Another Refi Question

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills
Post Reply
Topic Author
SirBotsALots
Posts: 8
Joined: Mon Mar 02, 2020 3:53 pm

Another Refi Question

Post by SirBotsALots »

Hi bogleheads -

I'm currently have a refi in progress with my current mortgage holder. 30 year fixed, 3.5%, with 1% of the loan as lender credit. The lender credit is large enough to cover the costs associated with refi, excluding the escrow prepay, and still reduce my outstanding loan balance by $2,000. That was the best rate I could find when I locked it a month ago, but is no longer (Lenderfi calculator shows 3.25% at cost, with possible excess used for loan reduction).

I'm not seeing a clause in my loan estimate preventing an immediate refi after closing this one. What is the downside of going through with this refi, and then proceeding with another one in the near future after this one closes? Given I've already done all the work for the current refi with bank and would need to do the paperwork again anyway if I switched now, it seems like I'm getting a free $2,000 at the expense of a higher rate which I could quickly refinance away.

The only risk I see is that rates could go up before I refinance again. Am I missing something else?

Current loan: 28 years left, 4.25%, $658K outstanding
Refi in progress: 30 year, 3.5%, no cost with $2K loan reduction
Market as of today: 30 year, 3.25%, no cost with expected reduction if costs come in lower

FWIW - I'm choosing 30 year and lender credit because we're expecting to move in 3-7 year range.

Thank you!
SirBotsALots
wilked
Posts: 1932
Joined: Thu Mar 24, 2011 1:50 pm

Re: Another Refi Question

Post by wilked »

Are you certain all of these are $0 cost? That includes 3rd party costs such as title ins, filing costs, etc?
Topic Author
SirBotsALots
Posts: 8
Joined: Mon Mar 02, 2020 3:53 pm

Re: Another Refi Question

Post by SirBotsALots »

Yes. The lender credit comes to about $2k larger than appraisal, title, recording, origination etc on current refi. That doesn't include prepaid escrow or the prepaid interest for the first partial month.
Post Reply