Any mortgage experts here?

WallyWest

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Refinancing my house and something seems fishy, but I don't know enough about the math behind these things to say for sure. I'll try and condense the story as much as possible.

Initial value was estimated at $135,000. Loan was $100,000 to stay just under 75% LTV. There was like 1.5 points, in that range anyway, to get a 4.99% rate. That rate was locked in 30ish days ago. Headed to closing now, but still not getting a straight answer about the points.

Based on the $100k loan vs $135k value the points were going to cost $1061. Then the appraisal comes back at $145k. So I upped the loan to $108k, almost exactly the same LTV, still slightly under 75%. And the points went up to $1645. I questioned this, an 8% increase in loan amount results in a 58% increase in points cost? I was assured that nothing about the loan had changed, no added fees, no rate increase, nothing. So I asked why the points went up so much and at first the agent was kinda on my side. Then a few days later I get a boilerplate text from her saying, "my manager confirmed the points are correct. Our pricing is so uniqe to each borrower that the change in loan amount did affect the points cost on your loan." I pointed out that this didn't make sense, something had to have changed in the math behind it for that to happen. I was basically told at that point take it or leave it.

Then when looking over the initial disclosures on their website I see on the main page that my loan amount shows $108k, but the property value still says $135k. I mention this and asked if this could possibly be why the points jumped up, since based on those numbers the LTV would have increased. I was given a very short "the points are correct" answer. Not what I asked, and obviously this line of questioning is being met with a stone wall now.

So, does this sound at all normal? Or am I right that something major changed at least in terms of how the points are calculated? Honestly given the way they've handled this if interest rates were still the same as when I started the process I'd probably just walk away and shop around, but I think they know if I do that I'll be more in the 5.5% range and up. So basically I have to eat that extra $500 to get the loan. I don't care for their refusal to show the math behind what's going on, and the attitude of "screw you, take it or leave it". But I'm thinking that rates are only going to continue to go up for the foreseeable future, so yeah, may not have a choice.
 
$100,000 * .015 = $1,500
$1,061 / $100,000 = .01061

The $ amount that they represented as 1.5 points earlier was really just under 1.1 points.

$108,000 * .015 = $1,620
$1,645 / $108,000 = .01523

The $1,645 that they're conveying now truly is 1.5 points or percent of the loan value of $108k.

Either they did their math wrong up front or there's been a misunderstanding and the cost to lock in the rate at that time was actually lower (less points) than it is now.
 
I've never been a fan of buying points. It can pencil out in some cases but many times it doesn't.

If you could afford it at 100k just borrow that amount. Don't put more on the credit card just because they raised your limit.
 
I've never been a fan of buying points. It can pencil out in some cases but many times it doesn't.
You really need to run the numbers on when it breaks even. If the loan exceeds that time period then it makes sense. However many people move for various reasons before they ever reach the payoff time only to feel better about the lower rate.
 
Damn, my house in PA cost me $330 to build in 2019
Down here in PHX my home sold originally for $355K in 2004.... then in 2007 for $675K.... then out of bankruptcy in 2009 for $275K and I bought it for $355K in 2011. In 2020 I had an assessment and it came back at $505K....and the realtors that knock on my door every night tell me it's worth $850K now.... 34% year over year increases here in the valley. There is no end to the CA cash offers around here. You can sell and take offers for 5 days and get 100K over asking price in cash.... but you'll never be able to buy again unless you want to joint those bidding wars with cash.
 
Down here in PHX my home sold originally for $355K in 2004.... then in 2007 for $675K.... then out of bankruptcy in 2009 for $275K and I bought it for $355K in 2011. In 2020 I had an assessment and it came back at $505K....and the realtors that knock on my door every night tell me it's worth $850K now.... 34% year over year increases here in the valley. There is no end to the CA cash offers around here. You can sell and take offers for 5 days and get 100K over asking price in cash.... but you'll never be able to buy again unless you want to joint those bidding wars with cash.
AZ market is on fire. Ive been eyeing the US markets in general and that state is up there with some of the others, but really high up in $$.
 
