Comments on: Mortgage Refi Journey Started

By: Kate

Kate — Tue, 28 Apr 2009 00:05:17 +0000

I see, thank you…. nice to find this blog, very helpful…..

By: TFB

TFB — Mon, 27 Apr 2009 22:34:30 +0000

Kate – I heard a loan with escrow is easier to sell to Fannie Mae or Fannie Mae charges the originator a fee if the loan doesn't have escrow. The originator is passing the fee down to the borrower.

By: Kate

Kate — Mon, 27 Apr 2009 22:23:54 +0000

we are refinancing, and are also facing a fee for declining escrow; I am perplexed as to why they charge a fee for this? We haven't used an escrow acct for the last 11 years, and we are refinancing with the same mortgage co…..

By: TFB

TFB — Mon, 27 Apr 2009 19:47:32 +0000

Raghu – Great work for getting rid of that escrow waiver fee. You got a better deal than I did. Right now my NMA deal has an escrow waiver fee. Because they offered me a little more money (still less than the escrow waiver fee), I settled for "good enough." I look forward to reading your posts. Thank you again for leading me to NMA. I gather you didn't have any problem with them last time. If there's anything I should be aware of, please let me know (use the contact form if you don't want to say it publicly).

By: Raghu

Raghu — Mon, 27 Apr 2009 19:06:22 +0000

I was surprised to see may name here. Right now I'm locked at 4.875% No Closing, No Escorw (without escrow waiver fee). After dealing with refinance since Nov 2008, I came a thing or two about how to find brokers and places that has offer lowest rate. But, one thing is for sure, if you are willing to spend time and play the game asking brokers to match the rates, you can ultimately get better rates.

I plan on writing more on how to get brokers to lower the rates.

By: TFB

TFB — Mon, 27 Apr 2009 16:12:17 +0000

TIE – The choice of using escrow (aka impound) or not is with me. If I don't use it, they charge me a one-time fee of 0.125% of the loan amount. If I use it, I save that fee. That's the deal. With all my previous mortgage refinance (I lost count: this will be the 7th?), I never used escrow. I have not decided whether to use escrow this time. I don't have to make the decision about escrow/impound for a while. When I do, I will write about it!

By: TIE

TIE — Mon, 27 Apr 2009 15:44:18 +0000

Am I understanding correctly that you have to use an escrow account and that is why they are willing to credit you 0.125%? It has been a while since I used an escrow account so maybe you can refresh my memory: do you receive interest on the account? If not, then that explains how they recoup the 0.125%. They get the interest. You pay the opportunity cost for money tied up in escrow. I think that's why I don't like escrow. Plus, I've had companies mess up payments out of my escrow account.

I'm not saying you shouldn't take a deal with escrow. I'm just commenting on the issues. It would be interesting to include the cost of opportunity in the effective rate you're getting. You'd have to estimate how much money will sit in escrow and for how long before it is used for taxes and insurance, and what you would have otherwise invested that money in over that time.

If my memory is poor on who gets escrow interest, let me know. That changes the opportunity cost a little.