Whittier, CA · Member since 2017 · 4 posts · 0 votes
I needed to do a cash out refi in order to consolidate my second loan into my primary loan. If the rates were to drop significantly in the next 6 months as I believe they will, I plan to do a rate n term refi in the next 6 months but my broker refused to do my first cash out refi if I plan to refi within 6 months. Another competitor told me he can do it. I am trying to figure out who is telling the truth. Please help. Thanks in advance!
Investor · Wexford, PA · Member since 2015 · 27 posts · 13 votes
9y
Out of curiosity, why do you expect rates to drop significantly in the next 6 months? Given that the Fed just raised rates, a significant drop in mortgage rates in the next 6 months seems unlikely, no? I've been expecting them to either rise a bit or at best remain flat. But I'm far from an expert. Would be interested to hear what others think.
Investor · San Diego, CA · Member since 2014 · 254 posts · 56 votes
9y
@William Wong - You will likely have to refinance with another bank if you want to do this - but there's probably a bank out there who will. That said I haven't worked with a bank who will let you refi their own loan. Think about it this way, what's their incentive? They're in the business of making money - if they're currently making X amount of money from you, why would they suddenly say "sure, pay us less". The only way I can see them wanting to do this is if they've got high origination fees and/or pre-payment fees.
If you're dead set on doing this (I've done it before) just refinance with another bank later. Really though, if you're in this for the long haul, you'll want to develop a good relationship with a bank early. This will open up more options down the road. Saving a few dollars a month (after paying all the refinance fees) probably isn't worth it.
I needed to do a cash out refi in order to consolidate my second loan into my primary loan. If the rates were to drop significantly in the next 6 months as I believe they will, I plan to do a rate n term refi in the next 6 months but my broker refused to do my first cash out refi if I plan to refi within 6 months. Another competitor told me he can do it. I am trying to figure out who is telling the truth. Please help. Thanks in advance!
Unless there is a hard money loan being paid off or something was purchased all cash, six months mortgage-to-mortgage or refi-to-refi is the typical seasoning requirement.
Moment of transparency from the famously opaque mortgage industry for ya...
If we do a mortgage that is then paid off in full within six months (such as, from refinancing), it retroactively counts as negative production for us. Meaning we are worse off for helping you do that mortgage that was paid off within six months. Totally trashes our measured numbers. It'll wipe out 2 or 3 other transactions I did that are in the black, not just for me but for 2 or 3 levels of management right above me. There's the plain blunt truth of the matter. At least that is how it plays out in California, I can't speak to other locations.
I don't mind screwing big banks, credit unions, and HML over, but that's the only time I personally will do it. Otherwise, I'll start the refinance process before the six month mark and just not let the transaction close until the 181st day.
I guess what I'm getting at is to go do your cash out refinance with whichever big bank you hate the most, then rate/term refinance a month later with whatever lender you like the best. Rate/term refinances have lower interest rates than cash out refinances. :)
Investor · Wexford, PA · Member since 2015 · 27 posts · 13 votes
9y
Out of curiosity, why do you expect rates to drop significantly in the next 6 months? Given that the Fed just raised rates, a significant drop in mortgage rates in the next 6 months seems unlikely, no? I've been expecting them to either rise a bit or at best remain flat. But I'm far from an expert. Would be interested to hear what others think.
Whittier, CA · Member since 2017 · 4 posts · 0 votes
9y
I have been tracking the yield on treasury bonds using the ETF TLT and the chart for TLT is trending up. Also seasonal volatility for stocks peaks in October/November.
Whittier, CA · Member since 2017 · 4 posts · 0 votes
9y
Ever since I started this refi process in April 2017, I shaved off about 75 basis points from my 15- year fixed rate. Dropped from around 4% to 3.25% inline with the drop in treasury bonds yield,
Whittier, CA · Member since 2017 · 4 posts · 0 votes
9y
I found this on Trulia:-
"It is a myth and a misunderstanding that the rate is higher for a cash out refinance. The rate is the same, it's the fees or "loan level pricing adjustments" that are higher. Therefore, you could have paid higher fees to refinance and get the same rate the first time. To refinance again and pay "all" the fees all over again doesn't really make much sense and is probably not going to be worth it.
I don't know where anyone is getting their 30 day time period from, but it's completely made up and not part of any guideline. Ultimately, you can refinance whenever you want to unless it was a high balance refi above $417,000. You will need 6 months seasoning to refinance a loan amount of $417,001 to $625,500 on a 1 unit property."
Can any of you confirm if this info is correct? Thanks!
"It is a myth and a misunderstanding that the rate is higher for a cash out refinance. The rate is the same, it's the fees or "loan level pricing adjustments" that are higher. Therefore, you could have paid higher fees to refinance and get the same rate the first time. To refinance again and pay "all" the fees all over again doesn't really make much sense and is probably not going to be worth it.
I don't know where anyone is getting their 30 day time period from, but it's completely made up and not part of any guideline. Ultimately, you can refinance whenever you want to unless it was a high balance refi above $417,000. You will need 6 months seasoning to refinance a loan amount of $417,001 to $625,500 on a 1 unit property."
Can any of you confirm if this info is correct? Thanks!
It's correct and not correct.
LLPAs from Fannie Mae are linked here. You can see the cash out LTV/FICO hit matrix on page 3. You can write a check to pay it, you can roll it into your loan balance (refi only), or you can take a bumped rate. You can always swap rate for fee, fee for rate. The "fee" in this case will be expressed as discount points.
The more the sum total of all the LLPAs is, the larger the check you will need to write, the more will need to be rolled into your loan balance (refi only), or the larger the rate bump you take. Or you can split the difference, and write a check for half of it and take half of the rate bump you otherwise would have taken.
If you are planning to refinance in the near future, you take the bumped rate 7 out of 7 days a week. It would be foolish to let your loan balance go up for a lower interest rate that you're only going to pay for six months.