We were approved for a no-cost refinance. 4.75% over 20 years. Down from 5.5% on 30 years, down from 6.5% on 30 years when we started.
These no-cost own provider Wells Fargo mortgages are so easy. Basically you call up, give them a bunch of information, they may decide to do an appraisal or may not, they do a hard pull of your credit (mine is 803! DH’s is only 760 for some reason– we need to check his record), they send you a few documents to sign, then a few more documents and you’re done.
The one big thing to note is that you skip paying your mortgage for an entire month, so they add the interest that you would have paid into your mortgage, increasing the total amount. You can get around that by paying extra the month after or even better, before if you have the slush (you pay slightly less interest if you pre-pay before).
The other big thing to note is that the interest rate that they give you will be higher than the interest rate they would give you if you were paying the closing costs. I *think* that they do these no-cost things to keep you from refinancing at a lower rate with someone else. Which is a good idea. If we were still at 6.5% we would have paid someone else to refinance by now. (Wells Fargo currently offering 3.75% on a 15-year if you pay costs.)
So, very exciting for us! And no mortgage to pay for the next month… so no prepayments this month.
ETA: Financial Sam has a nice post encouraging you to refinance, even if it means plowing some extra money into your house.
If you have a house, have you refinanced or are you going to refinance any time soon? How much of a hassle is it?
August 25, 2010 at 1:49 am
Wow! 800+ credit score is so rare! Good work, and good stuff saving some money down the road!
August 25, 2010 at 6:32 am
Thanks! Last time mine was lower than DH’s. (Still in the upper 700s though.) We really do need to pull his credit reports… it has been a little over a year so we’re due.
August 25, 2010 at 9:30 am
Excellent job on the refinancing and I’d say that’s an impressive credit score! Whoo hoo!
August 25, 2010 at 1:05 pm
Stop rubbing it in. MA has a law that prohibits loans with no closing costs, so as my friends in CA and NY were refinancing with wells for free, I could not. Boo hoo.
August 25, 2010 at 1:11 pm
Sandy L– That is bizarre. I wonder what the reasoning is. It’s not like you’re not actually paying for the loan– you’re basically adding a point and using that point to pay your closing costs directly. Except it’s a lot less hassle. Do they not allow any points? I’m sorry you can’t do the no cost refinance. :(
Little House– Thanks!
August 25, 2010 at 6:06 pm
I’m doing it and it’s easy. Have not decided whether to go for 15 years or 10. 10 is tempting but makes payments high enough that I wouldn’t really have enough of a cushion.
August 25, 2010 at 6:48 pm
You can always get the 15 and pay it as a 10 year. There’s some calculator online somewhere to figure out how much extra to add to the payment to make it equivalent. That way if you change your mind you can just stop paying extra.
August 25, 2010 at 8:34 pm
That is a fantastic credit score, great job! My credit score is different from my husband’s too, but I can’t remember whose is higher.
Great job on the refi!!!
August 25, 2010 at 10:11 pm
Great work to get that credit score! There’s an idea for a future blog post of yours: how to obtain a great credit score, with a real live example!
Also: 6.5% to 5.5% to 4.75% is impressive as well. Good that you took advantage of the market.
August 26, 2010 at 5:47 am
Squirrelers– I have no idea how though. And no idea why DH’s is so low right now. Last time his was in the 790s and mine was lower. We really do need to pull those credit reports. Maybe this weekend.
Btw, we’ve each got 2 credit cards with high limits that we have had for years and years. We pay in full every month. (It may be they caught DH’s before he paid and me after…) We both paid off student loans some 10 years ago. We shared one car loan briefly and paid it off ~4 years ago. And we’ve been paying a mortgage for a few years. I used to have 3 credit cards but capital one shut me off for not using it a few years ago. That’s about it with our credit history.
August 26, 2010 at 3:56 pm
Squirrelers– You might find this CNN Money article interesting:
Personally I think it’s a bit crazy because above 740 or so it doesn’t make a difference.
August 26, 2010 at 7:23 pm
Great stuff! Congratulations! (Also, if DH’s credit limits are lower, whatever balances they report to the credit agencies may show a worse credit utilization ratio, which could lower his score.)
I pull my credit reports from annualcreditreport.com one at a time, 4 months apart, so every 4 months I can get one (I rotate among the 3). I know they’re not all the same, but It makes me more comfortable being able to see one every 4 months instead of all three once a year.
August 27, 2010 at 4:59 am
When I had my mortgage, Wells Fargo mailed me a great refi package like what you got, and it was a no closing cost loan too.
We both had credit scores over 800… I’m not sure what compeled this to do so, but I was grateful!
I was very happy with them. If I even have another mortgage, I’m going with them again!
August 27, 2010 at 11:40 am
Nick– I know we should do that, but even remembering to pull once a year is hard! Slowly but surely we’re getting things ticked off our financial to-do list. Next up: Get a will!
MR– It really has been great working with Wells Fargo on the mortgage. Occasionally I hear negative things about them, but I like the way they bill us every month and there’s spots on the bill for where you want extra payment to go, and they don’t penalize you if they pay more escrow than you put away (so basically some years we get an interest free loan from them), and there’s a 15 day grace period so if I don’t get the check actually mailed before the first we’re ok… And the no-cost refinance is really great.
October 6, 2010 at 7:37 am
“Refinance With No Closing Costs” there are still some flaws with this kind of refinances supposing i plan living in my home for more thatn 17 years? i bet the rate would be different and i might probably be in so much debt then
if you have time give a look at it
January 30, 2017 at 1:19 am
[…] For nostalgia’s sake, here’s the first one from November 2010. (And here’s an earlier post about refinancing before I started tracking monthly. And here’s a popular post on why we did some prepayment […]