1. #1
    TheMoneyShot
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    Closing Costs On A Refinance - What Is Acceptable? What's Stealing?

    I was quoted a loan at 3.990% but my closing costs were $5,550 roughly. I'm just wondering if this is considered decent? Acceptable? Or am I taking it up the ass? Appreciate your input fellas.

  2. #2
    ngates815
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    Jesus Christ...paid 1700 this year.

    That sounds absurd.

  3. #3
    ngates815
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    Thru wells fargo...my dad said they paid 2200 last year thru their small local bank.

  4. #4
    The Kraken
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    Typically 2-5%. It may not be a great idea to refinance, especially if you won't be there past the next 3-5 years. It helps to figure out your break even period.

    How do you calculate the break-even period?

    Use the step-by-step worksheet below to give you a ballpark estimate of the time it will take to recover your refinancing costs before you benefit from a lower mortgage rate. The example assumes a $200,000, 30-year fixed-rate mortgage at 5% and a current loan at 6%. The fees for the new loan are $2,500, paid in cash at closing.

    Example Your numbers
    1. Your current monthly mortgage payment
    $1,199
    1. Subtract your new monthly payment
    - $1,073
    1. This equals your monthly savings
    $ 126
    1. Subract your tax rate from 1
      (e.g. 1 - 0.28 = 0.72)
    0.72
    1. Multiply your monthly savings (#3) by your after-tax rate (#4)
    126 x 0.72
    1. This equals your after-tax savings
    $ 91
    1. Total of your new loan's fees and closing costs
    $2,500
    1. Divide total costs by your monthly after-tax savings (from #6)
    $2,500 / 91
    1. This is the number of months it will take you to recover your refinancing costs
    27 months


    Tip: Calculate the financial benefit of refinancing in one, two, or three years. Does the benefit compare with your plans for staying in your home?

  5. #5
    Regul8er
    Wordd
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    My closing cost was approximately $1,500 and this happened in the summer.....you sir are getting ripped off.
    Locked in at just over 3%

  6. #6
    ngates815
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    Quote Originally Posted by The Kraken View Post
    Typically 2-5%. It may not be a great idea to refinance, especially if you won't be there past the next 3-5 years. It helps to figure out your break even period.

    How do you calculate the break-even period?


    Use the step-by-step worksheet below to give you a ballpark estimate of the time it will take to recover your refinancing costs before you benefit from a lower mortgage rate. The example assumes a $200,000, 30-year fixed-rate mortgage at 5% and a current loan at 6%. The fees for the new loan are $2,500, paid in cash at closing.

    Example Your numbers
    1. Your current monthly mortgage payment
    $1,199
    1. Subtract your new monthly payment
    - $1,073
    1. This equals your monthly savings
    $ 126
    1. Subract your tax rate from 1
      (e.g. 1 - 0.28 = 0.72)
    0.72
    1. Multiply your monthly savings (#3) by your after-tax rate (#4)
    126 x 0.72
    1. This equals your after-tax savings
    $ 91
    1. Total of your new loan's fees and closing costs
    $2,500
    1. Divide total costs by your monthly after-tax savings (from #6)
    $2,500 / 91
    1. This is the number of months it will take you to recover your refinancing costs
    27 months


    Tip: Calculate the financial benefit of refinancing in one, two, or three years. Does the benefit compare with your plans for staying in your home?


    While that's what I thought as well, The whole "not staying there for more than a couple years". It knocked my payments down 220 a month...So it'll pay for itself within a year, which I'm sure I'll be there for that long and if not, I'll still be holding onto the place as I won't be able to sell it. Most people I know refinancing now are dropping for mid 5's/6's to mid 3's.

  7. #7
    The Kraken
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    It sounds like you got a better deal, Gates. In order for Moneyshooter to recoup his money back in 1 year, he'd have to be saving 462/month. I bet he's saving less than 200/month. Either way it still helps to know the break even period.

  8. #8
    TheMoneyShot
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    Current Loan:

    6.875% $1,092.14 A Month (Loan was 5 years ago No Doc)


    New Loan:

    3.990% $772.96 A Month (HARP Program Loan) No Doc.

  9. #9
    TheMoneyShot
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    Quote Originally Posted by The Kraken View Post
    Typically 2-5%. It may not be a great idea to refinance, especially if you won't be there past the next 3-5 years. It helps to figure out your break even period.

    How do you calculate the break-even period?


    Use the step-by-step worksheet below to give you a ballpark estimate of the time it will take to recover your refinancing costs before you benefit from a lower mortgage rate. The example assumes a $200,000, 30-year fixed-rate mortgage at 5% and a current loan at 6%. The fees for the new loan are $2,500, paid in cash at closing.

    Example Your numbers
    1. Your current monthly mortgage payment
    $1,199
    1. Subtract your new monthly payment
    - $1,073
    1. This equals your monthly savings
    $ 126
    1. Subract your tax rate from 1
      (e.g. 1 - 0.28 = 0.72)
    0.72
    1. Multiply your monthly savings (#3) by your after-tax rate (#4)
    126 x 0.72
    1. This equals your after-tax savings
    $ 91
    1. Total of your new loan's fees and closing costs
    $2,500
    1. Divide total costs by your monthly after-tax savings (from #6)
    $2,500 / 91
    1. This is the number of months it will take you to recover your refinancing costs
    27 months


    Tip: Calculate the financial benefit of refinancing in one, two, or three years. Does the benefit compare with your plans for staying in your home?
    Thanks Krak for the info!

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