I once worked with the person who popularized the no-cost refinance. It was a major trend until the mortgage crisis. I can answer any questions about how these work and their potential downsides.
Jules said:
I once worked with the person who popularized the no-cost refinance. It was a major trend until the mortgage crisis. I can answer any questions about how these work and their potential downsides.
Could you explain more about the implications of resetting to a 30-year term? I find the details a bit complex.
@Val
Resetting to a 30-year term can be beneficial depending on your goals. If saving on monthly payments is your priority, stick with the 30-year option. If you aim to save on total interest or pay off your loan faster, consider asking for a shorter term during your next refinance.
Jules said:
I once worked with the person who popularized the no-cost refinance. It was a major trend until the mortgage crisis. I can answer any questions about how these work and their potential downsides.
Sounds dubious.
Jules said:
I once worked with the person who popularized the no-cost refinance. It was a major trend until the mortgage crisis. I can answer any questions about how these work and their potential downsides.
Reminds me of a big broker from Atlanta that grew rapidly. They covered every major city with their ads.
I don’t call it free, but I do inform my clients that I provide a credit to cover the associated costs.
Nothing is truly free. You might not be paying directly, but you’re either accepting a higher rate to cover the costs or the costs are being added to your loan balance, or both.
It’s concerning how often closing costs are rolled into the loan, making the refinance appear less expensive than it is. If you’re clear about the trade-offs and are making an informed decision, that’s what counts.
Did your principal amount increase with this refinance?
Zayden said:
Did your principal amount increase with this refinance?
It didn’t increase significantly. The new loan was $595,000 while my previous balance was $594,300, which was close enough.
I’m thankful every day for locking in a low rate during the COVID peak.
Did your loan term reset with this refinance?
Bryn said:
Did your loan term reset with this refinance?
Yes, but since it was only 11 payments into the loan, I didn’t see it as a big issue.
Bryn said:
Did your loan term reset with this refinance?
Yes, but since it was only 11 payments into the loan, I didn’t see it as a big issue.
It depends on how you view the payback period. It’s not necessarily a bad thing; it’s just part of the overall cost calculation.
Bryn said:
Did your loan term reset with this refinance?
Yes, but since it was only 11 payments into the loan, I didn’t see it as a big issue.
That’s not incorrect. You still have the option to pay it off earlier, maintaining the benefits of the original term.
I’ve heard that no-cost refis are misleading because the costs are ultimately included at the end of the loan term.
It’s not ‘no-cost’. You’re financing the fees and possibly the points.
There’s a misunderstanding between getting the lowest rate by paying closing costs versus a slightly higher rate with lender credits covering those costs. Both options have their merits.
The term ‘no-cost’ is inherently misleading.
The criticism often comes from those whose companies don’t offer such programs.