Mortgage Refinance Guide - The Frugal Way

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hi guys my name is Ryan the frugal

analyst and in this video I'm gonna show

you my mortgage refinance guide and last

week I actually locked in a new rate at

three point four percent for my mortgage

thirty-year fixed with no net fees so in

this video I'll go over how to get the

best deal on a mortgage refinance first

thing you need to know is the key

factors of a mortgage now if you already

know all this you can skip to the next

part but a lot of mortgage have these

loan characteristics it starts with a

loan type

there's conventional and FHA I

definitely would stick with conventional

FHA have other fees that I'm not

interested in dealing with the interest

rate this is the metric that everybody

looks at everybody wants the lowest rate

you can gauge the 10-year yield to see

if the rate has drop or increase the

rate type there's fixed variable and a

combination otherwise known as arm so

for me I just prefer a fixed rate just

so that it's predictable for a term

there's 15-year 30-year and so forth a

short duration means that you can get a

lower rate and you have a higher minimum

payment and conversely if you have a

longer duration you'll have a lower

minimum payment but a slightly higher

rate next we have the category of

origination fees origination fees as a

part of closing but I think the most

important thing is the lender fee how

much are you really paying your lender

to originate the loan the points this

point is also another form of lender fee

I would definitely recommend asking for

a zero point loan the appraisal cost

which goes to the appraisal sometime

this cost can be waive if your property

value have gone up title and escrow fee

usually these are to protect the lender

so that if you didn't pay that they

could basically take your property so

all of these lender fee appraisal and


Oscar fee I would bucket them under

origination fee and the next segment is

called lender credit now this is money

to offset your origination fees so

sometimes depending on the deal you can

get lender credit if you're willing to

take a higher interest rate loan the

last but not least is the lock base

there's three day 45 days and 60 days

depending on your situation

you might need more days for for me I

have to use a 45 day because my property

signing is slightly more complicated but

if you are local you're prepared to do

all the paperwork really quick you can

just lock on with a 30 day lock rate

usually the shorter the lock rate the

better deal you can get on your loan so

those are all the key factor that I

think we should have a good

understanding before refinancing next is

all about timing when should you really

refinance well to answer this question

we have to think of ourselves like a

fixed income trader playing our loan

balance in the marketplace so we have to

look at the 10-year yield and usually

mortgage rates correspond one-to-one

fairly close to the 10-year yield plus a

margin yet the yield drop you can be

sure that the mortgage rate also drops

you can find this rate in the Treasury

gov or online I'll have links below at

the bottom of this video so in this

10-year chart this is when I lock in my

mortgage the 10-year yield is around

1.75 percent and I'm getting a three

point four percent in my mortgage rate

for three year fix that means my margin

between the 10-year yield and my rate is

around 1.6 percent you can see that the

rate recently drop and that's why I

decided to refine my mortgage so you see

the rate dropping that's a great time to

refinance your mortgage

the next thing is about finding the

right lender so mortgage refinancing or

mortgage market in general it's a very

commoditized market it's such a big

market and there's a lot of players big

players like big banks and also smaller

players I personally prefer the smaller

players because usually they have more

senior loan advisor versus the big banks

I also got screwed by a big bank due to

processing fees and usually they have

more junior guys that would really sell

you on their company when all you need

is this commoditize mortgage refinancing

from them so ultimately I end up with a

company called loan lock I think that

are based in Santa Monica they're a

pretty small company but I think the key

here is to always compare different

lenders different lenders will have

different fees they have different rates

and see if you like the person that

you're gonna be working with because

there is a lot of paperwork to do after

you find a list of lenders that you want

to work with the next part is to really

negotiate the right deal for your refi

this requires the understanding of the

relationship between interest rates

lender fees or origination fees and

lender credit they are all related if

you want the lowest interest usually

that's what people say then usually the

lender is going to tack on some points

and give you no lender credit so all of

these three factors are related so here

I have an example chart where there are

three options option a is the free

refinancing option this is the option

that I prefer option B you have the

upfront costs of the origination fee but

you don't have any points so you'll have

to pay the origination fees at closing

option C I would call it a ripoff this

is where they tack on points and

organization fees without giving you any

lender credit option C is what they

usually sell you on because

religion fee and points goes directly to

the lender you can get the lowest

interest rate in option C but usually

only works if you really think that the

interest rate is going to stay low for a

very long time and you're also going to

keep the loan for a very long time so I

highly discourage people from getting

option C which is with points and no

lender benefit I would recommend option

a the free option so option A it has the

highest rate but they give you a lender

credit to offset the origination fee so

basically you're refinancing cost is

free and that's the loan that I chose is

the one that I don't have to pay

anything to reduce my rate now if you're

talking to a lender and they only if you

want option and that's not the free

option make sure you go back to them and

really request the free option because

every lender should be able to give you

all of the these three options so to

summarise check the 10-year yield to see

where the rates are going make sure you

compare a lot of different lenders and

especially consider the smaller

companies to do the mortgage free

financing and third make sure you ask

them for the free loan deal which means

a lender credit to cover the origin fees

and no points on the mortgage

refinancing so if you're ready to talk

to a lender I have some few tips I think

you have to be very straightforward to

the lender and tell them what you want

in the mortgage refinance so for example

in my situation I would tell them that I

want a conventional loan with no points

three year fix my credit score is above

740 my loan amount is let's say $300,000

my property value is let's say $600,000

and I want the lender credit to offset

the origination fees what is your rate

now they should be able to give you a

estimate without running a heart inquiry

but if you are ready to shop around and

decide that you want to do the deal I

mean running multiple heart inquiries is

okay on your credit some company won't

give you any high-level number because

they're kind of scared of price matching

so shop around make sure the company is

transparent and willing to give you some

high level of rates and after they give

you rate you don't tell them if you want

a better rate then you said hey can you

please call me when the rate drops to

XYZ so make them earn your business

I I've dealt with multiple company that

that wouldn't call me back because

they're just a big bank but I think some

of the smaller guys will actually get

back to you and let you know if the rate

has has gone down and I get to where you

want it to be and also a no fee


to give you guys a real-life sample so

this is my mortgage refinance that I'm

doing right now so long pipe invention

all interest rate three point three

seven five rate type fix term three-year

LOC days 45 days the cost that I have

lender fees around 1300 I got my

appraisal wave and the title escrow fee

comes to around $1400 and I got a lender

credit of two thousand eight hundred

eighty eight dollars so in total this is

this is like a free refinance and I have

the details at the bottom of this video

with my loan disclosure and also a

sample of my final refinance closing

costs that I did in 2017 just so that

you guys have a reference you could

download that and I removed the personal

information but I think you could look

at the numbers and see what they are and

you know what's really the final tally

up number so that's all for my guide to

mortgage refinancing hopefully this

video enables you to refinance your


I sure took advantage of the drop in

rates last week so if you do have a

mortgage you might want to consider

refinancing the mortgage for a lower

rate it might save you some money

Oh on a side note my co-worker told me

that if you're a Costco member they have

a lender who's willing to give $250 if

they can't match your rates and my

co-worker actually got that 250 because

he he went with my lender low lock and

he actually went to Costco and and say

that hey can can you match the rate from

low lock and they can't and he actually

got $250 so if you want to make some

money and have a Costco membership that

could be a another thing to do so that's

it for this video please comment below

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