Fannie Mae Says The Party’s Over For Refinance Rates

Did you miss the boat on ultra-low refinance rates or can you still lower your payment and put some cash in your pocket? Are you kicking yourself for letting the refinance craze pass you by and are asking “Should I Refinance now that interest rates are going up?” Here are several tips to help you decide if refinancing with today’s best mortgage lenders is still worthwhile.

Mortgage Refinance Rates Are Going Up

The outlook for refinance rates in the coming months is just plain grim. Mortgage refinance rates for a 30-year fixed rate home loan inched over four percent, up from 3.5 percent last month.

Don’t panic just yet if you’ve been procrastinating yourself out of a better deal. You can still get a lower payment without paying unnecessary fees or discount points, but you’ve got to lock current refinance rates soon.

If you look at the big picture, historic refinance rates are still very low, just not as low as you could have locked them.

Fannie Mae Says Refinance Rates Not Likely Going Down

Fannie Mae’s chief economist, Douglas Duncan was quoted saying that the forecast for refinance rates in the coming months is not good. Mr. Duncan went on to say that if you can afford to lock at today’s refinance rates, “I would lock.”

If you’re floating refinance rates hoping to get a better deal the chances of catching the downside is highly unlikely. If you haven’t already had a conversation with your loan officer about locking in current refinance rates you might want to get that person on the phone quickly.

Continue reading Fannie Mae Says The Party’s Over For Refinance Rates

Who Has Today’s Best Mortgage Rates?

Are you considering a new mortgage loan to purchase or refinance your home and want to know who the best mortgage lenders are? You might think that large banks offer the best mortgage rates and consider Wells Fargo or Bank of America as a matter of convenience. One of the most common mortgage misconceptions is that the best mortgage lenders all charge the same fees and that closing costs are regulated by law. Truth be told mortgage fees vary widely and the big names you see claiming to have the best mortgage rates overcharge closing costs. Here are several tips to help you find the best mortgage rates AND lender fees.

The Best Mortgage Lenders All Charge Different Fees

The fact is that banks like Wells Fargo rarely offer the lowest fees, despite what your loan officer might be telling you. The best mortgage rates from one lender might include discount points, an unnecessary expense for most homeowners. Other lenders claim to offer the best mortgage rates and overcharge their loan origination fee.

Shopping for the best mortgage rates and the lowest fees can be confusing, especially if you’re not going about it correctly. One common mortgage mistake responsible for many of your neighbors overpaying is comparing fees from different programs. It’s impossible to make an apples-to-apples comparison of the best mortgage rates and fees if you’re comparing quotes for a 30-year fixed rate to a 15-year adjustable rate mortgage.

How to Shop for the Best Mortgage Rates & Fees

Getting the best mortgage rates isn’t hard, especially if you agree to pay unnecessary discount points. The trick is getting the best mortgage rates while paying as little as possible at closing. Fortunately, using the new Good Faith Estimate makes shopping for the best mortgage rates easy, if you go about it correctly.

Here are six steps for getting the best mortgage rates without overpaying lender fees.

  1. Pick a Mortgage Program & Stick With It
  2. Deciding up front which types of mortgage loans work best for you makes shopping for the best refinance rates and fees so much easier. If you need the lowest payment that won’t change over time choose a 30-year fixed rate home loan. Do you want to build equity and pay off your mortgage as quickly as possible? Choosing a 15-year fixed-rate home loan gets the job done. The point is decide which mortgage program is best for you and don’t let a fast-talking loan officer quote their best mortgage rates across different programs.

  3. Check Your Credit Reports Before You Start Shopping
  4. When is the last time you checked your credit reports for mistakes? If you’re finding the best refinance rates lenders are quoting you are higher than what you’re seeing advertised, the likely culprit is your credit. Spend some time reviewing your credit reports for accuracy at AnnualCreidtReport.com. If you want a free credit score with no strings attached check out CreditKarma.com.

