Ok, WF has a 3 step refi program where you don't pay any closing costs or points but the rates are a little higher(5.25).  My other option would be a traditional refi 4.65 with 1 point.  This is for a 200K loan, 30 year refi.  At first I thought the 4.65 was the way to go but with points and closing costs it would add around 5500-6000 to my principal.  According to my calculations it would take at least 10 years to make up the 5500 difference.  Plus for those 10 years I would pay more in interest so i could deduct more off my taxes.  Am I missing something here or is the 3 step the way to go?

It would depend on how long you plan on being in the property.  If you plan on being there at least 15 years or so, the lower rate is a better option.  If you are unsure or think you will be there 15 years or less, then I would choose the no closing cost option.

Why did I say 15 years versus 10?  A lot can change in 10 years.  If you plan on being there for 15, it is far more likely that you will be there for the 10-11 years until you break even.  The longer time frame means more can happen to change your current plans.

Kent is right on about this. You may want to double check your calculations however, I'm looking at a breakeven around year 6, not year 6. Don't get me wrong, 6 years is a long time, but it's certainly shorter than the 10 you are projecting.

AC

Frankly, you should be able to get the loan for 4.625 through Wells with O points.....

"how long you plan on being in the property "

I sometimes find this question very difficult to answer.Does any one really know how long  he or she plans to live in a particular home. Things change fast and circumstances change pretty soon in a world where jobs are not secured even with the top corporations. If all is going well than you start getting good opportunities elsewhere. So how do I decide ?

On the other hand when you are buying or refinancing home you are showing conviction that you are not going to sell this home for ever.

I think some people over analyze this question.  Your decisions have to be made on what your most likely courses of action are.  You can't cover every contingency so that you achieve the optimal outcome.  I normally break it down to the next 5-10 years.  If you plan on being in your home between 5 and 10 years, the monthly savings from taking a lower rate should pay for the higher closing costs.

Thanks Kent

This is a good answer. Breaking it down in smaller segments of 2-5 years is what you should look at while considering rates and point combination.

 Kent

One question : I am being asked for  fresh Title Insurance even though I am getting re-financed thru the same lender (  Countrywide ).

Can you please explain me why is it necessary for countrywide to go for a fresh Title Insurance when there has been no changes in Title.

I bought this home 4 years back and my previous title company ( Chicago title ) is also not ready to offer any discounts.

Is there a way to avoid this new title insurance fee ?

Thanks

Kent

One question : I am being asked for  fresh Title Insurance even though I am getting re-financed thru the same lender (  Countrywide ).

Can you please explain me why is it necessary for countrywide to go for a fresh Title Insurance when there has been no changes in Title.

I bought this home 4 years back and my previous title company ( Chicago title ) is also not ready to offer any discounts.

Is there a way to avoid this new title insurance fee ?

Thanks

A lender will want to have your title reviewed and insured.  What the title company has to do is ensure that there are no additional liens against your property.  Past due taxes, unpaid home improvement bills, and the like could affect the lien position on the new loan.  You are given a re-issue rate, so it is cheaper than when you purchased.

From MMedlock,

"Frankly, you should be able to get the loan for 4.625 through Wells with O points....."

If you're talking about going directly to the bank on the retail side, than they might offer that if they really wanted to keep your business, although I doubt it.

But if you're working with a broker that deal would not be possible.  That is at, or below, most lenders par rate, so the broker isn't getting paid on the back and they're not making anything on the front with zero points.  I suppose you could charge a bunch of bunk fees and not call them "points", but that's a little backhanded in my opinion.  In my mind when we're talking about "points" on a loan, it should mean all the fees being charged by the lender (admin, process, etc.).  I could say I'm not charging you a "point" and then have a $795 processing fee, a $595 administration fee...  on and on until your supposed "zero point" loan has actually become a 2 or 3 point loan.  As long as the consumer is shopping around then I don't have a problem with how most brokers set up their GFE's, but it's definitely important to educate yourself as much as possible.

Although a retail LO might not be willing to do it, someone in their direct-to-consumer/call-center channel might .....

Exactly.......It is definately being done.....

Mike Medlock:

Frankly, you should be able to get the loan for 4.625 through Wells with O points.....

Why stop there, might as well go for 4.25% with no points.

That would be a great option if it had ever been available. Of course you know it hasn't been. 4.625% with 0 points was an available and viable option on the day the posts were written. Your post wasn't even marginal sarcasm......weak at best.

Juan Boldizsar:

Although a retail LO might not be willing to do it, someone in their direct-to-consumer/call-center channel might .....

Most call center 'retail' LO's have no price control. I can't speak for Wells but I know of 2 national banks that don't allow any movement for their call center "LO's". The rate and cost is what it is, there is no negotiation, there is no wiggle even to get a deal. These guys are designed to sell someone and move on, they don't typically get conditional approvals, they don't collect docs, they may or may not speak to the borrower after the initial "sell". The guys I know, even in mid 08 were closing 30-50 deals a month and carrying a 100 plus loan pipeline.

A true retail LO (non-call center) will have plenty of wiggle room on price, in my retail day I could do a loan for a true loss, actually losing money on it if it helped my month enough that it was worth it. You may take a loss on a big loan just to jump your tier and make more on the rest of your loans. We had pricing exceptions available to do the deal, Wells had (don't know if they do or not) a point bank that allowed them to originate a loan at a loss without the LO actually losing anything (if I did a loan at a loss I had to share in the loss). Either way, I'm currently finding that most retail, especially at larger lenders is inflated right now. They have all moved to huge lock terms (90 day mandatories, etc), plus inflated rates. They've got too much business, because of that I doubt you'll find a retail LO willing to take a loan at a loss to jump his tier, they've got more biz than they can handle right now already.

I've done both retail and DTC and had wiggle room in both instances......definitely more so in retail, but up to .75% yield in some cases while I did a DTC stint...... I'm sure it depends on the company.

Mike Medlock:

4.625% with 0 points was an available and viable option on the day the posts were written

Not with Wells Fargo.  4.625% has gone anywhere from <.30> to worse than par during the time these posts were made, and nobody is working for those kind of small margins without charging points.  And don't tell us that 1% origination is not a "point", it's an "origination fee" - I can't stand people that quote like that.  Is my sarcasm improving or do I still need to work on it?

OK, one last try.....through my connections at Wells Fargo 4.625% was at 100.00 through Wells Fargo retail on 3-31-09. Depending on the LO IN RETAIL at Wells Fargo someone with a 200,000.00 loan amount could have gotten 4.625 with 0 (ZERO) points and normal/typical closing costs through Wells Fargo (in my state around 984.00) on 3-31-09. The RETAIL LO, depending on their personal book of business could have chosen this option to get the deal if they chose ( I think they make between .4 and .65 depending on their commission tier) to and would have had to share some of their commission with Wells Fargo. Based upon Wells's commission structure this one loan could have possibly pushed the LO into a higher commission tier thus causing the LO to make a higher commission on all previous locked/closed loans.

Would I do this for a customer....???? Probably not. Would you???? Absolutely not!! Would an LO at Wells Fargo do it to "bump" his/her commission on ALL OTHER LOANS HE/SHE HAD CLOSED??? Maybe, maybe not.

I answered the posters question with a viable option through Wells Fargo retail.

By the way....your last response didn't have any sarcasm, so, obviously, to answer your question; Yes, you do need to still work on your sarcasm.

I am now officially done with your whining and your personal pity party. Good luck!!