is this true? So why if we owe on our existing loan $68,000 and we refinance for $76,000 do we have to pay so much money AND lose $4600 of our equity? I am so confused.
2007-02-07 14:15:48 · 4 answers · asked by bufalo1501 2 in Business & Finance ➔ Renting & Real Estate
I agree that is a somewhat confusing question.
First question I have for you is why are you refinancing?
Are you getting any cash back at the closing. One way to leverage the equity is to take out a loan for more than you owe and receive the extra amount as cash to use for home improvements or whatever.. they would general refer to that as a cash-out refi.. So if you are getting cash back that could be what they are talking about..
By pre-paying interest are you refering to points? in which you are paying interest upfront which lowers your interest rate?
Or just the usual days of interest you are required to pay during the time frame for which you don't make an actual payment. For instance I closed on a loan on Jan 30th and my first payment isnt really due until April. So I dont make a payment in Feb or March. However they require me to pay the interest from February to March upfront. So at my closing I paid that interest.
What are the closing costs?
Do you have a copy of the "good faith estimate" which should itemize all of the costs and summarize the transaction at closing?
If you can post those details it would help answer the question i think.
good luck
2007-02-07 15:08:22 · answer #1 · answered by MrFava 2 · 0⤊ 0⤋
If you owe $68k and the new refinance loan amount is $76k, then (assuming you're not getting any cash back) your closing costs and prepaid escrows are $8k (76-68=8). Sounds high. Part of it might be your 2006 taxes. Even if you escrow, if the 2006 tax payment hasn't been recorded yet you will have to pay them at closing. You'll be refunded by the county if by doing so you've overpaid. Just a quirk because of the time of year that you're refinancing.
Otherwise, I don't undersand what they are trying to tell you about leveraging equity. If you mean they are taking some of that $8k and investing it for you...in that case it is a scam and illegal. Not only run from them, but report them to your state savings & loan department.
This is a confusing question and I'd need more information to give you a complete answer. Please contact me if I you'd like more assistance.
Good luck.
Rick
http://www.fairwaymortgagelending.com
2007-02-07 22:31:00 · answer #2 · answered by Anonymous · 0⤊ 0⤋
Without more details it's impossible to answer your question, but from what you are saying it sounds like an overzealous salesman is telling you stuff that's not completely true. PLEASE GO TO A CREDIT UNION they are non-profit an have no motive to scam you. They will pretty much always give you the best loan for the best rate for the best terms, or advise you that they can't beat your existing loan.
2007-02-07 22:19:57 · answer #3 · answered by Anonymous · 0⤊ 0⤋
If you are confused - do not do it.
Use a finance company that will teach you what you need to know so that you understand exactly what you are doing and how much it will cost.
It can be confusing if you have not doneit before.
Good luck
2007-02-07 22:22:17 · answer #4 · answered by Bob 4 · 0⤊ 0⤋