Re: Refinancing

From: hic@world.std.com (Howard I Cohen)
Subject: Re: Refinancing
Date: Mon, 5 Oct 1998 23:40:03 -0400

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I play the 'no points no closing' (NPNC) game. What this does for me is to 
let me jump with no historic committment to an earlier mortgage schedule on 
which I had to lay out money. I estimate that I pay about 1/4 to 1/2 of a 
point more for that type of deal. But look at my history. I am now 
processing the application for my 6th, yes 6th, NPNC. All 30 fixed.  In the 
last three years I've gradually moved my interest costs from over 9.0% (on 
an ARM that was going up and up) to 6.75%. And the beautiful thing is that 
it costs me nothing. No totally true. A couple of times I had to pay $200. 
for the appraisal. (But it is nice to see the appraised value going up these 
days.)

Most of the time the mortgage broker (same one for all 6) simply uses the 
last appraisal. Once I was charged $25.00 for a FEDEX shipment of the 
application papers. Typically every penny of service charge is reconciled, 
i.e. accounted for and paid for by someone else. Balances, escrow, 
everything is moved precisely to the penny, and I pay nothing. It is a 
wonderfully free feeling. That 1/4 to a 1/2 point saving, even on a 1 point 
with closing costs might typically cost me thousands of dollars, and the 
usual rule of thumb is that it would take about 4 to 5 years to pay for 
itself. Historically I have seen an incremental drop in my rate ( typically 
1/4 point) roughly every 6 months. I will jump whenever there is at least a 
1/4 drop in the rate. And if rates start to rise, well, I've saved a bundle 
over the last three years and I don't want to be greedy. I'll simply wait it 
out hoping they drop again. 

Incidentally, here is a delightful vignette over my last five experiences. 
The closing lawyer - always the same guy - and I have gotten chummy. On the 
last one, last February, he treated me to lunch. I'm told that such behavior 
is unheard of in legal circles. Problem is that one the 6th one - now in the 
paper phase, with closing scheduled near the end of the month, I'll have to 
treat him to lunch.  

One last comment. Even if you paid for points and closing costs on your last 
one, there is absolutely no reason not to take a NPNC mortgage. It wont cost 
you a penny, (accept appraisal and FEDEX charges), and you start paying at a 
lower rate as soon as you close.

If you aren't sure how to proceed, there is a web page with offerings from 
various brokers. Else get a list from their ads in the local Sunday Real 
Estate section. Call and ask for 'best rate, NPNC - 30 year fixed, so much 
principle, so much loan to value, etc. and write down what they say. If you 
are near Boston I'd be happy to refer my broker to you.

BTW - the upcoming (6th) refi will say me $50/month on my mortgage payment. 
And if Asia collapses (God forbid) and rates drop more, I'll 'jump' again.

Good luck.

Howard I. Cohen <hic@world.std.com>  



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