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catwub · Dec 30, 2008, 08:48 AM

I just purchased my house the last day of October at 6.2%, as the rates drop I would like to try for a better rate. However, I have had a lot of people tell me it is too soon for us to refinance and we would take a terrible hit in fees. Can anyone give me some advice in this area?

Cat

franz546 · Dec 30, 2008, 09:06 AM

You usually make out in the long run if the rate is 1.5% to 2% lower than your existing mortgage. Try to get it fom your same lender, so your fees are not that much. Make sure you can pay off your existing mortgage after 3 months.

sandkicker · Jan 16, 2009, 09:08 AM

RE: "Try to get it from your same lender.."

This may not be a good ideal. Many lenders have clauses in their contracts on the wholesale side of the transactions not to do this. In any event, it is unlikely that any fees (other than possibly appraisal) will be lower.

The determining factor in doing a refi is how long it will take at the lower monthly payment at the lower rate to pay off the expenses involved. If you ever get told that this is a "zero cost refi" one of two things are happening... 1) The costs are being added to the loan amount (hardly zero cost!) or 2) the lender's rate to you is increased so that their increased commission at the higher rate covers some or all of the closing costs... (may not be a good deal for you). Both bankers and brokers work this way but banker's are not required to disclose at the same level to borrowers as brokers are, so bankers are legally allowed to "hide" some of the loan fee structure that brokers must disclose.