  5. Don’t Get Bamboozled By Discount Points
  6. Lenders love to quote their best mortgage rates that include discount points first. This fee is pure profit for the bank and does nothing for you as a borrower except separate you from your cash. If you’re curious about how paying discount points affects your mortgage payment there is a table on page three of your Good Faith Estimate; however, as a starting point make sure the best mortgage rates you’re being quoted do not include discount points.

  7. Protect Your Credit Shopping for the Best Mortgage Rates
  8. Some homeowners refuse to give their Social Security number out when shopping for the best mortgage rates because they think they’re protecting their credit. While it’s true your credit score will get dinged when a lender runs your credit, you’re not getting an accurate quote if they don’t. The trick to protecting your credit score when shopping for the best mortgage rates is to limit all of your lender inquiries to a 14-day (two week) period. When you do this your credit score will only get dinged for one mortgage lender’s hard inquiry on your credit report.

  9. Use The Good Faith Estimate to Get the Best Refinance Rates
  10. You already know that it’s important to request your quotes from identical mortgage programs that do not include discount points. Once you’ve got quotes from identical programs start with the best mortgage rates and compare loan origination fees. The less you pay closing on your new home loan the more benefit you’ll get from that lender’s best mortgage rates.

    Many loan officers will tell you that one percent is standard for the mortgage origination fee; however, I’ve reviewed community credit unions that charge as little as $400 to arrange your home refi. This loan origination fee can be found on page two, section A of your Good Faith Estimate.

  11. Compare The Mortgage Lender Fees on Page Two
  12. Section B on page two of your Good Faith Estimate are the fees required by individual lenders. You’ll find that closing costs on the Good Faith Estimate vary widely from one lender to the next without explanation. Don’t be afraid to question the fees found on page two of the Good Faith Estimate and haggle with loan officers. If your broker pushes back and refuses to explain the fees that you’re questioning simply move on to the next quote.

    Make sure you’re requesting quotes for the best mortgage rates from a variety of banks, lenders and credit unions. Some of the best deals I’ve found have come from those small community credit unions that you might be overlooking when shopping for your home refinance.

Invest some time shopping for the best mortgage rates and fees using these tips and you’ll save thousands of dollars on your next home loan.

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You can learn more about getting the lowest home refinance rates from today’s best mortgage lenders by checking out my free Underground Mortgage Videos.

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Here’s a quick sample to help you get the lowest home refinance rates from today’s best mortgage companies…”

Home Refinance Tips Your Lender Will Wish You Didn’t Know

Are you considering taking advantage of current home refinance rates? Whether or not you’re getting a good deal for your next mortgage loan depends on the fees you’ll pay, not just on how low the refinance rates. Here are several tips before you refi to help you get the lowest home refinance rates without overpaying the lender at closing.

Home Refinance Settlement Fees

Every home loan has settlement fees that have to be paid one way or another at closing. Even those no-fee refinance offers have closing costs; the fees are being paid by the lender in exchange for you agreeing to higher home refinance rates.

The reason lender fees are so important on your home refinance is that you have to recoup your out-of-pocket expenses before you’ll benefit from having a lower interest rate. The more you pay at closing for things like the loan origination fee the longer it’s going to take you to break even.

Part of answering the question “Should I Refinance my home” is figuring out how long it’s going to take you to break even recouping your closing costs.

How to Calculate Your Home Refinance Break-Even Point

It’s not difficult to approximate your home refinance break-even point. You can use a simple mortgage calculator like the one below to figure out how much your monthly payment will be going down after your home refinance. Simply plug in the refinance rates you’re being quoted and your desired term-length and click the calculate button.

Simple Mortgage Calculator

Loan Amount: Years: Mortgage Rate:

Annual Taxes: Annual Insurance:

Monthly Payment =

Once you know the amount that your payment is going down each month after your home refinance, divide the total closing costs found on your Good Faith Estimate by your savings. This will tell you the approximate number of months it’s going to take to break even recouping lender fees on your home refinance.

This is only an approximation because it doesn’t take into consideration factors like income taxes and changes in your mortgage term length; however, as long as you’re not lengthening your term-length the approximation is good enough to make an informed decision.

