I’ve refied my properties a number of times over the last two decades and slowly the important aspects of a refi (to me) have evolved:
(A) – How will I benefit financially?
(B) – How much time will it cost me to refi?
(C) – How much do I trust the MB (mortgage broker)?
(A) can be answered with four questions:
A.1 What are the terms of the loan? (ie 30yr fixed, no prepay penalty)
A.2 How much will I save each month?
A.3 How much will I have to put into escrow?
A.4 How much will I get back from my old lender after escrow closes? (impound acct)
Goal is to get A.2 as high as possible, and (A.3 minus A.4) to be as close to zero as possible.
If the MB can’t answer the above questions succinctly, clearly, and precisely then walk away. (*)
All the details of the individual charges from the lender, the MB, the escrow company etc. are just noise that I ignore. The bottom line is how much is this gonna cost me and how much am I gonna save.
(B) should be as little as possible. The MB should be familiar with the entire process and the companies he works with. This will minimize rework and inefficiencies.
(C) really comes down to the feeling I get when talking with the MB and the references I’ve received from people I trust.
So how does Sheldon stack up?
(A) last time around, he saved me $250/mo with ZERO net cost to me…*and* my loan balance went down by about $1500 the moment escrow closed!
(B) I figure I invested a total of 3 hours to get A above…not too shabby. That includes my time to fill out app, round up docs to send him, talk with Sheldon on the phone, be present for the appraisal, and sign papers. 3 hours.
(C) I’ve always walked away with at least as good a deal as he promised after the dust settled, and sometimes a good deal more than he promised. That builds trust. In addition, I’ve found that he protects my info and gives me good, solid, honest info – even when it could discourage me from doing a refi.
(*) MB may not be able to answer A.4, but it is easy enough for you to calculate through statements from your old lender.
