YES, they definitely exist and are available from almost any lender.

Every rate comes with a cost (or credit) associated with that rate. The cost/credit changes daily depending on the bond market, and there are often intra-day changes.

There is no set formula for how the credit increases for each higher 1/8th of a point, but it is not uncommon to receive a 1pt credit (of the loan amount) for taking a rate 1/8th of a pt higher.

IN THIS EXAMPLE: On a $400,000 loan you would receive a credit of $4000.00 (1.00%) and have a payment that is $29 higher each month.($348 yr)
If you keep the loan long enough, it will cost you
much more than $4000.

After all fees are paid for, the excess funds can (usually) ONLY be used to cover certain things such as interest, insurance, property taxes and reserves required for an impound account. This can be a problem for those with low property taxes who do not want an impound account.

Some lenders *might* allow any excess to reduce principal balance but it is rare.

[quote=Former SD resident] we don’t really want to pay anything out of pocket and only plan to stay in our current home for a few more years.[/quote]

1. What is your current rate and balance ?
2. If you are certain that you will only stay for a few more years,(Less than 6) then also check on a 5yr ARM. The rate will be lower.

Paying out of pocket is not the worst thing if it saves you enough in interest. You are going to pay one way or the other, but if you have the equity, you can add the cost to your loan balance without any out of pocket expense.

You are not likely to get much credit on a 5yr ARM, but will get a lower rate.
The credit is much larger on a 30yr fixed, but the rate will be higher.

Depending on your current rate/balance/situation, you may be able to save a substantial amount with a 5yr ARM, even with a cost.

You will pay a premium to fix the rate for 30yrs, which you may not need. Another option is a 7yr ARM if you want another 2yrs of security.

[quote=Former SD resident]1. 5.125% and 265K (with 20% equity)[/quote]

In most cases servicers do not own the loan and could not care less about losing a loan.

The reality is that most people who stick with their current lender get screwed by staying with them. Most take advantage of the situation. BAC rates have been terrible lately.

Existing loans get paid off and new loans require qualifying to get the best rates. Can’t just modify an existing loan for the best rate.

With your balance, you will save around $3000 in interest JUST THE FIRST YEAR, and it can be done at zero cost, and you may end up with additional credit.
(you are wasting $8 a day in interest at your current rate)

[quote=Former SD resident]Again, thank you HLS! We didn’t originally pick BAC, we went through a broker and that’s who we got. Right now I’m getting quotes from Mortgage Capital in LA and Quicken Loans. Do you know of a great broker/bank that will do loans in NC?[/quote]
FSDr
You do know that HLS is a broker. Home Loan Sheldon. I’ve used him, and referred a number of friends to him.

UCG…
Thank you.
Former is in North Carolina.

Unfortunately I don’t know who they should use.

For anybody, It is very difficult to shop for the lowest pricing. Pricing changes constantly based on the bond market.
There was an intra-day pricing change for the worse today which changes credit/cost that someone would have been quoted an hour ago.

[quote=UCGal]I was thinking north county.
Sorry about that. :)[/quote]

Never a need to apologize for having a sharp mind that is capable of seeing things that others may not see!
(Doesn’t make you weird either) 😉