6 Questions I have about refinancing...

Question 1: if your agent is telling you closing costs are about 7k, that is to include all your closing costs, interest, pre-paid items, title, escrow, lender fees, origination, ect. If he is saying you will get a discount by showing your previous title, appraisal ect, I dont see how that lowers your costs. This is a totally new transaction. Have them send in writing what they are going to credit to make your total closing costs lower...Question 2, your purchase loan included setting you up with 1 years premium on your hazard insurance, then if you set an escrow account for your taxes/insurance, an additional increase to your monthly payment would be set up "escrow account" which you could get some reduction on your current payoff, discounting the unused portion of your escrow account. No your closing cost wont be reduced, you just dont pay for a years premium on a refinance. You only pay to set up an escrow account, which most every lender requires. Question 3 To get the break even point, you want to take how much the new loan will cost you, ie 7k. Then if you save lets say 500 a month with the new refi payment, take 7000 by 500 and it equals 14 months. If you save 500 a month for 14 months you recoup the 7 k investment to obtain this new loan. Then if you are lowering your interest rate, you will also save over the life of the loan on interest payments, which could be quite significant on your mortgage size. Question 4 the amount you paid into your current mortgage is lost, well not lost, but unrealized income. You paid lets say at your payoff quote from your lender is 345k then you paid down 5k of principal, and you now have 5k more in unrealized income or equity in the home. You do not get that money back. Question 5 your new montly payment is complicated and you need a financial calculator to do the amortization. Go to google and type in mortgage calculator and key in your loan amount, interest rate, term ect. and it will give you your breakdown. Question 6 since the federal government has taken steps to protect the homeowner from abuse and fraud, they actually made it more difficult for homeowners to decifer the true costs. Look at your NOTE, which tells you the mortgage amount and interest rate. Look at the TIL or truth in lending which spells out the terms and cost. And then the GFE or good faith estimate. look at the total cost out of pocket. One thing to consider when looking at the TIL, notice the note rate, and the APR rate, Always they are different. The higher the difference, the higher the cost to obtain the financing. Ie. 5% note rate and 5.125% apr has real low costs of financing where a note rate of 5% and the apr of 5.875 is much more expensive. On the TIL you have financed amount, finance charge and total payments. Pay particular attention to these amounts. Hope this helps-

1. These closing costs seem excessive. We can refinance you with zero lender costs. 2. If you escrow for insurance, the only amount you would need for this cost is a few months of insurance cost to set up your new escrow account. 3. We could always look at refinancing you on the exact number of years you have left so you wouldn't have to worry about comparing your current loan to a new 30 year term. 4. Your amount paid in to principle has reduced your principle balance and that is the only amount needed to refinance. 5. Use any mortgage calculator to figure your new payment and then add in the costs of monthly hazard insurance and property taxes. 6. Closing costs, closing costs, closing costs. I have very low costs. contact me at 866-766-1918 to compare what you are paying to what is available.

1. $7,000 seems a little high on closing costs, definitely would look at what is included in that 7K.2. You will not have to pay for an additional 12 months but depending on when your insurance expires most lenders require that your insurance be active at least when you make your 1st payment. (example if you close end of April 1st payment will be June so your policy could not expire before June).3. Assuming this is a 30 year fixed the difference in your payments will be $249.45 for a loan with $7,000 in closing costs your break even point would be 28 months; for $5,000 in closing costs your break even point would be 20 months.4. Again assuming that you are getting another 30 year mortgage you are signing back up for another 30 years, so the time you have in with your current mortgage will be lost. One way to combat this is to get quotes on a 15yr, 20yr or even 25yr mortgage so you save money and don't lose time. Savings will be a less because you are amortizing over a shorter period of time.5. The calculation is crazy but if you are good at math here you go:M = P [ i(1 + i)n ] / [ (1 +i)n - 1]M = Monthly Mortgage PaymentP = Mortgage Amount - this is the amount of your mortgage - for example $200,000i = Monthly Interest Rate. To calculate this take the interest rate you were quoted (ex. 6.375%) and divide it by 100. Then divide that number by 12. You should get a very small number. For example: 6.375% / 100 = .06375. Now divide .06375 by 12 to get .00531. .00531 equals i for this example.n = Number of Monthly Payments in your mortgage. For a typical 30 year mortgage there are 360 payments. To get this take 30 years and multiply by 12 months to get 360 payments.6 On the new good faith you would want to scrutinize section A (1&2), this will have the lender fees and any points they will be charging you. Line 4 this is what they title company or lawyer will be charging for the closing, title services etc and Line 9 which is the line that shows you initial escrow set-up for taxes and insurance if you will have those.