[quote=arv]My latest is around 6800 cash back on the closing which happened today.
[/quote]
Arv,
6800 “cash back” sounds high. Is this net of all lender fees (“origination” fees, etc), and other fixed closing costs (appraisal, title, other fees, etc)? If so, how did you achieve this?
My understanding is you cannot receive actual cash back from the closing (as that would make it a “cash out” refinance), so the net credit you receive has to be less than the other items the borrower must fund at closing (i.e. the initial deposit for you escrow account, and the daily interest charge for the period between closing date and the first month’s new mortgage payment)
As such, it’s my understanding that, for me, the greatest net credit I can get from each refinance is ~$4k.
[quote=EconProf]Teaboy, looks like you (and others) have made good money by refinancing and “capturing” the gain resulting from the falling interest rate environment.[/quote]
EconProf,
In a falling interest rate environment, as in my previous 3 refinances, I have received both a net credit plus a lower interest rate. This is a win-win.
In a rising interest rate environment, one would receive a net credit plus a higher interest rate. This is a win-lose.
However, what I am proposing is that even in a (not too steep) rising interest rate environment, the former “win” (net credit) would outweigh the latter “lose” (higher interest rate).
No-one can predict rates. From a practical point of view, also, I realize that it is most likely that I will not remain in my current house for 15-years, and so cannot reasonably expect to be able to take full advantage of a 15 or 30-year mortgage.
No-one can predict rates, but if we assume that they follow a sine wave over time, assume inflation at ~3%, etc, would be the equation to model the expected profit/loss from my hypothesis?
Is there a math wiz in the house?
