Refinancing cost comparison

 In shopping for a refinancing of my current loan, I recently got four
"good faith estimates" from various lenders about their fees.  Since
my mortgage is fairly small ($125k) fees are an important part of my
decision.

Since lots of people are confused by them, I tried to put them
together in the most comparable way possible.  The following are for
loans of the same size, though not the same term or rates.  I've
excluded points, taxes, escrow deposits and pre-paid interest as these
should be the same between lenders given everything else about the
loan is fixed.

I was suprized, given how confusing these things often are, how much
was compatible among the lenders:

LENDER                     A        B       C       D  
Appraisal                400      325     300     300
Application                0*     295     350     300
Closing                  750*     490     400     525
Titling & Insurance      375      522     625     472
Credit/Flood Reports      16       13      23      16
Tax Service                0*      50      65      76
Routine Services*          0*      66     170     200
SUBTOTAL               1,541    1,761   1,933   1,884

NOTES:
Routine Services includes fees for couriers, notaries, wire transfers
and (giving "D" the benefit of the doubt) "processing fee."
Lender A's Closing Fee includes the other items marked 0*, which are
contracted together.

At this point, though, the crap starts rolling in:

A:  Done; Final = $1,541
B:  Funding & Review $330; Final = $2,091
C:  Settlement Fee = $400; Final = $2,333
D:  The joke of the bunch:
    Underwriting Review  $295
    Attorney Fee          650
    Document Preparation  350
    Legal Review          150
    FINAL              $3,329

One caveat -- "Lender A" was offering a 5/1 ARM while the others were
15-yr fixed.  (Their teaser rate was in line with other loans of that
type.)  It is possible that some trading off of their fees vs. rates
has occurred.

Considering how widely refinancings are available on the 'Net, you'd
think the better sites would have become better known, the way eBay
dominates auctions.  Anyone know of a really top-notch refinancer?

 

Doug Olson wrote:


ouch! what's your current interest rate?  Beware of lenders that roll
the cost of refinancing into your new mortgage balance.  If you can live
with paying 1/2% more on the current market rate, go with a no cost refi
.  It's not really free you pay 1/2% more interest, BFD, I went from
7.62% to 6.5% no cost then 6.5% to 6.0% no cost.  Offered no cost for
5.5% 2 weeks ago when the normal 30 year rate was 5.0%

 J SKerry wrote:

It is not wise to just pay 1/2% more interest to avoid costs without
crunching some numbers firts.

On a 15 year loan of $125,000 the difference in the monthly payment
amount between 6.0% and 6.5% is $34/month.  The present value of
$34/month over 15 years at 6% is $4,036.  The total undiscounted cash
difference in payments is $6,131.  If this guy blindly followed your
advice to pay an extra 1/2% to get a no-cost refi he would end up paying
about $2,000 extra (in discounted terms) and $4,000 extra in
undiscounted terms. Ouch!

Andy

 On Mon, 05 Apr 2004 05:55:26 -0700, Andy


Thanks for posting this info, much appreciated and fully considered by
me.

 

xymergy@suds.com wrote:


Your example is true if the loan is held to term.  If you sell or
refinance in less than 15 years, no cost refi's can be the wiser choice.
With a no cost refi you start saving money on day 1, with cost refi, it
typically takes 4-5 years before you break even