- My Forums
- Tiger Rant
- LSU Recruiting
- SEC Rant
- Saints Talk
- Pelicans Talk
- More Sports Board
- Fantasy Sports
- Golf Board
- Soccer Board
- O-T Lounge
- Tech Board
- Home/Garden Board
- Outdoor Board
- Health/Fitness Board
- Movie/TV Board
- Book Board
- Music Board
- Political Talk
- Money Talk
- Fark Board
- Gaming Board
- Travel Board
- Food/Drink Board
- Ticket Exchange
- TD Help Board
Customize My Forums- View All Forums
- Show Left Links
- Topic Sort Options
- Trending Topics
- Recent Topics
- Active Topics
Started By
Message
Mortgage Refinance - Tips to get best rate?
Posted on 10/8/15 at 10:36 am
Posted on 10/8/15 at 10:36 am
I'm doing a cash out refinance and have contacted a couple big banks and a credit union. My credit score is excellent (+750) so I should be able to get a good rate. All 3 places that I called have given me the same rate. Is this normal? Is there any method to get a lower rate?
3
Posted on 10/8/15 at 10:39 am to SUB
In the same boat. All quoted 3.875% on 30 year mortgage.
Posted on 10/8/15 at 11:00 am to nrtiger
Ask them what the yield spread premium (YSP) is on the rate they're quoting you is. Quick lesson:
Lender quotes you % rate off of a matrix updated weekly and sometimes during that week. It's based on your middle score in your tri merge credit report and the amount of money you want to borrow for your home, based on the % of your home's overall value. This second metric is expressed as "Loan To Value."
Lower Rate = Better for Buyer
Higher Credit Score = Lower Rate (Creditworthiness pays off)
Higher Loan To Value/LTV = Higher Rate (Riskeier to loan you more $)
So Middle Credit Score + LTV = Your "Par" rate on the matrices they receive from their lenders weekly.
But you don't get quoted "Par" pricing on your rate. Why you ask? Because loan officers need to make money, and the more they make the better for them. So they shift out a few basis points (read, increase your interest rate incrementally) in order to sell you an interest rate on your mortgage that's actually higher than what you qualify for.
The bigger the difference between par pricing and the rate you lock and close at, the more money the broker and lender make. The key is not to knock your head off and be uncompetitive, but to still earn enough to make a living.
The amount they're paid on your interest rate is referred to as the "Yield Spread Premium," and unless you ask they're not required to tell you how much they made in YSP on your loan.
A note: you cannot ask someone working on commission to offer you a product where they don't get paid. Now, one way to achieve as low of an interest rate as possible is to pay a certain amount of money based on your loan size, credit etc, and "buy your rate down." This still allows for profit on the interest rate and allows you to reduce your interest rate simultaneously.
They can also charge closing fees (Usually on Line 801 or 803 on your sample HUD 1 Settlement Statement in your Good Faith Estimate and your Closing Paperwork). But that is disclosed to you and you see that amount (if you know where to look...which you now do).
Another note: What a lender/broker makes on the interest rate is called "the back end." The "front end," are the closing costs you see on paper at closing. Both the front end and the back end are capped by federal and state laws governing lenders.
At any rate, asking the lender what is your Par pricing is, and how much he is being paid on your rate with an understanding of this concept will make most lenders gulp or roll their eyes and groan. But it can save you money.
Good luck.
Lender quotes you % rate off of a matrix updated weekly and sometimes during that week. It's based on your middle score in your tri merge credit report and the amount of money you want to borrow for your home, based on the % of your home's overall value. This second metric is expressed as "Loan To Value."
Lower Rate = Better for Buyer
Higher Credit Score = Lower Rate (Creditworthiness pays off)
Higher Loan To Value/LTV = Higher Rate (Riskeier to loan you more $)
So Middle Credit Score + LTV = Your "Par" rate on the matrices they receive from their lenders weekly.
But you don't get quoted "Par" pricing on your rate. Why you ask? Because loan officers need to make money, and the more they make the better for them. So they shift out a few basis points (read, increase your interest rate incrementally) in order to sell you an interest rate on your mortgage that's actually higher than what you qualify for.
