Any clever workarounds to get new mortgage pricing on a cashout refi

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Submitted by scaredyclassic on July 25, 2020 - 8:57am

Cash out refi pricing is higher.

Why?

Makes zero sense where the loan is conforming and the equity is greater than 20 perc.

Anyway, is it possible to nonfradulently workaround this?

Sell the house to another entity...a trust? An llc? And get new mortgage pricing?

Alternatively are there any lenders who would do same low rate for cashout refi that conforms with lots of equity?

What if i pay off the house. If i start over, with no sale, is that a cashout refi or a new home purchase loan?

Submitted by gzz on July 25, 2020 - 12:11pm.

Why can't you refi no cashout for the good rate, then get a HELOC?

This issue is why I have mostly resisted the urge to make extra mortgage payments. No easy way to get the money back at low 30-year mortgage rates.

Cash-outs have a higher default rate. Defaults are expensive for lenders even when they are low LTV loans.

Submitted by scaredyclassic on July 25, 2020 - 12:46pm.

Because i owe too little. I cant find anyone to refi just 160k at the best rate. Its all 1 point or more because its below a 300k min cutoff.

Not worth their time i guess.

Lesson learned.

Some days just a full payoff seems nice.

Id just prefer to have a cheaper house paid off than be in an expensive one paid off. Not diversified enough.

Maybe i should sell and relocate just for the nice new mortgage.

Downsize the house, the interest rate, invest the difference.

It all makes sense. Except my wife and i dont feel like moving.

Submitted by gzz on July 25, 2020 - 12:47pm.

I doubt a 160k loan is really penalized compared to a 300k one. Even if it is an 1/8 higher, that's $200 a year, so what.

Just grab the best normal refi rate you can now and don't overthink it.

Submitted by scaredyclassic on July 25, 2020 - 1:29pm.

Im quoted 1 perc.

Where can i refi 160 k at .125 more?

Ive shopped at least 5 lenders.

My energy levels lower today.

Feel more like just paying it off.

But maybe ill perk up

Submitted by an on July 25, 2020 - 2:51pm.

Cash out refi up to $510k only cost $2k more than non cash out at the same rate. If you need more than that, you can always do a second refi a few months later. Then 2nd refi won't be considered cash out.

Submitted by gzz on July 25, 2020 - 4:59pm.

An has a great solution, why didn't I think of that.

Just using zillow mortgage, a 160 refi on 800k primary shows 3.25%, a 300k refi shows 3.0%.

I used zillow to find sebonic mortgage on my last purhase in 2017, and sebonic did a great job and had the lowest rate. Not saying go with them, but worth getting a quote.

You might just wait a little while too. Lenders are getting swamped now as rates hit all time lows. The last three days are the first in US history the 10-year closed below 0.6% three days in a row. That should give lenders confidence to lower rates further, but since they are at capacity they will want to focus on larger loans first.

Submitted by HLS on July 26, 2020 - 5:06pm.

Those are the guidelines.
There are many others that make zero sense as well.
Underwriters are told to follow directions, not to think for themselves.

If you pay off the house then want cash out, it's a cash out refi.
You cannot buy the house from yourself.
Freddie & Fannie make the rules which have nothing to do with common sense. Pricing hit for cash out

Your lower loan amount is what's hurting you if you're looking for a no cost loan.
Doesn't matter if you have 80% equity.
There are costs involved with every loan, $500,000 loan fees aren't that much higher than 160,000 loan.
Lender pays a % of the loan amount to cover the costs.
1% of 500k = $5000
1% of 160k = $1600

Some lenders have penalties for loans under $200K
I am working on one for a client now.
It was cheaper to get a $200,000 cash out loan than $160,000 without cash out. They will probably pay the extra $40,000 back towards principal quickly.
Although the payment won't change, interest is only charged on the actual loan balance. More will go towards principal.

What are you trying to accomplish ?
Is a rate around 3.21 with $1000 cost or below 3% with a higher cost any interest ?
It's either low/no cost up front with a higher payment OR pay up front and have a lower payment for the life of the loan.

Some people think paying up front is wasting money but
staying in a higher rate is wasting money too.

Submitted by HLS on July 26, 2020 - 5:13pm.

The 10yr bond might be a rough indication of 30yr mortgage rates for the average consumer but have nothing to do with rates in reality.
Mortgages are bundled and sold into mortgage backed securities for 30 years.
Regardless of where the 10 year goes, if there's no demand to buy 30 year fixed rate bonds at low rates, mortgage rates will go up.
It happened quickly in March
If you can predict the demand for billions of dollars of 30 year MBS, that might be a better indication of where mortgage rates are going.

Submitted by scaredyclassic on July 26, 2020 - 10:41pm.

HLS wrote:
Those are the guidelines.
There are many others that make zero sense as well.
Underwriters are told to follow directions, not to think for themselves.