Are you okay with the amount of time it’s going to take recovering your closing costs from your home refinance savings? If so, then paying for mortgage refinancing probably makes sense in your situation.

What About Those No Fee Refinance Offers?

You’ll see lenders like Bank of America advertising no fee home refinance loans from time-to-time. If you don’t have the cash to pay your settlement fees at closing these offers might seem like your only option. There is an alternative to accepting higher refinance rates, which means your payments will also be higher than necessary.

Many lenders will let you roll your closing costs into your loan balance meaning you’ll get to take advantage of current home refinance rates without markup.

You’ll find the credit you get for taking higher home refinance rates on page two of your Good Faith Estimate. Look at section A item 2. “Your credit or charge (point) for the specific interest rate chosen. The first box reads “The credit or charge for the interest rate of % is included in “Our origination charge.” (See item 1 above.)”

This credit is known as Yield Spread Premium and works like a discount point in reverse. For every .25% markup on your home refinance rates that you agree to the lender credits one percent of your mortgage amount towards your settlement fees.

Is agreeing to Yield Spread Premium on your home refinance a good idea? You can run the numbers using a simple mortgage calculator to figure out how the markup affects your monthly payments; however, the longer you keep this home loan the more you’ll wind up overpaying the lender down the road.

Should You Pay Discount Points?

Discount points are a fee leftover from the 1980s when homeowners were paying double-digit interest rates. You could pay one percent of your mortgage loan amount at closing and the lender would lower your rate by .25%.

Today home refinance rates are still near historic lows making the benefit of paying discount points extremely small. If you’re curious how paying discount points will affect your payments there is a table on page three of your Good Faith Estimate but most homeowners do not benefit from paying this fee. Make sure the home refinance quotes you get as a starting point are zero point quotes.

How to Shop For the Lowest Mortgage Rates & Fees

The first step to getting the best deal on your home refinance is to choose a mortgage program. Do you need a 30-year fixed rate home loan? How about an FHA streamline refinance? Once you know which mortgage program that you need don’t let loan officers quote interest rates from programs you’re not interested in.

The only way to get an apples-to-apples comparison of mortgage lender fees is to compare quotes from identical programs.

Next, look at the loan origination fee. This is paid to the mortgage company or broker arranging your home refinance. Many loan officers will tell you that one percent is standard for the mortgage origination fee; however, I’ve reviewed several community credit unions that charge as little as $400 for their loan origination fee.

Remember, the less you pay at closing the more benefit you’ll get from your home refinance.

Finally, look at the fees found on page two of your Faith Estimate in section B. Comparing these fees from a variety of banks and credit unions will give you a good idea of what’s reasonable and what is outlandish. Mortgage fees tend to vary significantly from one lender to the next so don’t assume giants like Wells Fargo Mortgage are going to offer the best deals.

The most common mortgage mistake is focusing on getting the lowest home refinance rates at the expense of lender fees. If you’re shopping for the lowest interest rates and lender fees using the Good Faith Estimate you’re on track to get a better deal than 90% of your neighbors.

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You can learn more about paying less for your next home refinance while avoiding lender junk fees by checking out my free Underground Mortgage Videos.

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Here’s a quick sample to help you get the lowest home refinance rates from today’s best mortgage lenders…”

Should I Refinance Now That Current Mortgage Rates Are Rising?

Do current mortgage rates have you asking the question should I refinance my home? Demand for refinance rates is down significantly now that current mortgage rates are pulling away from record lows. Did you miss out on historically low rates or should you act now before current mortgage rates climb higher? Here are several tips before you refi to help you answer the question “Should I Refinance” before it’s too late.

Should I Refinance My Home Loan?

While it’s true that the average refinance mortgage rates on a 30-year fixed-rate home loan have recently gone up by 1/5 a percentage point they’re still near all-time-lows.

The simplest way to answer the question “Should I Refinance” is to look at how long it’s going to take you to break even recouping the costs of taking out a new home loan. Every mortgage has settlement charges like the loan origination fee that have to be paid at closing, either by you or someone else.