The bigger the difference between par pricing and the rate you lock and close at, the more money the broker and lender make. The key is not to knock your head off and be uncompetitive, but to still earn enough to make a living.
The amount they're paid on your interest rate is referred to as the "Yield Spread Premium," and unless you ask they're not required to tell you how much they made in YSP on your loan.
A note: you cannot ask someone working on commission to offer you a product where they don't get paid. Now, one way to achieve as low of an interest rate as possible is to pay a certain amount of money based on your loan size, credit etc, and "buy your rate down." This still allows for profit on the interest rate and allows you to reduce your interest rate simultaneously.
They can also charge closing fees (Usually on Line 801 or 803 on your sample HUD 1 Settlement Statement in your Good Faith Estimate and your Closing Paperwork). But that is disclosed to you and you see that amount (if you know where to look...which you now do).
Another note: What a lender/broker makes on the interest rate is called "the back end." The "front end," are the closing costs you see on paper at closing. Both the front end and the back end are capped by federal and state laws governing lenders.
At any rate, asking the lender what is your Par pricing is, and how much he is being paid on your rate with an understanding of this concept will make most lenders gulp or roll their eyes and groan. But it can save you money.
Good luck.
This post was edited on 10/8/15 at 11:10 am
Posted on 10/8/15 at 11:50 am to GFunk
Thanks for the info. How would you even ask about Par pricing? What would you even say to get them to budge on the rate?
Posted on 10/8/15 at 12:12 pm to nrtiger
quote:
In the same boat. All quoted 3.875% on 30 year mortgage.
Same quote from two of my credit unions.
Posted on 10/8/15 at 12:29 pm to WPBTiger
Y'all beat me. Mine was quoted at 4.0 through Wells Fargo yesterday with 800+ credit score.
Does anyone have any ballpark estimate of what closing costs would be for a loan refinance? I was having a hard time getting a straight answer.
Also, he seemed to be pushing a 7 year ARM. We will very likely be out of our house within 7 years (growing family - lack of public school options); and are really just looking to lower our rate at much as possible for the next few years so my wife can raise the kids and quit working. Is a 7 year ARM something that I should even consier or is there some obvious flaw that I am not privy to? Any informaiton is much appreciated.
Does anyone have any ballpark estimate of what closing costs would be for a loan refinance? I was having a hard time getting a straight answer.
Also, he seemed to be pushing a 7 year ARM. We will very likely be out of our house within 7 years (growing family - lack of public school options); and are really just looking to lower our rate at much as possible for the next few years so my wife can raise the kids and quit working. Is a 7 year ARM something that I should even consier or is there some obvious flaw that I am not privy to? Any informaiton is much appreciated.
This post was edited on 10/8/15 at 1:35 pm
Posted on 10/8/15 at 1:23 pm to jammintiger
quote:
Does anyone have any ballpark estimate of what closing costs would be for a loan refinance? I washaving a hard time getting a strait answer.
Depends on fees charged. One of my credit unions does 1% origination, the other does a flat $495. Plus the other costs, i.e. appraisal, title insurance, etc.
Posted on 10/8/15 at 1:34 pm to WPBTiger
Who did the $495? May be worth opening an account.
Posted on 10/8/15 at 2:37 pm to SUB
quote:
What would you even say to get them to budge on the rate?
Like he said - pay extra up front in closing fees. You can get it down basically as far as you want provided you pay enough up front.
Posted on 10/8/15 at 3:01 pm to foshizzle
Free Advice: you need to run-not walk, but RUN-away from any human being employed as a Loan Officer who is pushing an adjustable rate product in an Era where people are shopping 3 and 7/8ths fixed rate on a 30 year conventional mortgage.
They are ripoff artists and have ZERO ethics. That's beyond the pale.
They are ripoff artists and have ZERO ethics. That's beyond the pale.
This post was edited on 10/8/15 at 3:02 pm
Posted on 10/8/15 at 3:07 pm to SUB
quote:
SUB
quote:
Mortgage Refinance - Tips to get best rate?
