Basically it works like this: The higher the rate sold to the buyer, the more commission the loan officer makes. So, let's say for instance that your current rate is at 6%. The loan officer says that they can offer you a rate of 4.875&. Woohoo! Well, actually, the loan officer is going to make 4% of the loan amount in commission. You figure that closing costs will be between 2 and 2.5%. Therefore, the loan officer keeps between 2 and 1.5% commission in his/her pocket. It's better than nothing. We do that as well but take it one step further and streamline the loan without an appraisal. If it works, it will save you money out of pocket on an appraisal. If the loan officer does a streamline with appraisal, then streamline with no closing costs is irrelevent. The purpose is to avoid having to get an appraisal. If you get an appraisal, request a lower rate and roll the closing costs into the loan.
In order to make sure that your refinance is worth it when paying closing costs, divide the payments savings into the costs to close (minus escrow) and that will tell you how many months it takes to break even. FHA doesn't allow us to refinance a person if they can't save at least $50 a month.
Also be careful with what the company regards as closing costs. After all, it's a generic term. It can imply costs associated with the loan and escrow (taxes and insurance) or it can imply only costs to close and you have to pay escrow out of pocket. If that's the case, see if the lender and the title office can offset the escrow. In other words, take the escrow balance that you currently have an apply it to the required months needed to create the new escrow account. Other things you can do to cut down on escrow is to close at the end of the month and fund the loan during the first few days of the following month (remember, you have 3 business days to rescind). If you close within the first 5 days of the month, you can request interest credit (or short pay). This is where the lender pays you back interest at closing. If your loan funded October 4th, the lender will credit you back 4 days of interest and your first payment is due November 1. If you fund October 6th, you pay a full month of an interest only payment and your first payment is due December 1. If you close at the end of September, you pay interest from the funding date to the end of the month and your first payment is due November 1.
Regardless of your decision, have your FHA case number pulled by someone by October 4th. This is the last day to get your FHA mortgage insurance payment at .55% of the loan amount versus .90% of the loan amount. FHA will also be reducing the up front MI fee from 2.25% to 1%.... more
Key Bank does. I'm not sure if US Bank still does but they did too.
Key Bank is one of those well-capitalized banks that specialized in these types of loans. It appears they039;ve weathered the recession storm pretty well, which is why they still offer these. FYI, they're VERY score driven. They only look at your Equifax score but the minimum score for different programs varies all the way to a 780 credit score.... more
The Keyes Company has a business affiliation with Wells Fargo Home Mortgage Company. Wells Fargo is an extremely reputable and competitive lender. At the Keyes Boynton Beach Office we have a Mortgage Representative who is always available to assist our buyers when determining their home purchasing needs and abilities.... more
The best deal is not always the best rate, it's a loan program that meets your current and future needs and fits your budget and lifestyle. Seek a reputable lender who can advise you on your options. Once you choose a loan program the mortgage broker should be able to go to a number of lenders to obtain the best possible rate.... more