Down here in PHX my home sold originally for $355K in 2004.... then in 2007 for $675K.... then out of bankruptcy in 2009 for $275K and I bought it for $355K in 2011. In 2020 I had an assessment and it came back at $505K....and the realtors that knock on my door every night tell me it's worth $850K now.... 34% year over year increases here in the valley. There is no end to the CA cash offers around here. You can sell and take offers for 5 days and get 100K over asking price in cash.... but you'll never be able to buy again unless you want to joint those bidding wars with cash.
Purchased 11acres in Ft Myers, Fl in '84 for $225K. Sold it in 2005 for 6.5m at the height of the over priced, speculative, real estate boom. It was sold two years ago for $350K. You win some and you lose some, I won.😁
 
Purchased 11acres in Ft Myers, Fl in '84 for $225K. Sold it in 2005 for 6.5m at the height of the over priced, speculative, real estate boom. It was sold two years ago for $350K. You win some and you lose some, I won.😁

that's incredible.

I've come out ok on most of my transactions but nothing like that. And this time around it's pretty ugly. Sold high but buying higher...
 
that's incredible.

I've come out ok on most of my transactions but nothing like that. And this time around it's pretty ugly. Sold high but buying higher...
There were just a lot of seemingly very greedy people back then. After all the flipping that was going on, somebody had to get burned and a bunch did. They defaulted on their loans and left neighborhoods looking like waste lands, some are still trying to recover today.
 
There were just a lot of seemingly very greedy people back then. After all the flipping that was going on, somebody had to get burned and a bunch did. They defaulted on their loans and left neighborhoods looking like waste lands, some are still trying to recover today.

yeah. And I have a hard time feeling bad for somebody that could afford to pay $6.5M for a place anyway.

We paid $85k for our 4 acres in Oklahoma that we're building on, but thanks to materials inflation and interest rates, if rates don't drop back down in the next 7 months it's going to end up costing about $1k/month more than I'd planned for. It's pretty much our dream property (within this area anyway) so I'm just gonna end up eating it and hope I can refi some day. Just trying to look at the bright side that we're getting to build our dream house thanks to the last house we sold appreciating 40% in a year, and trying not to focus on the fact that my free cashflow situation is gonna be set back by at least 5 years.
 
yeah. And I have a hard time feeling bad for somebody that could afford to pay $6.5M for a place anyway.

We paid $85k for our 4 acres in Oklahoma that we're building on, but thanks to materials inflation and interest rates, if rates don't drop back down in the next 7 months it's going to end up costing about $1k/month more than I'd planned for. It's pretty much our dream property (within this area anyway) so I'm just gonna end up eating it and hope I can refi some day. Just trying to look at the bright side that we're getting to build our dream house thanks to the last house we sold appreciating 40% in a year, and trying not to focus on the fact that my free cashflow situation is gonna be set back by at lea

yeah. And I have a hard time feeling bad for somebody that could afford to pay $6.5M for a place anyway.

We paid $85k for our 4 acres in Oklahoma that we're building on, but thanks to materials inflation and interest rates, if rates don't drop back down in the next 7 months it's going to end up costing about $1k/month more than I'd planned for. It's pretty much our dream property (within this area anyway) so I'm just gonna end up eating it and hope I can refi some day. Just trying to look at the bright side that we're getting to build our dream house thanks to the last house we sold appreciating 40% in a year, and trying not to focus on the fact that my free cashflow situation is gonna be set back by at least 5 years.
Build your dream and enjoy it, life is short. Things will work out for you.
 
I do not envy anyone trying to build right now. I’m helping a buddy build in Id this summer. The cost of materials for his house has gone up over $100k since he laid down the foundation last fall and that’s if he can get anything in a timely manner. Worst part is if the supply's are not there on time his subs will just move on to the next job and he will have to get in the back of the line.
I’m glad we still have prop 13 here in Ca. With the ridiculous prices here I could not afford the taxes on my properties at their current valuation. I just turned down an unsolicited $2 million offer on my 1.5 acre shop property that I bought for $85k back in the 90s. I told the guy if I sold I’d have no place to go play. On the plus side the rents I get now are nice.
 
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