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Author: RBMunkin Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 127571  
Subject: Refi questions Date: 1/29/2009 4:56 PM
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Our mortgage bank, Indymac, just offered us a significant reduction in interest rate. But I hate the points and closing costs. But it seems worth it anyway, and refusing because of the points and costs seems like cutting off my nose to spite my face.

Does anyone know a good way to shop around without just pulling out the yellow pages or Googling? It takes so long to apply that it's not really feasible to shop too many places. Are there any super cheap, beats all comers, mortgage brokers out there?

The deal:
$101K current loan balance, add $20k cash out (yummy - money to invest!), add points and closing costs of about $6700 (ouch!). New loan (rounded), $127K.
4.5% rate (down from 5.875%).
Monthly payment is virtually the same as it is now (the higher loan amount with the lower rate coincidentally made the monthly payment only a couple bucks off from the current monthly payment amount).
New loan: 30 years. Current loan: 25 years left.

Does $3500 in points (2.756%) and $2689 in closing costs seem high?

Even if it's high, it seems worth doing. Same monthly payment $637and $20K to play with. I could even just send that money back to them, lowering the monthly payment to $542, saving nearly a hundred bucks a month. But at 4.5%, I'm thinking of investing it considering I can get that same percent in dividends alone and this seems like a great time to invest for the long term. I also might use the money to do some short term investing but that's a whole other story (I'm VERY conservative when I do this).

Anyway, I'm running all this by you all to see if you have any suggestions for getting lower closing costs and points, and just to see if you have any other comments or if you see any holes in my logic about taking the deal anyway, even at the over $6K in costs since my monthly payment is the same and I get the cashola.

Thanks,
RB

PS One other benefit Mr. Indymac said to me was that with this loan at 4.5% I would never have to deal with refinancing again. No more closing costs and points, no more hassle of applying. Because the rate is really as low as I'll ever get and to make refinancing worth it you generally have to get at the very least a 1% reduction in rate and below 3.5% is just not going to happen.
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