Re: NPNC Refinance

From: hic@world.std.com (Howard I Cohen)
Subject: Re: NPNC Refinance
Date: Mon, 23 Nov 1998 16:51:46 -0500

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> From: rlee@muse.sfusd.k12.ca.us <Ron Lee>
> Subject: NPNC Refinance

 
> Mr. Cohen,
> 
> Congratulations on your latest deal in refinancing! I am also 
very
> interested in refinancing with NPNC deal.  Can you please email 
> regarding the lenders and the broker you've used so I may be 
able
> contact them?  That's if you don't mind sending me the info.  I 
> regularly subscriber of the personal finance bulletin in which 
you
> posted your refinance discussion.  From what I read, you seem to
> you are doing; how else would you be getting a NPNC deal which 
you
> less than $100 out of pocket?  I am currently paying 7.125% for 
> fixed, and the prinicipal is about 170K.  The property is in SF,
> 

Dear Ron:

Thank you for the above. I would be perfectly comfortable giving 
you the name of my broker, Joe Lucido, Bay Mortgage Services, Inc. 
located in Plymouth, MA. 1-800-742-3001. But I would be very 
surprised if he would or could do anything in CA. 

I would encourage you to inquire locally. Look in the yellow pages 
 or the local newqspaper for mortgage brokers, make a list, and 
start calling. Also check the web. www.ctt.com/mortrate.htm or 
mortgage-x.com or simply search on 'Mortgages.'

I would guess that 7 1/8 is not considered a high rate. So whether 
there is much to be gotten by refinancing is the question to 
answer. My understanding is that I lucked out. Got in on a short 
dip in rates and since then they have inched up a bit. Note that 
you are only 3/8 of a point higher.

For what it's worth, here is a simple rule of thumb that might be 
useful. With a principal of $170,000. every 1/8 of a point you can 
shave off your mortgage rate is worth approx. $18. ($17.70) each 
month. (At least in the early years.)  You can also use this 
number when doing the points vs no points trade off. If you save 
1/2% by paying 2 pts. + closing costs - approx. $4500 to $5000, 
you are saving $72./mon. Thus it would take you about 65 to 70 
months to earn it back. That's close to 6 years.

But note that you are in pretty good shape right now, at least by 
Boston standards. But by all means, try. After a few calls you'll 
know what the street is offering. Even if you get 7% that's a $18. 
saving, at no cost to you. 

Have taken the liberty of CC'ing Ms. Sherri Powell who also raised 
questions about NPNC, as well as Ron Lee whose query I am 
answering.

Sincerely, 
Howard I. Cohen 


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