage that estimate to drive down the price at another lender. All of the lenders I spoke to were willing to look at beating their competitors' offers; the offer I ultimately took saved me a bundle, and a different lender has a policy of offering $1,000 if they're unable to beat their competitors' offers, so we'll get an extra $1,000 as long as we close at the same rate, amount, and term as was estimated (I question whether this is legit, but if it's not, I'm not going to sweat it).
The lesson - shop around; for relatively little effort, you can put yourself into a seriously advantageous position!
Submitted July 10, 2019 at 02:57PM by cjw_5110 https://ift.tt/2Y1ioOW