If you pay off the house then want cash out, it's a cash out refi.
You cannot buy the house from yourself.
Freddie & Fannie make the rules which have nothing to do with common sense. Pricing hit for cash out

Your lower loan amount is what's hurting you if you're looking for a no cost loan.
Doesn't matter if you have 80% equity.
There are costs involved with every loan, $500,000 loan fees aren't that much higher than 160,000 loan.
Lender pays a % of the loan amount to cover the costs.
1% of 500k = $5000
1% of 160k = $1600

Some lenders have penalties for loans under $200K
I am working on one for a client now.
It was cheaper to get a $200,000 cash out loan than $160,000 without cash out. They will probably pay the extra $40,000 back towards principal quickly.
Although the payment won't change, interest is only charged on the actual loan balance. More will go towards principal.

What are you trying to accomplish ?
Is a rate around 3.21 with $1000 cost or below 3% with a higher cost any interest ?
It's either low/no cost up front with a higher payment OR pay up front and have a lower payment for the life of the loan.

Some people think paying up front is wasting money but
staying in a higher rate is wasting money too.

I guess my problem is im not sure what im trying to accomplish.

6 months ago, i was sick of the mortgage, sick of paying, just wanted no mortgage. I wanted to quit working and just vegetate, meditate and be done with all the bullshit.

Now the cheapest 15 year is starting to look almost free. I feel a little less disgusted by it all and feel like i can keep working and want more money again. I want to deal with all the bullshit!

I think what i want is a 165,000 15 year mortgage at 1.625 percent. For this i would pay $3900-4500.

Or 500k for $9200, if i could convince my wife thats not crazy. Which i dont think i could do. So realistically 160 to 200k

. I hope to get this before the election. I accept that it may never happen [the mortgage and the election].

I would like to keep some mortgage now well into my 70s, if it can be below 2 perc. And put the $ i intended to pay the mortgage off with into a diversified little portfolio with a 15 y investment horizon . I did not think id ever see a rate low enouggt to tempt me to do this. 1.625 would do it.

I also wasnt sure sure if id live to see 2k an oz gold for much of the last decade.

The latter will likely happen this week, (hell, it may open on monday close to 2k. Rocketing up in overnight trading. Holy crap, 1,941 right now. I bought as much as i could stomach on fri. But not enough)...

The former, im less confident but i feel its coming and that its related to the steep rise in gold and tht crazy shit will be done to prop of a failing system as election day approaches...including historic low rates

I might also run out of energy again and prob. Should keep the debt low just in case i wake up one day and cannot summon the energy to get out of bed. 20 years ago i felt like i could never run out of energy. Now me and the market could crash 80 perc from current levels tomorrow, and stay there for years. Maybe never recover. Man, life wears me down. What i would like tto accomplish is something i think will be unattainable for me.. to never worry about money. That is just not in the cards for a person like me in this society. Or not at least until death is very close. Which makes sense as the term mortgage translates from ancient french, death pledge.

Morticians, mortgages, mortality....

Submitted by treehugger on July 30, 2020 - 8:29pm.

I just closed a 30 year fixed at 2.6 no points no fees and I am below $300,000, but not by much. So now that I closed I am confident rates are going to drop substantially.....

Submitted by scaredyclassic on July 30, 2020 - 8:36pm.

Refi?
Where?

Submitted by treehugger on July 31, 2020 - 9:55am.

I went with owning corp in orange county. If interested call Karen Hua (949) 519-2697 and see if she will match the 2.6 rate or lower.

I actually got the lower rate from Loan Cabin and went back to Owning and they were willing to match it. Loan Cabin was awful to try to deal with and while they sent me an e-mail confirming the 2.6 rate, I couldn't get them to confirm the promised credits and no fees, so they might be a better deal, but were not as easy to deal with.

A bunch of these internet companies have low rates, but I found many of them too distracted.....Owning was pushy and their pricing was aggressive.

Submitted by OwnerOfCalifornia on July 31, 2020 - 10:05am.

Too bad about loan cabin...as of this writing, they're advertising 1.75% and 0 points (not necessarily the same thing as $0 cost) for a 15-year refi. I submitted online three days ago, haven't heard from them yet. I think all these internet places, while offering crazy teaser rates, are just massively swamped.

I just closed a refi for 2.625% 15-year in April (about net-$500 out-of-pocket) and thought that was nuts.

Submitted by scaredyclassic on August 1, 2020 - 9:50pm.

OwnerOfCalifornia wrote:
Too bad about loan cabin...as of this writing, they're advertising 1.75% and 0 points (not necessarily the same thing as $0 cost) for a 15-year refi. I submitted online three days ago, haven't heard from them yet. I think all these internet places, while offering crazy teaser rates, are just massively swamped.

I just closed a refi for 2.625% 15-year in April (about net-$500 out-of-pocket) and thought that was nuts.

Beautiful.

A nice fresh 2.625 mortgage is a veautiful thing. Whenever you feel down, just think of that nice mortgage. Its lovely

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