re: Refinancing a Mortgage after first year

I find that I seldom agree with your comments. You are simply incorrect again.

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Just so we are clear here. To whom are you speaking about is incurring that cost?

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The borrower

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not for the borrower...

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So getting a higher rate to cover those costs isnt costing the borrower?

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The borrower

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Please explain.

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Nothing is "no" cost in this world

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In this scenario what's the cost to the borrower?

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The bank maybe giving him a lower rate but its higher than he quals for

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You're assuming someone has applied to literally every place out there to find the lowest rate and nobody can quite literally do that, so what you're suggesting is literally impossible to know.

One place could still give someone a 5.75% rate with $4k in closing while another does 5.6% with no closing costs. Does that mean the 5.6% is the best out there? We'll never know, but it's still good and better than the other.

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That literally makes zero sense

Yes banks love give out deals for free

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They are getting a huge amount of interest over time on the transaction regardless, sure they would love to squeeze some money out of you up front but lets not pretend like they're not covering their costs to run the refi within the first few months of the mortgage itself anyways and over time getting potentially hundreds of thousands in interest. A lender giving out a $300k 30yr/5.6% refi is getting over $4k of interest in the first 3 months.

Sure, someone could get quoted 5.6% with $4k in closing in one place vs. maybe 5.7% with $0 closing in another. If he's coming from a 7% rate, I could totally understand going with the 5.7% zero in closing because he's still lowering his rate substantially with literally nothing out of his pocket, and with rates still potentially going down over the next year that probably is the best option if he could do this again in a year and get maybe 4.9% with or without some closing cost then.

The end goal here is you are spending literally nothing to lower the rate substantially which is a win for just about anyone, especially with continually falling rates and nothing out of their pocket which is what you dont seem to understand.

In the end, you're never going to know if you get the absolute best deal because nobody freaking applies to thousands of lenders to find out.

I've gotten zero cost refi offers in the past and the rate was not substantially different than the other best rates out there. You're acting like a zero cost refi would be like half a percent higher or something, they're generally not.

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Sure, someone could get quoted 5.6% with $4k in closing in one place vs. maybe 5.7% with $0 closing in another

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Thats not the way it works

The quote at 5.6 at 4k then the zero cost loan would be 6.25

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I've gotten zero cost refi offers in the past and the rate was not substantially different than the other best rates out there. You're acting like a zero cost refi would be like half a percent higher or something, they're generally not

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You think thats what happened

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Thats not the way it works

The quote at 5.6 at 4k then the zero cost loan would be 6.25

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Thats not the way it always works, either. You seem to be throwing opinions out there like they're facts.

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You think thats what happened

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I know thats what happened because i compared a bunch of quotes. The rates were not substanially different like you're alluding to in all cases.

Again, the companies get a TON up front in interest on 30 year loans anyways. They dont NEED to offset the loss of upfront reif costs by automatically going 0.5-1% higher on the rate. Would like to? Sure, is that always the case, no and I know from a fact it wasnt in mine.

Again, going back to the premise here, if someone has a 7% rate and is looking to refi, a 5.75% zero cost refi would be more appealing to most people than say a 5.6% with thousands up front, especially with continually falling rates at the moment. The person who chose the 5.75% zero cost refi will probably come out ahead when they refi as rates continue to go down as the other person feels more locked into the up front cost refi until a breakeven makes more sense for them. Thats what you're failing to understand here.