In the previous post, I had explained why I decided to do with No Cost Mortgage. Here, I will explain my experience in searching for No Cost Mortgage rates in this article.
No Cost Rate Lock
In my community almost 5 of my neighbors are going with No cost Mortgage. So, we formed a network to find the best mortgage rates. I started following Mortgage Professor Website for sometime now. I spent time searching for the site which will update the Mortgage rates instantly when banks send the rate sheets. There are so many sites that give the Mortgage rates, but one I found that reflects rates instantly was National Mortgage Alliance. NMA is recommended by Mortgage Professor. I got my HUD statement just before I started typing this article.
My experience with NMA so far is wonderful. But, having said that, they don’t have the lowest rate ( by 0.125%) that you can get. All my neighbours were dealing with 4 different brokers. I had locked 5.50%, 30 year fixed, no closing cost, no lender fee loan. My loan got approved in 1 week and NMA wanted me to close the loan ASAP. But, I wanted to delay the closing. It was due to 2 reasons
- I had just paid December months mortgage. If I were to close on first week of Dec, then I will have to pay Interest rates for some 20 days. Its almost like making 2 mortgage payments in one month.
- Since, rates were volatile, I wanted to see if I can still get lower rates.
No Cost Mortgage for 5.375%
Couple of days after my loan got approved, one other broker offered 5.375 No cost loan. One of my neighbor locked that rate. I had introduced, my neighbor to NMA. So, I called NMA and asked them to match the 5.375% and I did say my neighbor, who was talking to you last night locked 5.375%. Within few minutes, NMA called me and asked me to get a Good Faith Estimate and they matched 5.375% with escrow.
No Cost Mortgage for 5.125%
In another 2 days, same broker gave lowered to 5.125% and I tried to get that offer from NMA. Since, I had to pay $300 deposit to lock the rates, I was locked with them. It would take about 9 months to break even $300, if I had opted out to get 5.125%. But, I was not able to get GFE for 5.125%
No Cost Mortgage Loan for 5.25%
I was also talking to couple of other brokers. One of them was kind enough to send an GFE for 5.25%, No escrow, No cost 30 year fixed. I asked NMA to match that, and finally, they agreed. So, I’m closing tomorrow 5.25%, 216, 000, No closing, No lender fees, 30 year fixed.
Lowest Mortgage Rate
I could have ignored $300 and went with 5,125% (with escrow account) but I didn’t feel that was right to do, after NMA loan officer spent time on my loan papers. But, the broker who offered low rate was from www.cimginc.com ( Chris Murray). If you talk to him, you can use my name as reference ( No, I’m not an affiliate to them). I’m currently working with Chris for 4.875% No cost Refinance ( Update – May 13, 2009)
Why No Cost option is better for me?
I got 4.875% with $1700 in closing cost. The break even point compared to 5.25% will be about 34 months. Which didn’t sound right. 2 months from now, I might get 4.875% for No Cost loan and I can refinance again. I’m not locked in for 34 months to break even. With current market scenario, anything could happen.
My 2 cents
- Find the lender/borker who you feel comfortable with.
- Do NOT give your SSN, before doing some shopping.
- Talk to 3-4 brokers or current lender, then lock the rate wih the lowest offer.
- Try to lock the rates witout any deposit amount
- Ask for rate float. If rates happen to drop before closing, make sure they will lower it.
- Keep shoping for rates till the you close the loan
- If I find rate lower than 5.125% I will post it here.
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thanks for the info.
[...] referred to me but the broker is not licensed in my state. I also remember that Raghu wrote about his refinance experience last December. I actually commented on a few of his posts back then because he had listed my blog [...]