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How long does the mortgage process take?
Current turn around times to process a refinance or purchase loan is approximately 3 weeks. Retail banks can often take 60-90 days which creates a tremendous advantage for small direct lenders like Choice Mortgage Bank. Another reason for the fast turn around time is the file is always overseen by the broker and not passed along the chain through several hands.
Is there a way to reduce closing costs?
One way to reduce closing costs is to structure the loan with a marginally higher than best available rate which creates revenue for the bank to help pay your closing costs. For instance, if the best available rate for a 30yr fix is 3.75% with standard closing costs, we can raise the rate by a .25%-.375% and pay all or the majority of the fees.
What are the closing costs involved with refinancing?
Here in Florida we have three components of fees which include the bank, the title company, and the state. My bank does not charge any points and therefore our fees only change depending if the loan is a government loan or conventional loan. Most of the title fees and state fees are promulgated by the state and based on the loan amount.
I financed my home at 5%, how low does the rate need to fall to make sense financially to refinance?
In order to analyze how much the interest rate must drop before I refinance, one would have to calculate the closing costs and the monthly savings. Once we know how much money you are saving every month, we divide that monthly savings by the total closing costs to find your breakeven point as to when you will recover the cost of the refinance. Everything after that breakeven point equates to savings. Depending on loan size and other variables, we often structure loans to ensure we make sense for clients to refinance. For instance, there are certain situations where we pay all of the closing costs for clients which therefore allows the client to refinance without having to have a large drop in rate. For example, a client has a 300k loan at 5% and we refinance down to 4.25% but the bank pays all the closing costs. The savings is $135/mo which is not a tremendous amount, but if its free, how can you say no.