LaCostaRacer

I was complaining in another thread about my frustrations in trying to refi a rental house loan this last year. And out of the blue today, my current lender (CitiMortgage) sent me a letter with some incredible refi rates:

current loan: 5.875%/6.1 APR 30yr

offered loans:
30 yr fixed: 5.375/5.556% APR
20 yr fixed: 5.250/5.493
15 yr fixed: 4.75/5.054

The 15 year looks the best value now, but the mandatory pmt goes up $100 over my current loan. We like to pay extra principal and the new mandatory payment is $100 less than our current optional payment so that seems liveable.

I'll call tomorrow and see if there is any catch- they even credit $500 towards closing and quote one point for fees- exactly what I was looking for.

With a loan like that and our normal overpayment of principal, we'll have that house paid off in 12 years. Once CD rates exceed 5.5% (and they will) then I can move extra principal to other investments that yield better returns.

I thought I would post this thread in hopes that other people have jumped on deals like this. It's smart for my current lender to try to keep my business- guess I'll find out tomorrow if there are any important details missing from the offer. I hate impounds and prepayment penalties so those would be a deal breakers for me.

LaCostaRacer

Ok, I'm locked into a 5.125/5.4 apr 20 yr mortgage for 90 days. I have to say CitiMortgage exceeded my expectations big time. In the past with other banks, you get nailed with lots of fees that just extend the time you actually save money on a REFI.

With these locked in terms, I should break-even in 3 years and have 10 years of savings over original loan using the current payment amount. This is much better than the last time I did this and it was a 7 year break-even time. The new loan will be paid off 7 months sooner than the original loan with no change in payment with just $800 out-of-pocket costs for application fee.

svtmike

Congrats!

TS_eXpeed

LaCostaRacer

Well the deal seemed too good to be true and I now see why. Apparently one of the new loan requirements is 'rent loss' insurance in the amount to cover 6 months of vacancy. The problem I have is determining how much this costs- my guess it's good for at least $600/year and probably doesn't pay off until long after I fill a vacancy.

I called my Insurance Agent and he doesn't know anything about this coverage, but a Google search shows that it does exist and is required by at least FreddieMac. Does anyone have experience with 'Rent Loss' Insurance? If it helps my loan amount would be $958 and the monthly rent is $2450- I'm just trying to get a ballpark idea how much this coverage would cost and if it eats up the bulk of the savings I would get in REFI'ing.

I'm thinking it might be better to keep existing loan that must not have this requirement (which explains why the lender made initial refi offer now).

Thanks!