The holder of my mortgage offered to refinance my 6.625% 30yr fixed
loan with a 6% 30yr fixed loan, reducing my monthly payment by $96.

The offer states:
No application fees
No appraisal required
No income verification needed
No out-of-pocket fees
No waiting

Why would the bank want to do this?

S2

Possibly to resell the new mortgage after it's in place. On the face of
it, $96 doesn't sound like a lot of savings, but how much interest per
year will you save?

If you want to refinance, shop around first to see what other lenders
are offering.

"Stuart" wrote...
The holder of my mortgage offered to refinance my 6.625% 30yr fixed
loan with a 6% 30yr fixed loan, reducing my monthly payment by $96.

Why would the bank want to do this?

They are making $$ up front from "hidden" fees already folded into the loan
rate.

They are making several more years' interest from you. You already paid X years
of interest, and now you will "reset the clock" to pay for 30 more years.

"John Weiss" writes:

"Stuart" wrote...
The holder of my mortgage offered to refinance my 6.625% 30yr fixed
loan with a 6% 30yr fixed loan, reducing my monthly payment by $96.

Why would the bank want to do this?

They are making $$ up front from "hidden" fees already folded into the loan
rate.

They are possibly also scared that OP will refinance with somebody
else at 5.5%. According to RE section of todays LA times, current
*average* rate for conforming 30-year fixed loan is 5.625%, so if
his credit is good, he should be able to find a 5.5% mortgage.

You already paid X years
of interest, and now you will "reset the clock" to pay for 30 more years.

This is a popular myth, but is not necessarily true.

The OP doesn't have to "reset the clock". If he continues to pay his
current total monthly payment, he'll simply pay off his loan sooner,
and *save* interest.

The amount of interest you have *already* paid should not be
considered *at all* when deciding whether to refinance again.

More details he http://www.mtgprofessor.com/refinancing.htm

Finally, OP should shop his current mortgage owner last, not first:
http://www.mtgprofessor.com/A%20-%20Refinance/why_won't_my_refinance_go_through.htm

Cheers,
--
In order to understand recursion you must first understand recursion.
Remove /-nsp/ for email.

6% is a rip unless your credit is bad or the loan is under 75k. I just
bought new and got 5.5%, no points, and a total of just $850 in fees,
from AAXA (who I am not employed by).

"Paul Pluzhnikov" wrote...

You already paid X years
of interest, and now you will "reset the clock" to pay for 30 more years.

This is a popular myth, but is not necessarily true.

The OP doesn't have to "reset the clock". If he continues to pay his
current total monthly payment, he'll simply pay off his loan sooner,
and *save* interest.

That's not what the OP told us. He said he would save $96/month, which implies
he will not continue to pay the same amount. Also, it is not always "simple" to
add on to a monthly mortgage payment. I've seen contracts that make it
exceedingly difficult to do so.


The amount of interest you have *already* paid should not be
considered *at all* when deciding whether to refinance again.

More details he http://www.mtgprofessor.com/refinancing.htm

Though it may not be a "direct" consideration, the payback equation addresses it
indirectly.

On Sun, 08 May 2005 04:14:00 -0400, someone wrote:

Why would the bank want to do this?

So you don't refi for 5.5% with someone else?


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