The more you pay closing on your refi the longer it’s going to take you to break even before you start benefiting from current mortgage rates. One of the most common mistakes you can make is focusing only on getting the lowest current mortgage rates at the expense of fees. When you compare quotes from today’s best lenders it’s important to compare current mortgage rates AND fees. Here’s how to get the lowest refinance mortgage rates and fees using the new Good Faith Estimate.

Don’t Forget to Check Your Credit First

Once you’ve answered the question “should I refinance” you’re ready to start shopping from today’s best mortgage lenders… almost.

When’s the last time you checked your credit reports and score? If you aren’t saying on top of your credit reports you might find that mistakes are dragging down your credit score. Have you already started shopping for a lender and are finding the refinance mortgage rates you’re being offered are higher than what lenders are advertising? The likely culprit is your credit score.

Before you do anything else go to the government-mandated website AnnualCreditReport.com and review all three of your credit reports from TransUnion, Experian and Equifax. The government requires the three credit bureaus to give you access to your credit reports every year but doesn’t require they give you a credit score. If you’d rather not pay for your credit score you can get your TransUnion score for free at CreditKarma.com with no strings attached.

You’ll find that credit scores vary between the three bureaus and mortgage lenders rely on your middle score when quoting refinance mortgage rates. If your scores are 680, 700, and 710 at Equifax, Experian and TransUnion your middle score is 700. Not happy with your credit score? The fastest way to boost it is by paying down the balances of your credit cards below 30% of your limit. Don’t zero them out completely, it actually helps to carry a small balance.

How to Compare Current Mortgage Rates & Fees

Now that you’re ready to begin shopping from today’s best mortgage lenders you want to start requesting quotes. There is a right way to request mortgage refinance quotes that doesn’t waste your time and protects your credit score.

First, make sure the refinance mortgage quotes that you’re getting do not include discount points. Paying points with current mortgage rates makes no sense. You’ll find that lenders advertise interest rates that include points first because they’re lower and seem more attractive. If you’re curious as to how discount points affects your payments there is a table on page three of the Good Faith Estimate but as a starting point make sure your quotes do not include discount points.

Second, make sure you’re giving the loan officer your Social Security Number to get an accurate refinance quote. Some homeowners refuse to give their Social Security Number because they think they’re protecting their credit score from lender inquiries. While it’s true that lender inquires do lower your credit score it’s the only way to get an accurate quote.

If you don’t provide your Social Security number you’re relying on the loan officer’s best guess for your refinance mortgage rates. You need accurate quotes to answer the question “Should I Refinance” and giving your SSN is the only way to get them.

You can protect your credit score from excessive lender inquiries by limiting all of your refinancing quotes to a 14-day period. If you do this your credit score will only get dinged for one lender inquiry.

How to Use the Good Faith Estimate to Shop for the Best Mortgage Lenders

Keep in mind that the Good Faith Estimate is just an estimate but it’s the best way to compare offers from different lenders. Also, make sure you’re comparing refinancing offers from identical mortgage offers. It makes no sense to compare refinance mortgage rates from a 15-year fixed rate home loan to a 30-year adjustable rate mortgage. Your quotes need to be for identical mortgage programs. That’s the only way to make an apples-to-apples comparison of lender fees.

Next, use page two of your Good Faith Estimate to comparison shop mortgage origination fees. Most brokers will tell you that paying one percent of your home loan is standard for the loan origination fee. This is the fee paid to the person or company arranging your home loan and I’ve found community credit unions that charge as little as $400 for loan origination. Remember, the less you pay settling on your new home loan the quicker you break even and the faster you’ll benefit from today’s refinance mortgage rates.

Beware Mortgage Yield Spread Premium

Huh? Yield Spread what? This is a credit found on page two, box 2a of your Good Faith Estimate, and yes, Yield Spread Premium is still legal. The only thing that changed is that mortgage brokers are not allowed to take the credit as a commission.

What is Yield Spread Premium? Simply put, it’s a credit you get for accepting higher than market refinance rates. Think of Yield Spread Premium as discount points in reverse. For every .25% you allow the lender to mark up your interest rate you’ll get a credit of one percent of your loan amount. This credit is used to pay your origination fee and other settlement costs.

