We have all seen ads on the internet, in our mailboxes, or on TV touting the no fee loan at ridiculous rates. No doubt, there are some honest lenders offering these, and some unscrupulous ones as well.
I even saw one that was offering a 3.35% fixed rate! Wow. Well, it was fixed, but it was a 5 yr fixed rate, them becomes adjustable, definitely not a 30 year fixed.
Here is the straight scoop. Rates have fallen in the past couple months. It is always wise to look at several rate/ fee / point combinations to see which one makes the most sense for you. It needs to meet your needs for budget, payment, how long to break even on the decision, how long will you stay in this home, what are you other life plans that may be effected by this decision, etc. Many more things to consider than rate alone.
Perhaps you purchased your home last year. Rates were low last year, but very erratic. Closing timelines don't always mesh well with rate watching, it is often better to lock in with a known rate than to watch the low rate you are shooting for fade to a distant memory. One such client was in a short escrow and really wanted that low rate, and missed the mark by .50 percent when the market went haywire for a few weeks. Well, this is where the no point/no fee loan comes in. This year, we are able to offer them a rate even lower than the .50 spot he missed last year, and with no points or fees. The logic is that he already paid fees last year, so it is really a no-brainer to refi now at the lower rate and save a significant amount on interest each month. The strange part was when we looked at buying the rate down even lower, It just didn't make good financial sense. Even with paying closing fees and 1% origination, the loan rate was only .375% lower than the no point/no fee option. It would have taken nearly 5 years to start saving money on that scenario. The no point / no fee option with a slightly higher rate definitely looks like the better overall choice.
If you would like to discuss this option for your loan, please let us know . We also offer No point/No Fee options on Purchase Money loans. These are available for the following loan types:
- FHA for purchase or refinance
- VA for purchase or refinance
- Conforming for purchase or refinance
- FHA Jumbo
- VA Jumbo
- Conforming Jumbo
- FHA Streamline Refinance
- VA IRRRL Streamline Refinance
- FHA Jumbo Streamline Refinance
- VA Jumbo IRRRL Streamline Refinance
- Home Affordable Refinance
