Saving Money when Refinancing a Mortgage: My Story

My Story

I used the advice I wrote about here: mortgage refinance tips to save money on my own refinance.

In 2009 I purchased a house with a 30 year mortgage and a fixed rate of 5.375%. Not bad, I thought. And, in truth, that was a great rate. Times change though and today 30 year rates are around 4%. I just refinanced our loan to a new 30 year fixed/3.875% loan. The total closing costs were less than 2% of the loan balance. This doesn't include the prepaids, which consist of the escrow reserves. Prepaids are more or less a wash anyways, because your old escrow account will get refunded to you.

How did I do it?

I checked Zillow and Google's mortgage rate tool and found that I should be targeting around 4% as my rate. I called a local lender and was quoted 4.25%, so I quickly passed. I then called two lenders from zillow. By the second call, I knew I had found my lender. I was quoted 3.875% with no points and no origination fees.

I asked for an initial fees worksheet, to make sure there were no surprises. I have found that because the Hud statement is complicated, some lenders will hide extra fees to pad their commissions. They may say, 'no points', but the underwriting fee is over $1,000!

With the initial fees worksheet in hand (not as strong as a good faith estimate, but it's something) I immediately locked my rate.

Great, now I have the interest rate locked in, and reasonable closing costs. So I'm done right? Nope.

So what's next?

I also needed to get a handle on the attorney and title fees. Luckily the attorney that closed my previous loan was also very reasonable on his fees.

He charged $200 to close the loan and was able to give me a 'reissue rate' for my new title insurance.

When you call an attorney, don't just ask if they can close the loan. They all can! Ask what their fees will be for their service. Ask about how you can save money on your title insurance.

What is the Overall Theme to Saving Money on a Refinance?

You can probably guess that it's being proactive. You need to actively be involved with each step. Shop for a lender and shop for an attorney.

If your only consideration is getting financed, or refinanced, or just simply closing the loan, there are plenty of people willing to do that for a nice fat fee. For instance, one quote I received was for a rate of 3.875%, but the closing costs were 6% of the loan! Ouch! The broker that quoted me the price was very friendly, in fact, I liked him the best on a personal level, but when I compared prices he was not competitive.

What are some of your mortgage success stories? Please share!