Question by glamorousvivica: Does anyone know anything about refinancing a mortgage?
I am not behind on my mortgage, nor have I ever been behind or paid late. But I was contacted by my lender…Chase Home Finance…a couple of weeks ago telling me I as eligible to refinance to a lower rate…almost 2 percent lower than I pay now…with no closing costs. They said they were extending this offer to clients in good standing only. So I got the good faith estimate yesterday, and they have added $ 1100.00 to the loan for home owner’s insurance. Ummm….I already have a homeowner’s insurance policy…which I have had since the life of my mortgage…with State Farm. I pay it directly and it covers replacement cost of the home, not just current value. My question is, when Chase is already aware that I carry this policy, why would they charge me for this?
Judy – I did all that. The loan is for the same time frame as my current loan, and it is 2% less than what I pay now. There are no other closing costs, except tax stuff, which I already have in escrow. But yeah…the insurance thing threw me for a loop. I already responded to the good faith estimate email they sent me and told them NO WAY am I signing any loan papers requiring me to pay their home owner’s insurance. We are scheduled to close on Thursday, but I won’t if it’s in there.
The loan is scheduled to be paid off in 15 years, and I am refinancing the same amount of years. It’s only a 15 year mortgage. The money I save on the lower rate will allow me to pay additional $ $ towards my principal…which I already do with my old loan. No early payment penalties on this loan, or the original loan, either.
To the third answer…according to the good faith estimate…it’s ‘hazard’ insurance. And according to the Chase Home Financial website, ‘hazard insurance’ is the same as ‘home owner’s insurance.’ What you are talking about…mortgage insurance…is usually only required on loans without equity. I have a ton of equity. ALSO…they quoted me a rate of 4.27% which is currently locked in until October 15th. I now pay 6.25%.
Answer by Judy
From Money Magazine.
Only re-fi if you can get 1.93% lower interest rate.
And only if you do NOT make your loan a longer term than it already is.
That will just make you poorer in the long run.
Only refi if you know you will be in the home for more than 5 to 7 years.
The closing costs will be added to the loan – nothing in this world is free.
Be careful with them jacking up that interest rate at the last miniute.
They will get you all hiped up, and then give you the higher rate – keep an eye on them.
A company can not force you to use their insurance company.
Demand that the insurance not be added to escrow.
Their company could double next year – and you might be forced into carrying their insurer for the life of the loan – it could be a trick.
Careful with Chase – watch their every move.
These closing costs – have me a bit scared – again – nothing in this world is free.
They will get the closing costs from you somehow.
Google : average closing costs calculator
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