Refinancing my current loan help

[Anonymous]

I looking into refinancing my current loan of $74,000 from a 30yr mortgage 6.5% to a 15 yr mortgage. I called my current Wells Fargo mortgage and was offered 5.25% with 2.5 point and $4,000.00 at closing. He gave me this rate because I was currently renting the property, but I am in the military and had to relocate. Then I called USAA a military friendly financial institution and they offered me a 5.5 APR with 0 points and $1350.00 closing cost for 15 yrs and payment of $610 per month. What is the best deal for me? Pay the 2.5 point and get the .25% less rate or pay $1350.00 with 0 points but a .25 higher rate. Which loan will be better in the long run? I do not plan on selling the house anytime soon. I have rented this house since I left Fort Bragg, NC July 1999 and have never had to pay a single mortgage payment. My Realtor has done an excellent job of keeping the house rented. Thanks David

[ShanetheMortgageMan]

Is USAA fully aware that you are renting the property out and not occupying it?  That interest rate they offered you is indicative of owner occupied financing - not non-owner occupied financing.  I'd call them back and make absolute sure they are aware of that, and also ask them what their interest rate would be if it was owner occupied - something tells me they are assuming it's owner occupied, or didn't remember that you told them it was non-owner occupied.

[Anonymous]

Shane, USAA is VERY military friendly, they will generally give owner occupied financing to servicemembers who can prove that they are not occupying a house specifically because they were stationed elsewhere (relocation papers, etc).  They are ridiculous with customer service, the best I have ever encountered.  (I used to work there in the equity loan department, I am not a military member, but I was able to see the passion with which they served their members firsthand).

[Anonymous]

According to bankrate.com the difference in loan payment would be about $10 a month.  Over the span of 15 years that is about $1800 which is far less than the difference between the $4000 closing cost and the $1350 closing cost.  USAA wins it seems.

[ShanetheMortgageMan]

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Drachen wrote:

Shane, USAA is VERY military friendly, they will generally give owner occupied financing to servicemembers who can prove that they are not occupying a house specifically because they were stationed elsewhere (relocation papers, etc).  They are ridiculous with customer service, the best I have ever encountered.  (I used to work there in the equity loan department, I am not a military member, but I was able to see the passion with which they served their members firsthand).

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Interesting, I knew USAA was good for military but didn't know they could make an exception like that - 5.5% with no points on an investment property is a kickin' deal. 

I would definitely pursue USAA's option, you can get 5.25% from USAA by paying an origination fee, but it won't be as much as the other place.