Gimme your Best Interest Rate with NO Closing Cost

The other day, a Redmond home owner contacted me for a quote to refinance their home. They specifically requested scenarios for “lowest possible interest rate without paying any points or closing costs“.

I can understand why someone would request this – especially considering some of the radio and television ads that are repeatedly aired seeming to promote these things. The only problem is that there really isn’t such a thing as a “no closing cost” loan. There are costs associated with originating a mortgage loan and mortgage companies are not charities nor do they have a magic wand to make closing cost disappear. Someone pays for them and it’s the consumer…and good luck trying to find this in their fine print. 🙁

With a refinance, closing cost can be paid for several ways, including:

  • Out of pocket. The home owner brings funds in at closing to pay for the closing cost.
  • Financed into the mortgage. If there is enough equity in the home, the home owner can opt to have the closing cost financed into the new mortgage by having a higher loan amount than the existing mortgage balance.
  • Rebate credit – higher interest rate. A rebate credit is when the interest rate is increased which provides a credit to be applied towards closing cost. Closing cost may seem to be reduced, however the home owners is actually paying for the closing cost in their monthly payment.
  • Lender credit. Some lenders may offer specific credits that do not impact the pricing of the interest rate, such as our Home Town Hero credit towards closing cost.

So you see, home owners can either pay for closing cost by writing a check, increasing their loan amount or their interest rate. Sometimes, depending on how pricing is with mortgage rates, it may make sense to opt for a rebate credit or to price your rate without points – it all depends on what your long term goals are.

For the Redmond home owner who wanted the lowest possible rate without paying points or closing cost, this simply wasn’t possible for their scenario. We work with several lenders and when pricing out their refi, we didn’t have any lenders offering rebate credit – so the best pricing I could offer them based on their financial goals was a scenario without points (aka priced at par). They could increase the loan amount to prevent them from bringing cash in at closing should they chose.

Side note about closing cost and refinancing, many applications are being approved without an appraisal which of course helps to save on closing cost. And if you have an existing reserve account for property taxes and insurance with your current mortgage lender, you will receive a refund of that balance a couple weeks after closing which will help off-set the cost of starting the new reserve account for taxes and insurance with the refi.

Bottom line, you have choices with how your closing cost and interest rates are structured. Be sure to ask your mortgage professional for a total cost analysis to review your options so you can make an informed decision.

If your home is located in Redmond, Tacoma, B’ham or anywhere in Washington state, I’m happy to help you! Click here for a detailed mortgage quote.

Honoring our Hometown Heroes

Rhonda_Hometown HeroMortgage Master Service Corporation recently started a program to honor our local heroes. We are now offering a $625 credit towards closing cost for a home purchase or refinance when we provide the mortgage.

Mortgage Master Service Corporation’s Hometown Heroes program is available for:

  • Police Officers
  • Firefighters and EMTs
  • Doctors and Nurses
  • Teachers
  • Military

We thank our heroes for taking care of our community and hope we can take care of you with your mortgage needs.  Please feel free to share this! I’m am honored to help you with any home purchase or refi on homes located in Washington state.

Note: This program cannot be combined with any WSHFC program. Program and pricing subject to change.

 

Want to stop your rent from increasing? Buy a home.

It’s no secret that rents, along with home prices, in the greater Seattle area have been trending higher. Rent Jungle reports that as of March 2015, the average rent for a 2 bedroom apartment within a 10 mile radius of Seattle is $1907. This is up 4% in the last six months.

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How Much Cash Do I Need to Buy a Home besides the Down Payment and Closing Cost?

mortgageporterraiseIn addition to the down payment and standard closing cost associated to buying a home, additional funds may be required from the buyer prior to closing on a home. Here’s an example of what home buyers in the greater Seattle area should be prepared for.

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Comparing Closing Cost

Sometimes I see quotes from competitors that befuddle me. This morning, a home owner in Maple Valley asked me to review their FHA streamlined refinance quote that they received from a big bank.

The great big bank not only has a much higher interest rate, their closing cost are more expensive too. In fact, when I review the closing cost, it makes me wonder if the loan officer has originated many FHA loans.

Here are the bank’s closing cost for an FHA streamline refi…

Bank FHA
Big Bank’s Closing Costs

…and there’s only a $10 closing cost rebate with an interest rate that is 0.5% higher than mine! 

Compare this to my closing cost (BELOW), which are covered with a rebate credit (which also pays for my clients prepaids and reserves). 

My closing cost
My closing costs

I really don’t understand how our quotes could be so far apart…but you can see, they are. Many consumers would trust their bank would provide the most competitive rates and closing cost. The quotes I’m looking at today illustrate this isn’t always true. If this Maple Valley homeowner did not shop his rate quote and only trusted his big bank, he would be paying a much higher rate over the life of the loan and overpaying in fees. 

Yet those in Congress feel that mortgage originators who work for banks can be held to lower standards per the SAFE Act. Remember, bank mortgage originators are not required to be licensed, they are only registered. I recently met a nice loan officer who works for a different big bank and who presented herself to be NMLS licensed, when I asked her directly if she was “registered” or “licensed” she did correct herself. Believe me, there is a  difference.

If you are considering refinancing or buying a home anywhere in Washington state and have a rate quote from another lender or bank, I’m happy to review it to see if I can offer a better rate and/or lower closing cost. Send me an email with a pdf of the rate quote you would like me to review. Remember, I can only help with homes located in Washington state, where I’m Licensed to originate mortgages.