The higher your closing costs the more markup you’ll need to cover. This is how those “no fee” and “no cash out-of-pocket” mortgage refinancing offers work. The problem with accepting Yield Spread Premium is that you’re giving up the lowest current mortgage rates which means you’ll have a higher payment for the entire time you keep the loan. Instead of breaking even you’re going to reach a point where you’re losing money by having the lender cover your closing costs. If you can afford the fees it’s almost always better to pay closing costs yourself if you plan on keeping your home.

How to Calculate Your Break-Even Point

Are you still questioning should I refinance? One way to put your mind at ease about paying for a new home loan is to calculate how long it’s going to take to recoup your out-of-pocket expenses. You can use a simple mortgage calculator like this one to calculate the number of months it’s going to take you to reach your break-even point.

Simple Mortgage Calculator

Loan Amount: Years: Mortgage Rate:

Annual Taxes: Annual Insurance:

Monthly Payment =

Once you know how much your monthly payment is going down from current mortgage rates divide your total closing costs by your savings. (The difference between the old payment amount and the new) This will tell you approximately the number of months it’s going to take breaking even.

I say approximately because it doesn’t factor in taxes or changes in term-length. As long as you’re keeping the same term-length (term-length is the number of years) or going shorter, the approximation works. (If you’re going longer, say from a 15-year to a 30-year mortgage you’ll probably never break even.)

Once you know how long it’s going to take you to break-even recouping your mortgage settlement fees you can answer the question “Should I Refinance.” If you’re comfortable with the amount of time it’s going to take breaking even then mortgage refinancing probably makes sense. Remember, the better you shop for fees and the less you pay for things like loan origination the faster you’ll reach your break-even point.

Click Here For More Details…

You can learn more about paying less for current mortgage rates by avoiding lender junk fees and markup by checking out my free Underground Mortgage Videos.

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Here’s a quick sample to help you make an informed decision answering the question “Should I Refinance.”

The Truth About No Cost Refinance Loans Revisited

Are you considering a no cost refinance loan for your next home mortgage? You’ll see these refinance loans advertised by today’s best mortgage lenders and by most banks as an option at closing. If you’re strapped for cash the no cost refinance might seem like your only choice, but you should know what you’re giving up. Here’s the scoop about no cost refinance offers, how they really work and what you’re sacrificing in the long run to help you make an informed decision for your next home loan.

No Cost Refinance Lenders

No cost refinance can mean different things depending on your needs. First, let me tell you what a no cost refinance is not. There is no such thing as a free mortgage refinance…period. Every home loan has fees, origination and underwriting costs that have to get paid by someone. The question for the truth about no cost refinance offers is who’s paying the fees and in exchange for what?

There are two types of no cost refinance mortgage loans. There are “no cash out-of-pocket” refinance rates, meaning you’re not required to plunk down your cash at closing because all of the refinance fees are being rolled into your loan balance, and there are true “no cost” refinance rates where the fees are being paid by someone else, in this case the lender.

Why Would Mortgage Lenders Pay Your No Cost Refinance Fees?

Simply put, what’s in it for them? Mortgage lenders don’t do anything out of the goodness of their hearts (do they even have a heart?) so why on earth would they pay your no cost refinance fees?

The truth comes down to how mortgage lenders make their money, think profits. It might surprise some homeowners to learn that most lenders don’t profit by sitting back and collecting the interest from your payments, especially with today’s current refinance rates.

Lenders profit by selling home loans to investors. Home loans with higher than market refinance rates bring in the most profit. One way lenders get homeowners to agree to higher than current mortgage refinance rates is by offering no cost refinance loans.

In exchange for agreeing to higher than current refinance rates the lender pays your loan origination fee, mortgage underwriting fees and other closing costs. You get a no cost refinance with no cash out of your pocket and your mortgage balance doesn’t go up as a consequence.

Sounds like that no cost refinance is a great idea right? Remember, your payments are based on the term-length you choose and how low your refinance rates are. While you can control both, the higher your refinance rates the more cash comes out of your pocket every month for the entire time you keep the mortgage.

