How much for refinancing fees using amerisave?

Elizebeth
I'm trying to refinance my house through Amerisave at 4.375% APR but they want $8900 at closing to cover all the fees. My wife and I think this is an absurd amount of cash for this. The lender says I will get back $2600 in escrow, and won't have to pay mortgage for 2 months, so a lot will come back, but we'll still be out around 3K. Has anyone here dealt with these guys, and are they legit?Thanks in advance, John

Bronwyn
I estimate that about $7, 200 of the $8, 900 is paying down the interest rate to 4.375. The "par" rate, where APR is almost equal to the interest rate is probably closer to 5.75. That's the rate investors are willing to lend at. That's your starting point.At par, your closing costs are only the $1, 700.Your buying down the rate compensates the investors for what they're willing to accept at the moment. Conversely, if you're willing to accept a rate higher than the par rate, say at 6%, you will get credited money which can be applied to the $1, 700 in closing costs. You can also "buy down the rate" to rates between the 4.375 and the par of 5.75. The closer to 4.375, the more it will cost; the closer to 5.75 the less it will cost you. The other part of the $8, 900 -- $1, 700 in closing costs --- doesn't change much regardless of the rate you pick.Divide the $8, 900 by the amount of time you expect to be in your home. If that's offset by the reduced mortgage payment you get for buying your rate down to 4.375 then that's probably what makes sense for you. You could do similar math for higher interest rates up to the par rate, until it does make sense, especially if you don't have the $8, 900 to bring to closing.What the lender is saying about escrow and not paying mortgage for 2 months is intended to soften the blow of having to come up with $8, 900. It's not really relevant to the underlying math with regards if this loan structure works for you. I also wouldn't put much stock in the "not paying for 2 months" part. You will pay interest; it just may not come directly out of your pocket. As a loan officer, I always counsel my clients not to count on it, since it's dependent on the timing of your closing. Always assume you'll be paying it. It's better left as icing on the cake.Amerisave is one of the few nationally recognized Certified Upfront Lenders. This means their rates and closing costs are published on their website and are guaranteed not to change, subject to the usual disclosures and exceptions. They are licensed in all States, except possibly New York and Hawaii.

Eveline
Hi John, I have been in the mortgage business for a long time, I do not do business with amerisave but I think this company has ben around for 5 years or so. When taking cost into consideration you need to froget about your escrows for taxes and insurance. You actuall cost is on the higher side because it is costing you to get the 4.375 rate. I just did some pricing and getting you the same rate would cost you around $9, 100.00 simply you need to look at higher rates in you want lower cost.

Lavona
Not with this company but years ago when I refinanced it cost me over two thousand dollars, but it was worth it in the long run because although my payments didn't go down I cut of 15 years on my mortgage.

Kirstin
There game is to charge higher fees to get a lower rate so instead of looking at the total dollar amount look closely at what their fees are to get that 4.375% APR. BTW - Are you sure its 4.375% APR and not a note rate of 4.375%?Are you doing a 15 year fixed?The other thing you want to look at is are you saving any money on your monthly payment? If so you need to look at your break even point.You can figure this out by dividing the closing costs by the monthly savings.Here is an example.Lets say by refinancing you're saving $150 per month.Divide $8900 by $150 to get 59.33 or basically 5 years. That's a pretty long recovery period especially if you don't plan on staying in the loan for at least 10+ years.