The closing costs will depend on the loan amount. I will take a look at the good faith and tell you if the costs are fair if you'd like. About the $400 coming back to you. Most of us allow for a $500 buffer that allows us to "estimate" and not be short to close. This is a common occurrance. With FHA you can receive back up to $500 at closing and the loan is still considered a rate and term refinance (which gives you a better rate than a cash out refi). On Fannie / Freddie loans (conforming) you can receive up to $2000 at closing and it not considered a cash out refi. Most people look at the two rates 6.5 and 4.875 and only think ...wow I could have a 4.875%. You need to look at the amount saved vs the closing costs...how long does it take you to recoop the costs. In your scenario you would take $10,500 / $128 and get 82.03 months to recoop the cost (6.84 years). This would be the initial assumption, but there is more to it. You need to factor in the fact that you should be skipping two months of payments, if the loan officer knows what he/she is doing + you will be getting an escrow refund back ( you can't swap the current escrow balances, so part of that $10,500 should be your escrows, unless you have already pulled those out). You would then take the whole eqaution and look at the actual cost recoop period: ($10,500 - ( two months of your current payment + current escrow balance)) / $128 = X = total time to recoop costs. My rule of thumb is, if you will recoop in less than 5 years AND you are planning on bing in the house for more than 5 years, the refinance is worth it. We will not be seeing rates this low again any time soon. If you look at the lifetime interest difference, you will see a significat difference between 6.5 and 4.875. A good way to see if it is really worth it, is to look at an amortization schedule of your existing loan vs the new loan. Look at the loan balance at year five and see what the balance is. If the difference is substantial enough for you, then it is worth it. I would say you need to have a loan balance that is ( 10,500 - two months skip + escrow refund ) less than the balance after five years on your current loan. Call or email me. I can help walk you through this if you'd like.
Co-Owner / Licensed Mortgage Consultant
Primary Mortgage Group