Our Bank called and gave us an option to "refi":

They said they'd drop our VA loan from 3.5% to 3%
Keep the same term (no reset back to 30yrs)
No Bank Fees
But there is a $1,700 "VA Fee".

I told him I was skeptical. His response was:
I get it but we'd rather lose the $80/month than lose you to a refi with someone else.

Any finance folks out there that can tell me if this is worth it?

According to my math, this would save us $22k over the remaining life of the loan ( 22+ years left on our note).

But it would take us 22 months to "payoff the VA Fee".

Do I jump on this?

IMO, something doesn't smell right. I've yet to see a Bank do anyone a favor.

Yes.

I've been recommending that people refi with the low rates.

You may even consider waiting a day or two and ask what the rates are again--the rates dropped again today.

Also, don't forget to shop around for rates if you no longer need the loan to come from the VA.

Refinance for 15 and keep your payment the same. The fed dropped the prime so home mortgages will drop also. I would shop around before just saying yes to the first offer because it’s easy.

Have you checked on a conventional refinance?
Sounds like your bank knows you would benefit and they are wanting you to go with them before you shop elsewhere.
$1700 fee sounds ridiculous.

We are 6 years into a 30 at 3.875. Going to call tomorrow as my mortgage holder is offering 15 at 3.0 with $250 closing cost.

Sounds like a reasonable deal to me. A new conventional loan needs appraisal, origination, title insurance, filing fees, etc.

This is probably a simple modification requiring a modification to the original deed of trust. Go for it.

Generally (not always) VA loans are fee free. You shouldn't have to pay a loan origination fee.


Shop around.

The fee they may be referring to is a VA Funding Fee.

https://www.va.gov/housing-ass...e-and-closing-costs/

Will I have to pay the VA funding fee?

If you’re using a VA home loan to buy, build, improve, or repair a home or to refinance a mortgage, you’ll need to pay the VA funding fee unless you meet certain requirements.

You won’t have to pay a VA funding fee if any of the below descriptions is true for you. You’re:

Receiving VA compensation for a service-connected disability, or
Eligible to receive VA compensation for a service-connected disability, but you’re receiving retirement or active-duty pay instead, or
The surviving spouse of a Veteran who died in service or from a service-connected disability

You may be eligible for a refund of the VA funding fee if you're later awarded VA compensation for a service-connected disability. The effective date of your VA compensation must be retroactive to before the date of your loan closing.

The fee can be reduced with a down payment.


Also ask if you have to pay closing costs again with the new loan.

WCB is correct, it is the VA funding fee.

I looked around and WellsFargo has a better rate 2.75% but the Apr is a .25point higher so you're really just buying it.

Plus I agree with Mcrimm that a new loan requires more fees and appraisals, plus resets the amortization back to 30yrs.

I can't find any conventional loans that are better than 3% where the APR is reasonable.

Another strategy you might look into is to simply pay extra on the mortgage every month. Find an amortization calculator online and play with the numbers.

You would be surprised what a little extra money each month does for paying off the loan faster. And you end up paying less interest over the long term. Any extra goes directly to pay down the principle.


Here is a quick one I found. Others might be better:

https://www.mortgagecalculator...ment.php#yourresults

If you don't have any closing costs other than the fee you mentioned that sounds pretty good. Even better if it's not a new loan and you don't have to start at year 0 of a 30 year note. I don't think you will find anything better. Maybe you could ask for 2.75% and pay .25 point?

Typically around here you would have
$1000 mortgage fee
$500 appraisal
$500 survey
title insurance, etc

All adding up to a few thousand dollars of closing costs.

Keeping you by offering favorable terms on a refi is a legit strategy. I have def heard of bankers preemptively offering low rate refis like this to keep good customers.

But FYI, a friend of mine was just quoted 2.84% on a 15 year refi so you can probably do better.

The $1700 fee, if that is all you pay, is pretty low. Remember also that you'll skip a mortgage payment when you refi which might offset that one time payment.

Find out if this is a refinance or a modification. If a modification, you won’t get a month off.

quote:

Originally posted by GWbiker:
.... I've yet to see a Bank do anyone a favor.

Really? My bank does me favors all the time. Great people at BBT/Truist.

Now, Wells Fargo is another whole story.

Don't hesitate to look into a new 30 year refinance either. Take it back out to 30 years with a lower payment and keep making the same payment you are now. The difference will go straight to principle and you will end up paying it off long before the 30 year term.

I just did the VA refi through my lender, shaved almost a point off and skipped two payments.

Yes there is a the VA funding fees and some other but way cheaper than what I was quoted from another lender. I think it was the "origination fee"? That was a few grand with another lender. I will look at my paperwork tonight and clarify

Good comments so far.
If you’re planning on staying in your home for several years you will come out ahead.
I would look into what they can offer you with a 15 year loan. The interest rate should be less and you will pay off the loan much sooner and ultimately save several thousand dollars...

Good advice here but it is generally wise to take out a 30 year mortgage and treat it like a 15. Especially with as low as interest rates are on 30 year fixed mortgages now. If there is ever a time when you're unemployed or can't make the payments on the larger amount you can pay the lower 30 year amount.

If you take out a 15 you need to be certain you'll always be able to make that level of payment.

I recently refinanced my VA loan and the lender covered the va funding fee. It cost almost nothing to do the refi. I'm with Quicken Loans.

How likely are you to stay there for 22 months or more? After that it's just a math question. Make sure you factor in any other closing costs. Get an official disclosure form (GFE).

quote:

Originally posted by 1s1k:
Refinance for 15 and keep your payment the same. The fed dropped the prime so home mortgages will drop also. I would shop around before just saying yes to the first offer because it’s easy.

Right. Bite the bullet shop around and do 15. You'll thank yourself later.