Mortgage Refinance: Before and After Closing
After an appraisal is done, an underwriter will review the documents. Chances are the loan will be approved and I will be asked to pick a date for closing. It’s almost done.
Pick the Best Day of the Week for Closing
Does it make a difference which day you close the refi besides the convenience factor? Yes, for a refinance on your primary residence from a different lender, the short answer is:
Mortgage Refinance: What If Rate Drops After You Lock?
The Fed announced that it’s prepared to provide additional easing if needed. The bond market responded positively, which brought down the mortgage rate, again.
If you are doing a mortgage refinance, and you already locked your rate and fees, what do you do if you see the rate and fees drop after you lock?
There are several options.
Let the Bush Tax Cuts Expire
Title says it all. That’s my view on the issue of Bush tax cuts. Let them expire, not just for the rich, but for everybody.
Although Greenspan has lot a credibility after the financial crisis, I agree with him on this. For his reasoning, listen to what he said on Bloomberg TV (fast forward to 2:47) or read second hand from the New York Times article.
How Much Money Does a Bank or Broker Make From a Mortgage Refinance?
Have you wondered how much money a bank or a mortgage broker makes when you do a mortgage refinance with them?
By law, a mortgage broker must disclose their compensation but you often don’t see it until you get the final closing statement ("HUD-1"). In a post last year, Mortgage Broker vs Mortgage Lender, I showed a mortgage broker I worked with made $3,371 from doing a refi for me in 2008.
That broker wasn’t particularly expensive. Although I didn’t know as much about mortgage refinance as I do now, I remember his rate was the best I could find at that time.
Credit Card Rental Car Insurance Coverage Gaps
I said I have a weak point for sob stories because I keep getting drawn to them. Someone on Twitter led me to this story on CreditCards.com:
Don’t automatically refuse extra rental car insurance coverage
Kim rented a car from Alamo. She paid with her Discover card. Kim damaged the rental car when she backed it into a pole. Alamo charged her $4,000. Discover paid $3,000 because the card’s rental car insurance doesn’t cover the loss-of-use charges and administrative fees Alamo tacked on.
Vanguard New S&P ETF Ticker Symbols
With some fanfare, Vanguard launched nine new ETFs based on S&P indexes last week. When I first looked at the ticker symbols, I see a mess. All nine funds use a combination of V, I, O, and G. They are VOO, VOOV, VOOG, IVOO, IVOV, IVOG, VIOO, VIOV, and VIOG.
After staring at them for a while, I finally got it. The first V is Roman numeral five. "IV" is Roman numeral four; "VI" is six. "O" is zero. The last V and G stand for Value or Growth.
Therefore VOO is "500". VOOV is "500 Value". IVOV should be IVOOV for "400 Value" but they only want to use four letters so they dropped an O.
Mortgage Refinance: When to Lock?
I showed this chart in my previous post about comparing the total closing cost from different lenders.
In addition to the cost difference across lenders, it also shows the total closing costs go up and down quite significantly from one day to another. Even with the least expensive lender, choosing when you lock your rate can save or cost you $1,000 or more. So how do you know when you should lock your rate?
OTC Drug Coverage Will Stop for FSA, HSA, and MSA
The IRS issued a bulletin last Friday saying effective January 1, 2011, over-the-counter drugs will not be covered under a Flexible Spending Account (FSA), Health Savings Account (HSA) or Medical Savings Account (MSA) unless you get a prescription. Eye glasses and contact lenses will still be covered. This change is brought by the health reform law passed earlier this year.
Because getting a prescription for your typical over-the-counter drugs is more trouble than its worth, this effectively ends the small tax break of paying for these drugs with pre-tax money. That by itself isn’t a big deal but it also takes away a tool for managing the use-it-or-lose-it problem in an FSA. Under the current rules, if you are getting to the end of the year (or March 15 in some plans) and you still have some money in your FSA, you can spend it down on some OTC drugs. Starting in 2011, you won’t be able to do that.
Mortgage Refinance: Tradeoff Between Rate and Closing Cost
Say you chose a lender for your mortgage refinance. You still have to decide whether you should go for a lower rate with a higher closing cost or a higher rate but with no or minimal closing cost. You can also buy down the rate by paying points.
Making the perfect decision requires a crystal ball. Will the mortgage rate go down in the future? When and by how much? How long are you going to keep this loan? Note I didn’t ask how long you are going to stay in the house, because you can still stay in the house and refinance the loan again if the rate goes down.
The good thing is we have some calculators to help us make this decision. I will use a hypothetical loan as an example. Say I want a $200,000 loan in Missouri with a 30-year fixed rate, I see these choices from a lender’s website: » Read more …
Mortgage Refinance: Which Lender?
As I mentioned last week, I’m doing a mortgage refinance with a lender I haven’t used before: First Internet Bank of Indiana ("First IB").
My previous two refi’s were done through National Mortgage Alliance (NMA). NMA did the jobs well both times. My last one finished in 2 weeks from application to closing.
So why change? Lower cost for the same rate and term. Is it worth it? I think so. Let me explain how I chose the lender in this post.
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