Thanks for the info. How would you even ask about Par pricing? What would you even say to get them to budge on the rate?
Well, if you don't know your credit score you should. So find that middle score out. Then figure out your LTV
(Example: Your house costs $100,000.00. You're going to put 20% down. You'll finance $80,000.00. Your LTV based on the price is 80%)
Call your broker and ask him what par is for your score and your LTV. He's going to start tap dancing. Stick to your guns. If he won't tell you Par, ask them how much $ the rate they're quoting will pay them. If they say $0...that should raise an eyebrow.
Doesn't have to be a contentious conversation. Explain up front why you're asking and admit your goal whether you need to buy your rate down or you're just curious. If this guy has your business no matter what, let him off the hook and let him know. You aren't out to make him nervous or jittery or start a fight.
Good luck...
Posted on 10/8/15 at 3:34 pm to SUB
If you compare rates and fees (closing costs for lender) and they are all the same, go with one you're most comfortable with. Some of the information you've received is accurate, however lenders are no longer compensated off yield spread. We all have certain fee objectives we have to reach but it does not benefit the lender to charge you a rate higher than the one that meets their fee objective. Email me with any other questions. I'm a local lender in Prairieville and would be glad to help you out.
Posted on 10/8/15 at 4:36 pm to jammintiger
quote:
Who did the $495? May be worth opening an account.
Are you willing to say where you work?
Posted on 10/8/15 at 4:37 pm to Lsukj
This board turned me on to PenFed a few years ago. Best refi rate I could find at the time. 
Posted on 10/8/15 at 7:48 pm to SUB
To get the best rate, you need to move away from the CU's and the Big banks and got to a good broker. You may pay more in fees, but rate is more important, you will make fees up over time, usually 3-5 years. As low as rates are, there is no real reason to pay points it is not a 1 to 1 relationship. Paying 1% of the loan does not lower your rate 1%. Also, your rate will be a 1/4 to a 1/2 higher because it is a cash-out. Also, it will depend on the loan-to-value, higher LTV the higher the rate. Your score will make a difference. Most lenders use the middle score of three, on a mortgage crp. That is not the same report as my crp.com.
The best tip I can give you is to find 2 or 3 and make a decision, too much shopping around can affect your score.
The best tip I can give you is to find 2 or 3 and make a decision, too much shopping around can affect your score.
Posted on 10/8/15 at 8:17 pm to WPBTiger
you lost me. Are you saying you work at the place that charges $495 and don't want to say online or are you asking where I work to see if I'd qualify? I work at a law firm in Baton Rouge, and I don't think we have any sort of agreement with any credit unions. My wife might at olol.
Posted on 10/9/15 at 12:13 pm to SUB
you WILL NOT get par pricing from any bank or lender..would you do your job for free? nope so don't bother asking your bank to do the same. also 3.875% is a fantastic rate so lock and get your loan done.
Posted on 10/9/15 at 4:46 pm to hawkeye007
Hawkeye, did anyone at any point suggest that they would get Par? If so, please point that out?
I was hoping you'd post because I also wanted to ask you...did you see where the broker was trying to sell a 7-23 ARM? What would you say to someone considering that product in the current rate climate with respect to conventional fixed rate products with conforming credit?
I was hoping you'd post because I also wanted to ask you...did you see where the broker was trying to sell a 7-23 ARM? What would you say to someone considering that product in the current rate climate with respect to conventional fixed rate products with conforming credit?
Posted on 10/12/15 at 12:28 pm to jammintiger
quote:
Are you saying you work at the place that charges $495 and don't want to say online or are you asking where I work to see if I'd qualify? I work at a law firm in Baton Rouge
I was asking to see if you would qualify for membership. Given your employment, you would not qualify for membership.
Posted on 10/13/15 at 4:29 pm to GFunk
The fact the broker was selling the arm would have made me walk away. I only sell arm's on construction loans that will be modified to fixed rate programs when the house is complete. I guess I missed the par conversation I thought you were telling him how to ask for par pricing.
Page 1 of 1
Popular
Back to top
Follow TigerDroppings for LSU Football News