Comments on: "No Cost" Mortgage Refinance: Stepping Down the Ladder

By: TFB

TFB — Sun, 19 Apr 2009 23:13:15 +0000

xiangrong – I don't understand what you meant to say. Did you refinance a $127,500 loan to 30-year fixed with no closing cost? What's the rate?

By: xiangrong Guan

xiangrong Guan — Sun, 19 Apr 2009 14:21:46 +0000

30 year fix loan, Total $127500, no cost.

By: ROBB

ROBB — Mon, 16 Feb 2009 04:20:02 +0000

hi, i am searching for something similar. i refie'd 3 times. i had a high fixed rate, 8.95% (the 80's, yuk). and i got , what the bank called a "penny loan". where all i paid was a penny. i was skeptical, but when all was said and done, i paid nothing. the broker paid the penny for me. this was offered for 5 or 6 years, with "citizens bank" here in MA. each time the rate went down, i took the penny loan. i cut my 20 year loan, down to 10 years, paid for 4 years, then refied, back to 10 years, with a much lower payment, and i rolled all my ccard debt in there as well. i am looking to find another bank with a "penny loan". as there are no costs out of pocket , at all. robb.

By: Scott

Scott — Fri, 13 Feb 2009 03:36:30 +0000

The no cost refinance is by far better in your circumstance (if you plan on refinancing to a lower mortgage rate in the future). Long term, going for the lowest rate would save the most money. The problem, is nowaday, most homeowners don't stay in their homes or their loan for the long term, so the low or no cost option would work better for most, in terms of savings.

By: Anonymous

Anonymous — Tue, 05 Feb 2008 16:07:00 +0000

Hi TBF,

Answering your question, as long as you are not falling for "bait and switch", your strategy is fine, assuming you are not planning on keeping your property for more than 5 years. Beware, there are a lot of schemers out there, all they have is a 1/4 point spread per hundred to work with and no points no closing costs is more enticing to them.

Another point – going from 30 to 15 – you are increasing your P+I, should you lose a job, this may be a problem, but that's kind of an obvious consideration

By: Brad

Brad — Mon, 04 Feb 2008 16:02:00 +0000

tfb – so did you get all closing costs covered in your case? Was the $3000 you referred to in your post all of various lender and third party fees, or just the origination? Thanks for your prompt response!

By: TFB

TFB — Mon, 04 Feb 2008 14:39:00 +0000

Brad – Zero point does *not* mean that the lender will pay ALL closing cost. There still can be various fees charged by both the lender and third parties.

By: Brad

Brad — Mon, 04 Feb 2008 14:16:00 +0000

tfb,

Does a rate with zero points usually mean that the lender pays ALL closing costs, or just the origination fee?

By: TFB

TFB — Mon, 04 Feb 2008 03:23:00 +0000

Grace,

If I follow the new amortization schedule after the refi, yes, my loan payoff date will be extended for 3 years. But I don't have to follow the new payment schedule. If I keep paying what I used to pay before the refi, which is higher than what the new required monthly payment will be, my loan will be paid off sooner than 12 years because my interest rate is lower and more of my payment will go toward principal. When you have a 15-year loan, it doesn't have to be 15 years. You can make it a 12-year loan, a 10-year loan or any shorter length you want by paying more than the required monthly payment.

By: I'm Grace.

I'm Grace. — Sun, 03 Feb 2008 20:26:00 +0000

So you've extended your loan by three years when you went from a 15-year loan in 2005 to a 15 year loan in 2008?

I'm not sure I'd want to do that.

Am I missing something?