I wondered out loud last Monday why I couldn’t find a no-cost refi deal for a 15-year fixed rate mortgage at 4.5%. Reader Raghu commented that he got an offer for 30-year fixed at 4.875% with a 0.125% escrow waiver fee.
I called the mortgage broker he referred to me but the broker is not licensed in my state. I also remember that Raghu wrote about his refinance experience last December. I actually commented on a few of his posts back then because he had listed my blog as one of his favorites.
Raghu mentioned in his posts last year that he went with National Mortgage Alliance (NMA), which is an Upfront Mortgage Lender certified by the Mortgage Professor. NMA lends in all 50 states and Washington DC. When I checked NMA’s no-cost refi rates, I was offered 30-year fixed at 4.875% and 15-year fixed at 4.5%, both with a one-time 0.125% escrow waiver fee and $120 in document preparation and government recording fees.
If I agree to use escrow, then I just pay $120, which is not strictly no cost, but close enough. Other places I checked all want at least $2,000 in closing cost for the same rate. Score! Thank you Raghu!
Doing a mortgage refi with a company I never dealt with before makes me uneasy, especially when its rate and fees are so much lower than others. If I do a loan application, I have to give out my Social Security number and a lot of personal information. What if an ID thief sets up a web site to collect mortgage applications? What if it’s a bait-and-switch? But because NMA is certified by the Mortgage Professor and because Raghu said his closing went smoothly, I think NMA is legit.
I’m going to document this refinance journey and let you see how things pan out. If you haven’t refinanced lately, perhaps it’s time to consider doing it.
Wednesday 4/22/2009. Looked up loan rate and fees from NMA. Requested that a loan advisor contact me. Received an e-mail and a phone call within a few hours but I was too busy with work to reply.
Thursday 4/23/2009. Spoke to the loan advisor. Received a Good Faith Estimate (GFE) by e-mail showing the closing cost will be credited except a 0.125% escrow waiver fee and $120 in doc prep and government recording fees. Same as what I got online, good. Asked a few questions:
- Can appraisal be waived? – Fill out an application first. Then wait for a preapproval from the automated system.
- Is there a prepayment penalty? – No.
- Are there any non-refundable fees upfront? – A $300 deposit is required to lock the rate. It will be credited at closing. If you don’t close, the deposit becomes non-refundable if an appraisal is performed. Fair enough. Appraisal costs money.
I called the mortgage broker I used many times in the past. He couldn’t beat the deal. Filled out application online with NMA in the evening. Gave a credit card number for the $300 deposit for locking the rate.
Friday 4/24/2009. Got an e-mail from the NMA loan advisor saying their automated system says an appraisal is needed. Stupid computer! But the loan advisor offered some additional credit toward closing. OK, that’s good. Got a few more e-mails for this and that. All taken care of. The loan advisor replied all my e-mails promptly. When I called her, she always answered. My calls never got to voicemail. So far so good.
Say No To Management Fees
If you are paying an advisor a percentage of your assets, you are paying 5-10x too much. Learn how to find an independent advisor, pay for advice, and only the advice.