I am in process of refinancing

Asked by Alok Gupta, Phoenix, AZ Mon Feb 13, 2012

I am in the process of refinancing and I locked in on 4th Jan at 2.625% for 5/1 ARM (APR is about 2.745).

The same institution now has it available for 2.5% ( 1/8% less). I asked them and they said they can not lower it as I am already locked in. I am about one week away from closing. How can I get it lowered to 2.5%.

I am paying about 3000 ( 700 reserve of taxes/insurance into escrow acct) in all types of costs for a loan of about 142,000 (138,300 loan amount 700 tax reserve in escrow 3000 refinance expenses).

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Matthew Remus, , Phoenix, AZ
Mon Feb 13, 2012
Hi Alok,

Unfortunately the only way that you will be able to get the lower rate is if your lender will switch the bank that is underwriting your loan. They will most likely not do this because it will cost you another appraisal and start the entire process all over again. You can switch lenders yourself if you think you can get a lower rate with lower fees, but you will have to pay for another appraisal and start the process over. The other option that you have is to pay the lender the cost to them to lower the rate. Please feel free to call me if you have questions.

Matthew Remus
1 vote
, ,
Fri Feb 17, 2012
Hi Alok,

You locked into a great rate! Once you lock, you are protected from the the rise interest rates & you forego your ability to ride the market in search of a lower rate. We all want the lowest rate possible, that is understood, but once you lock a rate, those funds are actually reserved for you, based on the "rental" price at the time you locked that rate.

One way to look at this is, with rates so low, your downside potential of rates increasing, is much greater than the rates decreasing; this is an insurance policy for you. Now, you see that the rate dropped 1/8 (0.125%) of a point, when you "dollarize" that decrease, how much more would you have saved in interest on a monthly basis?

Now, if rates increased by 0.375%, how much would you have lost by the increased payment when you dollarize that number?

A bird in the hand...

All the best,

Roswell Moore, CMPS
Certified Mortgage Planner
480-422-5095 direct

We are a Direct Lender, Mortgage Bank where we originate, process, underwrite, fund, AND SERVICE our loans, in-house, with FHA (starting at a 580 score AND still only 3.5% down), FHA Streamline loans (NO minimum credit score, NO appraisal required) Go Green rehab loans, HomePath, Investor Friendly (10 financed properties), VA, USDA, Jumbo, Conventional, plus, we allow Escrow HoldBacks! NMLS ID 263779 | AZ BK 359295
0 votes
A. J. Stewa…, Agent, Fort McDowell, AZ
Mon Feb 13, 2012
I am not a lender so I could not answer you question with anything but speculation, but I am sorry that your question was met with so much sarcasm. I feel that this public forum is to assist, help and aide home owners, buyers and seller and that no questions is a bad one. I hope that you do not shy away from asking questions in the future do to responses you were given. Customer service is what it is about and I did see one answer here that led that seemed to actually answer your question without judgement. Good luck with your refi.
AJ Stewart
0 votes
Alok Gupta, Both Buyer And Seller, Phoenix, AZ
Mon Feb 13, 2012
I am (Re)financing first time, and I stop here.

I see it as fine as I paid a price to lock in. I just wanted to be aware if that is possible easily from well informed and knowledgeable community.

I appreciate everyone's response and time, however trivial my question might have looked.

I have got my answer

Thanks again,

0 votes
Don Tepper, Agent, Burke, VA
Mon Feb 13, 2012
Geez. Complaining about a 2.625% rate!?!

You had a choice to lock in or float. You chose to lock in. Frankly, I'd probably have done the same. It wasn't a bad decision.

And according to my calculator, the difference in your payment will be $9 a month. That's not a big deal.

Live with it. Be happy that you got an incredibly good interest rate.
0 votes
Gregorio Den…, , San Diego, CA
Mon Feb 13, 2012
So if rates were at 3% now would you be ok if they decided to change you r rate to that?
You can't have it both ways, a lock is a 2 way street. Greed is bad.
Besides, it's highly doubtful that they would have it for 2.5% with exactly the same fees as 2.625%. That would have required a huge move in rates and that just didn't happen; especially for ARMs.
0 votes
Matthew Remus, , Phoenix, AZ
Mon Feb 13, 2012
I concur with Carl. I always advise my clients to make the choice to lock the rate and be happy with the decision. The rest is a gamble but there should be no remorse and no looking back.
0 votes
Carl Henker, , 95928
Mon Feb 13, 2012
Honor your commitment, close at your locked rate and accept your desision. Maybe you can pay additional points for the lower rate with your current lender? Or cancel your current loan process find a new lender and start all over again, new apraisal and maybe .125% better rate?
0 votes
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