Re: Question on Refinance payback
- From: t@xxxxxxxxx (Todd H.)
- Date: 28 Sep 2005 11:25:02 -0500
"Abbs" <snimmaga@xxxxxxxxx> writes:
> Actually, it is 'Refinance after 4 MONTHS' - I am guessing rates would
> not fluctuate that much in 4 months, but again who knows.
>
> OTH, I was wondering if you have two loans with say 5% and 7% - Would
> the principal and interest portions of the monthly payment differ other
> than proportionally? In other words if one loan's monthly payment is
> say $1500 (1200 Int + 300 Principal) can another loan at higher
> interest rate be $2000 (1800 Int + 200 Principal)? This way though my
> payment is only $500 higher, I am also losing on my equity build up by
> another $100.
Have a look at the amortization schedule.
http://ray.met.fsu.edu/~bret/amortize.html
Okay, let's look at $300615.14, 30year loan.
7% $2000 payment,
after 4 mnths you've paid down 994.30 or principal.
5% 1613.77payment
after 4 mnths you've paid down 1453.88 of principal.
So, the diff is about $460 in terms of principal.
> Pardon my ignorance, but I heard from many that this is a sleezy
> style of business. If I can get to refinance in 4 months, say for
> the going current rates and still get a cash back - why is it bad?
It wouldn't be bad in that case necessarily, but you ARE gambling. If
you are confident that in 4 months rates aren't going to be higher,
then great. No one has that crystal ball, but there's a lot of
uncertainty in the markets right now due to current events, rates are
still historically very low, and I'm not sure I'd betting thousands of
dollars hoping things don't go up.
However, the other thing about refinancing is that ... it does cost
money. Whether they roll those costs into the new loan (for title
work, title insurance, and other sundries) or not, they're real costs
and you're paying for them somehow.
And by the way, Joe Charlatan is looking forwad to making another
yield spread premium commission on that new loan too.
> Is it illegal? I don't want to do anything illegal... Sorry, I did
> not mean to disrespect your suggestion - but it is a genuine
> question.
Whether it's legal or not, not be a lawyer or law enforcement
professional, I don't konw. I just know as a consumer it's got plenty
of red flags in it for other reasons. If this weren't a way for this
joker to make more money, I highly doubt he'd be pushing it with you.
If you want more cash in your pocket at your original closing, shop
around with other mortgage brokers (cus your guy can always manipulate
his commissions unbeknownst to you to make it look like "a great
deal"), and compare the loan amount and rate and closing costs (don't
forget this--brokers often rape folks on these) they'll charge and see
what comes out ahead. The loan business is very competitive and it's
worth shopping around and pitting these (many of them animals) against
each other.
Best Regards,
--
Todd H.
http://www.toddh.net/
.
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