no fee refinance

gibby2015November 8, 2010

I'm not sure how many people this would be applicable to here but I thought I'd mention it. I had a pretty low rate mortage on a second home - 5%, 9 years left on the loan. I finally became sick to death of hearing about lower rates and called my mortgage company (Wells Fargo) and told them what I wanted. Wanted to keep the 9 year term, get a lower rate, no cash out, no fees or closing costs. They said this could be done - 15 year term is the shortest but no penalty for paying at a rate that gets to done in 9 years. I got a "close at home" package which I could complete at home but had to have a couple signatures notarized. They verified my employment and income and checked my credit rating. So I now have a 4% rate at no cost to me. I am a long term WF customer and have other accounts there - also excellent track record with the existing loan as well as a very good FICO score. So for someone who is in good standing - it's worth asking. I probably shouldn't have waited as long as I did but I didn't really think they'd do it.

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ingrid_vc

Usually a loan costs several points and I've never heard of a free loan. Are you certain the cost of the loan wasn't just tacked onto the end of your new mortgage? That's generally how it's done to pay for the loan since many people don't want to pay the points up front.

    Bookmark   November 9, 2010 at 1:48AM
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Billl

The fees were undoubtedly added to the loan balance. However, that isn't necessarily a bad thing. If you were on pace to pay off a loan in 9 years and now you can pay off that same loan + fees in 9 years paying less each month, then that is an improvement. Money is money whether you call it a fee or interest or whatever. If less is leaving your pocket, then that is a good thing.

    Bookmark   November 9, 2010 at 8:48AM
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dave_donhoff

No, no, no...

The loan gibby got made her happy, end of story... don't go mucking up her world.

On an open market basis, the same loan is available at around 3% even, and at 4% its yielding somewhere between 3% to 4% in rebate.

NONETHELESS... she feels good about getting something "for nothing".. so why rain on her parade?

Dave Donhoff
Leverage Planner

    Bookmark   November 9, 2010 at 1:09PM
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Billl

Well, there is a difference between making a good choice and the best choice.

Lowering your payments without extending the life of the loan is a good choice.

Is it the best choice available? Probably not, but we don't have the real numbers or back story to know for sure. Generally though, if you make a lot of good choices in life, things tend to turn out pretty well even if you don't capitalize on all best option every time.

    Bookmark   November 9, 2010 at 1:54PM
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gibby2015

Closing costs are not added into the loan. They are minimal presumably because the loan is pretty much the same as it was and I'm a very low risk. And I imagine close at home reduces their cost. Also presumably WF wants to keep a good customer rather than having me go elsewhere. As a result they pay the closing costs. I refinanced once before and kind of tried to do the same thing and WF wouldn't do it without a bunch of fees so I went elsewhere. Oddly enough WF bought my mortgage back a short while later. I always wondered if that was just a coincidence or if they look for former customers or other mortgage companies try to sell back to previous companies.

    Bookmark   November 10, 2010 at 11:04PM
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gibby2015

Forgot to add - yes a better deal might have been had elsewhere but time is money for me so the fact this was so easy was a big plus. I didn't have to submit anything other than the closing documents, didn't have to attend a closing, etc. And I save about 10K without much more effort than making a phone call and reading the closing documents at my convenience. With all the horror stories I've heard about what refinancing has been like recently I was very pleasantly surprised. So my point is - if you are a good customer and a good credit risk and you don't have a competitive rate getting one might be easier and cheaper than you think.

    Bookmark   November 10, 2010 at 11:19PM
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