When to Refinance

There is no “rate for everyone.” Each rate offered to each borrower is based on many factors, including but not limited to credit scores, down payment/equity percentage, property type, transaction type, loan term and loan program. In addition, each lender offers different rates and has their own “sweet spots” for transactions within certain categories (purchase versus refinance, primary residence versus investment property, etc.). Once pre-qualified, it is a mortgage broker’s primary function to seek out which type of transaction will work best with which lender in order to get you the best rate out there.

*of course, we will always give our clients a rate quote and options based on the information we have.

New York State, and particularly New York City, impose several taxes on real estate and mortgage transactions. For purchasers who obtain mortgage financing, these taxes include mortgage tax. In certain cases, mansion tax or other transfer taxes may be incurred by a purchaser, whether or not he or she uses a mortgage loan to close. All of these tax types are based on either a percentage of the mortgage amount or a percentage of the purchase price. Typically, the more expensive the purchase price and the higher the loan amount, the more a purchaser can expect to pay in closing costs, primarily due to the increase in such taxes due at closing. There are, however, strategic ways to keep some costs down and minimize or legitimately avoid certain taxes, which is why it is imperative to have someone with the proper knowledge and experience handle your transaction.

Some will tell you yes. Some will tell you no. A professional should always tell you “maybe” or, “that depends.” As with most absolute statements, paying points is never always a good idea nor always a bad idea. Choosing to do so or not depends on the full situation, which involves several factors. The mathematical answer is determined by assessing how much the cost is, how much you save monthly, how long it will take you to recoup that cost and how long you intend to own the property. The full answer involves “external” things such as (both your current and expected) personal circumstances, financial situation and other potential investment opportunities, just to name a few. It is always necessary to discuss all of these, plus many more items with your broker in order to assess the best thing for YOU.

It will be up to YOU and your broker to decide TOGETHER. The simple answer will be determined by calculating the amount of closing costs incurred (whether financed as part of your new loan or if you decide to pay them “out of pocket”) and how much you save each month. This will tell you how long it will take you to “recoup” that cost and to start actually putting money into your pocket. Simultaneously, a consideration must be given as to how long you intend to own the property as you evaluate the foregoing. All of this must be considered in conjunction with other factors, such as the length of term left on your current loan, potential prepayment plan, future and external goals and so on. So, again, it is imperative to converse with a true expert and not rely on absolute statements by others.

A mortgage broker gives you an advantage in two major categories – qualification and interest rate. Each of these are described in further detail below but we encourage you to click on this link, which contains a full description as to the various benefits of utilizing a mortgage broker.

Qualification —proper qualification and getting you approved for every dollar you’re looking for takes extensive knowledge, experience, attention to detail and access to a multitude of lenders. Wholesale lenders, which are banks accessed through the mortgage broker channel, generally have much more leniency than direct lenders, offer different specialty programs, and, most importantly, have different underwriting rules. Having this access may help your unique situation and turn your denial with one lender into an approval with another. When you apply with a direct lender, you are simply subject to that bank’s rules and are “putting all your eggs into one basket” in hopes that the underwriter will accept every facet of your situation and approve your loan. In comparison, a broker pre-screens your file, identifies current or potential issues and guides you in preparing for all requirements so that your loan is ready for approval prior to submitting an application to a lender. This facilitates a pristine submission of your loan application and helps avoid issues throughout the entire transaction, ensuring a successful and timely closing. Also, in addition to being aware of the standard rules of all lenders, a mortgage broker will be able to identify more nuanced matters or potential problems and address them with the lender’s underwriting team in order to ensure any issues can be resolved with that specific lender. This method will lead to choosing the right lender each and every time and put you in the best position possible to close your deal.

Rate — a mortgage broker is almost always able to offer more competitive rates than a direct lender.  This is even true when a mortgage broker places your loan with that very same lender.   And, it’s even still true when the lender, not you, pays the mortgage broker.  This is simply a function of “wholesale lending” as banks can afford to offer mortgage brokers better rates and terms for their customers because of the volume of loans brokers generate for the banks with no overhead costs.  In addition, a broker will shop your specific deal to all of its lenders and find the “best of the best” based on your scenario/criteria.   A broker will also monitor the rate market each and every day in order to do their best to lock your rate in at the most favorable time.