Refinance questions - Posted by steve

Posted by Charles Clark on February 15, 2003 at 12:58:49:

Hi Steve,
I honestly do not know what is typical. With the front (what the client knows about) and the back end (what we keep as a secret from you-it is the amount that the lender pays us) I make 2000-2500 per loan. So, without knowing if he is buying down the rate with part of what he is charging you, he may be a little high, but not too bad.
The other think to remember/consider is, he is saving you 18K, does it really matter if he makes a few extra dollars more than he “should” make.
No one wants to pay more than they have to, but…
Charles Clark

Refinance questions - Posted by steve

Posted by steve on February 15, 2003 at 09:34:25:

I am looking for advice on refinancing my investment property.
I have a 4 unit owner occupied building. Paid 265K in March of 1999
I have a 1st of 199K at 6.25% for 30 years - Balance = 188K
I also have a small 2nd at 15K at 8.5% for 15 years - Balance = 11K
Current Tax Assessment is $275K

I wanted to reduce my term and rate.
I received a notice in the mail for 5.0% for 15 years.
No points, origination fee but a 2% broker fee.

Is this 2% high? I thought it was.
I figured with closing costs and his fee it would cost me over 5K
and would take 2 years to recover based on interest saved.

Obviously my monthly payment would be higher but that is not a problem
I have good to excellent credit and plan on keeping the property long term.
I would save over 90K in interest over the term.

Does this sound like a good deal? Or does anyone have any other recommendations
Thanks
Steve

Re: Refinance questions - Posted by Don Dion

Posted by Don Dion on February 15, 2003 at 12:09:04:

What state are you in? If the property is in a non rural area then mid 5’s is possible on NOO loan’s with a fico in the 720’s. You must have a good income or really purchased the property well for it to be supporting a 15yr fixed after only one year of ownership. Drop me a line direct if you want help into looking at the options.

Re: Refinance questions - Posted by Charles Clark

Posted by Charles Clark on February 15, 2003 at 11:23:57:

Hi Steve,
I would suggest that you do the following. What would happen, NET, if you took that 5k and put in into your loan, then started paying the same payments into your loan, at a 15 year amortization. I have a feeling that you would come out very close to the same, without the joy of filling out a bunch of forms and spending some time with us loan officers. I think that the 5% for investment property is a “too low” rate, so maybe part of the “broker fee” is to buy down the rate.
Good Luck,
Charles Clark

Re: Refinance questions - Posted by steve

Posted by steve on February 15, 2003 at 12:35:16:

Thanks
I am in Pittsburgh, PA.
I have owned it for 4 years, not 1

Is 2% typical for a broker fee?

Re: Refinance questions - Posted by steve

Posted by steve on February 15, 2003 at 12:38:08:

I did the math and over 15 years I would be saving 18K
with the lower rate versus putting 5K down and increasnig my payments

Is 2% typical for a broker fee?
Thanks
Steve

Re: Refinance questions - Posted by Don Dion

Posted by Don Dion on February 15, 2003 at 12:43:51:

Yes most Fannie Mae or Freddie loans have a 2% to 2.75% hit for non-owner. Some times this is not disclosed in terms but is built into the rates being quoted. This is why when you see 5% for Owner Occupied then once you make the application you end up with a 5.75% to 6.125% rate depending on what they have to build into the loan back end points to carry your loan. Its much better now then it was in the 70% when it was not unusual for people to pay 3% origination fee plus a 2.5% NonOwner fee to get Investor loans with rates near the 10% mark or higher.