Refi after only 4 months?

[Anonymous]

I received an email from our loan officer that assisted us in our house purchase that we closed on in Aug on this year. She states we will qualify for a lower interest rate (3.75%) based on our previous financials and due to a change in rates. We are currently at 4.25%. She indicated that based on the numbers, it would lower our monthly payments by $50-60ish.

They will have to pull our credit again, but she says it's just a formality unless something major shows up (nothing will, but it is Christmas and this month's credit card balances are a bit higher than usual; they will be paid off next month. Our credit scores are same as previous loan lock, if slightly better on husband's side.) We would not have to resubmit any LOE or bank statements and the lender will pay all closing costs.

Thing is, we were planning on doing this in a couple of years anyway, to do a cash out refinance in order to do some renovations on the house. It's currently a 3/1 and we want to add a bathroom and a new roof as well as lower the interest rate. We're in a hot area, houses generally stay on market <10 days and we bought the cheapest house at under the appraised value and have already done improvements, upgraded and fixed some deferred maintenance items as the house had been a rental for the past 10 years. We don't expect to do the cash out NOW, this would just do the initial refi to lock in a lower rate.

We've been doing some gardening on my husband's credit, as it's his credit that is the lower qualifier. Also we are hoping to get my husband a new car this coming year. His is 12 years old and showing every minute.

Another factor in play is that while my base salary is the same, and I am in the same position, I just made a change that will decrease my incoming net pay due to loss of weekend differential (I'm an RN). It doesn't change the qualifiers, as they go off base pay, but I was already looking at a loss of $240 a month in our finances, and was going to make it up by picking up an extra shift once a month. This would help ease that loss slightly.

In typical "time is of the essence" speak, she's asking us to make a decision soon. What is the experts opinions? Is this a good idea?

[StartingOver10]

It sounds too good to be true to me.  Usually when the lender is picking up "all of your refinancing costs" they increase your interest rate to do so.  

Ask her for the figures so you can make an informed decision.

[Anonymous]

If it makes a difference, it is a VA streamline refinance. I am assuming the closing costs will be wrapped into the loan itself, the way our inital loan lender's fee was. But I agree about getting the actual numbers, that would be a given. If the numbers work, and I do trust this loan officer, what are the drawbacks? I'll touch base with her and see if she can give me any preliminary cost breakdown.

I'm just wondering if this a good idea at all, based on the mortgage only being 4 months along, will it hurt our overall credit scores to refi so soon? Will it affect our decisions to buy another car in the next year,  or to later refi into a cash out refi (we were going to go with a 15 year loan in that furture, not-yet-decided, date?) We love the house, and plan on staying here for our lifetime.

[Anonymous]

OK so LO says there is absolutely no closing costs for us to pay, even none rolled into the loan; the lender is covering all fees. The only thing is they need to replenish our escrow to cover 4 months, and we can either pay that at closing, or roll the 4 months of escrow into the loan, about $1500. We're still under initial appraised value even if we roll that into the loan, which we probably won't because it's not a huge amount. Our taxes were just paid, so our escrow acct is essentially empty.

I'm not seeing any drawback to this at all.

[cartwrna]

I'd say go for it if there is in fact no extras going to be added! That equates to more paid off when it does come the time that you want to cash out refi. Plus 50-60 a month in savings is always a plus! You could always keep paying the same payment as well and that extra would go towards your principal

[ezdriver]

My current mortgagor has offered me a streamlined refi on my current FHA loan. Rate goes from 4.25% to 3.75% and my December mortgage payment will be applied to the refi costs so that I close in january. No credit pull or income proof at all. The only thing they request is the two most recent bank statements.

Today I received a refi offer, form another company, with a "possible 3.25%" but that I think is no doable. Out of curiousity, I plan to call the lender tomorrow.