Question: Which would be a better choice for a home refinance loan?

(Posted by: frm7716 on 2010-07-05 07:00:18)

We're going to refinance our home for a 30 yr. fixed with Amerisave and aren't really sure which would be the best choice. On one loan we could get a rate of 3.875 %, 4.218 % APR, and total closing costs of $7, 360 which we would want to roll back into the loan. The other choice would be 4.5 % rate, 4.605 % APR and total closing costs of $3, 010 which we would roll back into the loan. And do you know if Amerisave is a reputable lender? We plan on keeping the house about 5 years, so which would be less of a loss, higher closing costs or higher interest?

Posted by: Fig Newton on 2010-07-05, 07:29:58

In your case the the higher loan rate with lower closing costs is the better choice. For example, on a $200k loan: 4.218%, $7360 costs, principal + interest payment = $1016 month 4.605%, $3010 costs, principal + interest payment = $1041 month Over 5 years you'll pay an extra $1500 in payments but you'll have an additional $2800 of equity . Amerisave is a reputable lender. Like most lenders it gets its share of complaints and it really boils down to the loan consultant that you use.

Posted by: Judy on 2010-07-05, 07:08:44

The loan with the lower APR (the number you should focus on), will have pre-payment penalties. If you ever decide to move, to start paying off early, you will have to pay these fees. The other loan is better I think. Your goal in life, after all, is to eventually have your home paid off. Especially before you have your kids attend college. Check those pre-payment penalties. Read, all the fine print. (we move often and know that with a lower rate - there is always a trick) --------------------- I'm a little concerned. Amerisave has quite a bit of complaints. complaintsboard.com/ bycompany/ amerisave-mortgage-a99167.html Google Amerisave followed by the word(s): Complaint, scam, rip-off. Do your research on this company - please. Did this company call you? - or did you call them? Never do business with ANYONE that contacts you first. You choose a good company - and do business with them. Contact WellsFargo if you want a good company. /

Posted by: Ralph T on 2010-07-05, 07:18:36

Never heard of Amerisave. Are they your only choice to go with? Read the loan terms very carefully and try to negotiate some changes before you sign. You might want to add the right to pay off the loan at any time without additional fees or penalties. The right to make additional principal payments with no additional fees or penalties. The loan cannot be sold to any one or another financial institution without your knowledge or written consent. And you will want to get some protective clause in case of loss or reduction of income. If any payment is refused,the loan becomes paid in full. That you will really need in the loan terms to protect yourselves.

Posted by: Caveat Emptor on 2010-07-05, 07:18:41

What are the terms of your current loan? If you plan on selling within five years, it may not be worth refinancing at all. It's not simply a question of comparing the two offers - you need to compare them against the "do nothing " alternative.

Posted by: Rusty on 2010-07-05, 08:43:54

Fig Newton gave you the exact same advice I would have and used the same formula. I worked as an AVP, one of many, for a major mortgage lender for 15 years. Give Fig Newton BA and take his advice.

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