Refinancing Question

[Instrument 41]

We are in the "beginning" stages or refinancing. One question: I am talking to 2 companies about refinancing. Am I causing my self some problems, and not even knowing it, by talking to 2 different lenders?

[widgeon13]

I see no problem in "shopping around" to get the best deal. Just good business practice. The lenders have no way of knowing.

[motion]

They'll see each other's credit inquiry in your credit report, so I would think they would know automatically that you're shopping. Besides a very small ding in your credit score, can't be a bad thing.

[madmmac]

Some of the reasons I only use a mortgage broker.

[Zeke]

Credit reports obtained for the same item such as a car or a mortgage do not trigger a score change. Go shopping for both and it will.

+1 on the broker. Some people think they are more expensive than a direct lender (who is probably not a direct lender), but I have not found that to be the case.

[motion]

Milt, you're right. I think the rule is that all inquiries within a 30 day period for the same purpose only count as one inquiry.

[Por_sha911]

Originally Posted by Zeke

+1 on the broker. Some people think they are more expensive than a direct lender (who is probably not a direct lender), but I have not found that to be the case.

Some of them make a fortune of fees. Get a written menu of what they charge before you start signing something.

[Aurel]

Let us know how low a rate you can get. I was recently offered 3.75% from bank of America on 30 yr fixed, two points.

[RWebb]

4.125% refi thru Wells Fargo (existing holder); no pts. & no costs

[VincentVega]

I like the idea of keeping a lower payment for a longer term. When I have extra cash I put it to the principal. If/when I dont, I have the flexibility to just pay the minimum.

The biggest issue I have is the opportunity cost of paying it off. Not that I've made much $$ lately, but I keep putting some extra in the market. Maybe I'm too optimistic but I have to think the market is going to beat my mortgage rate. Also, for me at least, having no mortgage but little cash doesnt make me feel comfortable. I struggle with that balance every month.

[Porsche-O-Phile]

I like the idea of keeping a lower payment for a longer term. When I have extra cash I put it to the principal. If/when I dont, I have the flexibility to just pay the minimum.

+1

This is what I do also. I've never allowed a loan to run full term - always paying off early (some a lot early, some only a little).

This logic - not committing myself to a higher monthly nut than I absolutely need to - saved my ass when I found myself out of work for a year in 2009.

Committing to lower monthly payments (and ensuring one has the discipline to make higher payments when able) greatly extends one's leverage and flexibility. But the strategy is not for everyone - it can get some people into trouble if they succumb to temptation to allow the "wiggle room" to become filled by more borrowing and other debt obligations (don't let it be like gas expanding to fill a volume...)

Flexibility is ALWAYS a good thing, because sooner or later you'll need it - I don't care who you are.