How Much Higher Will Your Refinance Rates Go?

The answer depends on how much you agree to pay at closing. One common mortgage mistake with no cost refinance offers is neglecting to comparison shop lender fees. If you go into refinancing thinking that the closing costs you agree to don’t matter because the lender is paying, you’re going to get screwed no matter what.

No cost refinance offers work like discount points in reverse. Remember that a discount point is a fee you pay to buy down your refinance rates. If you pay one point, one percent of your home loan amount, you’ll typically lower your refinance rates by .25%. Well, the no cost refinance offers generate a credit of one percent of your mortgage amount for every .25% you allow the lender to mark up your refinance rates.

Can you see how these no cost refinance loans work like discount points in reverse?

How much your refinance rates go up depends on how much your actual closing costs are; the better you shop around the less markup you’ll need to cover lender fees. This also means your payments will be lower than the neighbor that didn’t do their homework and blindly accepted whatever fees the lender required, figuring “heck, the lender’s paying so whatever.”

Mortgage Refinance Fees Matter

The truth is regardless of how low your refinance rates are the fees you pay refinancing your home loan make or break the deal you’re getting.

With no cost refinance offers the fees that your lender pays are responsible for how much your payment goes up. Pay less at closing and not only will you get more benefit from today’s low refinance rates but you’ll have more cash in your pocket at the end of the month.

How to Pay Less For Mortgage Refinancing

Fortunately, shopping for the best refinance mortgage rates AND fees is not difficult if you go about it the right way. The government recently overhauled the Good Faith Estimate making it a much more effective comparison shopping tool. (It used to be completely useless)

The secret to getting the lowest rates and closing costs is how you use the new Good Faith Estimate for your refinance mortgage rates comparison shopping. First, watch out for quotes that include discount points.

Discount points make lenders a boatload of cash from unsuspecting homeowners. It made sense to pay points in the 1980s when people were getting double-digit mortgage refinance rates. Today it’s just a waste of your cash.

Make sure when you’re requesting quotes that the mortgage refinance rates DO NOT include discount points. If you’re curious about how paying this mortgage fee affects your payments there is a table on page three of the Good Faith Estimate, but always start with zero point quotes.

Watch Out For No Cost Refinance Fees

Sounds like a contradiction right? Not cost refinance loans don’t have fees right? Wrong! Remember your payment amount is going up by the amount the lender is paying for you. You want the smallest increase in the best refinance rates possible.

Focus on the mortgage lender fees found on page two of your Good Faith Estimate starting with the loan origination fee. This is paid to the person or company arranging your mortgage refinance. Many brokers will tell you that one percent is standard; however, I’ve reviewed community and military credit unions that offer no cost refinance loans with loan origination fees as low as $400.

If you take one thing away from reading this today it should be that the closing costs from your no cost refinance make or break the deal you’re getting. The less you agree to in mortgage fees the more benefit you’ll get from today’s best refinance rates.

Page Two Of Your Good Faith Estimate Is A Goldmine

As I mentioned the new Good Faith Estimate is the best thing Uncle Sam has done for refinance rate shoppers well, ever. If you’re interested in a no cost refinance you’ll find the credit being generated to cover your mortgage fees in box 2a. You want this credit to be as low as possible while still covering your closing costs so your monthly payment doesn’t go up any more than necessary.

Section B on page two of the Good Faith Estimate includes lender fees you can shop around for and third party fees. Comparing these fees from a variety of banks, lenders, and credit unions will give you a good baseline for what is reasonable. Don’t be afraid to haggle over fees found on page two of your Good Faith Estimate. Mortgage brokers, banks and credit unions are a dime a dozen so if you’re getting pushback from a loan officer simply scratch them off your list.

Click Here For More Details…

You can learn more about getting the best no fee refinance with the lowest payment possible for your next home loan by checking out my free Underground Mortgage Videos.

httpv://www.youtube.com/watch?v=be9md0A0_2c
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Here’s a quick sample to help you avoid paying lender junk fees by shopping smartly…