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We are looking to refinance our $ 221K mortgage loan. First Good Faith Estimate from our bank was a loan amount of $ 224, but now they sent us a new GFE which is $ 226K. Would you do it? Is $ 5000 normal? We are going from 5.6 to 4.7 %, have excellent credit and substantial equity in our home.

2 Thoughts on Looking to refi our mortgage. First GFE was $3000 above initial loan amount, now it’s $5000. Normal?
  1. Reply
    falsi fiable
    February 1, 2014 at 6:10 pm

    The lender is adding loan costs and/or points to your loan balance.

    With excellent credit, you should be able to find a no-cost and no-points 30-year loan with a note rate and APR of about 4.75%. Your lender can do better.

    Mortgage brokers often beat banks by thousands of dollars. Shop around or see cashcallmortgage.com

  2. Reply
    Bob
    February 1, 2014 at 6:48 pm

    The difference in loan amount does not mean you are being charged $ 5000 in fees. If your current balance is $ 221K, 30 days of interest that could be included in your payoff is about $ 1085. The lender probably has to fund your escrow account with enough to pay your taxes and insurance when they come due. When they payoff your current loan, most lenders do not immediately refund the balance in your current escrow account. They typically refund it to you separately. If your current escrow account has a shortage they will have to satisfy the shortage before the current lender will cancel the lien. Fees can vary depending on the area and the loan program, but basic fees in my area for your loan amount would be in the $ 2400-2800 range.

    The rate reduction alone should reduce your payment by about $ 100/mo. If you plan to remain in the home for at least three years it probably makes sense to do this.

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