Mortgages With Closing Cost Rebates

Mortgages With Closing Cost Rebates
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#1

Now that Penfed has changed the terms of their Real Estate Rewards program, it’s not quite as appealing as it once was. I am looking at getting a mortgage somewhere in the 240 - 320K range so I can still get some of the closing costs rebated but not nearly as much as before the change. Are there any other programs out there that are worth taking a look at? I saw that USAA has their own Real Estate Rewards program but the rebates look smaller than those through Penfed.


#2

Go with Amerisave. I found they not only had the best rates but provided Closing Cost rebates with a caveat. This rebate can be applied towards home insurance, property tax payments and interest for the 1st month.
One year, I got 3K at closing that I applied to property tax payment and refi’d again after a few months.


#3

Penfed Real Estate Rewards is now just a bad rebating realtor + mortgage combo - you get a 1.5% rebate on the mortgage amount, but there is a 1% origination fee on their loans and the rates are higher than Zillow. Terrible.

Split the transaction in two - get a 1-1.5% rebating agent that will rebate on the purchase price (vice mortgage amount) and find a lender that offers a closing cost credit on Zillow.


#4

I refinanced with Third Federal. They have a $295 closing cost mortgage (low cost smart rate) and refund $100 as a gift card. This is an old FWF thread on them: https://www.fatwallet.com/forums/arcmessageview.php?catid=52&threadid=1523979


#5

There should be a “Have you checked Zillow?” popup any time someone asks any mortgage questions…


#6

I have done PenFed, other rebate lenders. With them, there is always some cost to you despite the rebates.

Best success I had is with mortgage brokers who reimburse all your closing costs - its true 0 pt, 0 fee, 0 closing cost experience. You should ask around if you have local brokers doing this - they get commission from which they will refund your closing costs. If you need a referral in CA, PM me.


#7

While I agree that paying points should be avoided in almost all cases and $0 closing cost is great (I prefer negative closing cost so I actually get paid to refinance), this is not the best way to approach this problem. Points, fees, and closing costs can vary with the interest rate. Any schmo can offer you a loan with a higher rate while covering all your other costs. The only way to know that you’re truly getting the best deal is to get multiple quotes for the same interest rate (not APR). The monthly payment will be the same for all of them, and the only difference will be the lender fees and credits, and third-party closing costs.

The Zillow Mortgage Marketplace has been the best source of lowest closing cost mortgages for at least 2 years now. I’m almost willing to bet that your referral could never even come close to the best options on Zillow.


#8

[quote=“scripta, post:7, topic:657”]
While I agree that paying points should be avoided in almost all cases and $0 closing cost is great (I prefer negative closing cost so I actually get paid to refinance), this is not the best way to approach this problem. Points, fees, and closing costs can vary with the interest rate. Any schmo can offer you a loan with a higher rate while covering all your other costs. The only way to know that you’re truly getting the best deal is to get multiple quotes for the same APR. The monthly payment will be the same for all of them, and the only difference will be the lender fees and credits, and third-party closing costs.

The Zillow Mortgage Marketplace has been the best source of lowest closing cost mortgages for at least 2 years now. I’m almost willing to bet that your referral could never even come close to the best options on Zillow.
[/quote]I completely agree with your post, except that I would completely and totally ignore the APR. There is some suibjectivity in calculating the APR, and the APR calculations exclude certain costs, such as appraisal fees (which can vary widely provider to provider), so I do not even bother looking at the APR.

Also keep in mind that while the Zillow quotes are an excellent starting point, you can also do better than that. If you are a highly desirable borrower (low LTV, high scores, low debt to income ratio, great job stability, etc…), most lenders/brokers providing Zillow quotes will further sweeten the offer to get you in the door. Hence, to me, the ZIllow quotes represent the ceiling, not the floor on the refi terms.


#9

Everyone should try zillow marketplace…I have tried 3 times for refi and found its a bait and switch scheme for the lowest rate apr lenders. Once you get an estimate of closing costs and compare APR there will be surprise fees etc.

What I have learnt from my experience(5 refi) is that one should also consider local brokers who are not on internet/zillow because they have a way to compensate you for a truly 0/0/0 exp with competitive rates - that were better than zillow in my case.

Zillow is a good place to start, but you may not get best pricing when comparing total cost. You will not know till you have tried.


#10

You are correct, I meant interest rate, not APR. I updated my post.

I’m guessing you have experience with this? I thought I was a desirable borrower (800+ scores, ~ 60-75% LTV, conforming DTI, stable job), and I’ve used zillow three times already and the top lenders/brokers couldn’t sweeten the deal at all, not even to waive the escrow waiver fee, which is usually 1/8th-1/4th of a point.


#11

I’ve gotten probably 9 quotes and went ahead with three of them and there was no bait or switch of any kind. The individual numbers they list on Zillow aren’t exactly the same as the individual (categorized?) numbers they’ll provide you in the estimate, because the Zillow interface only allows them to input like 5 numbers in total. But the sum of those numbers on ZIllow and on their estimate was always exactly the same.

In other words, the Zillow quote might show:

  • Appraisal fee: $400
  • Lender credit: $600
  • Total Estimated Lender Credit: $200

while the GFE from the lender might show:

  • Appraisal fee: $525
  • Credit Report fee $40
  • Underwriting fee: $885
  • Lender Credit: $1650

Which all add up to the exact same $200 lender credit.


#12

[quote=“scripta, post:10, topic:657”]
I’m guessing you have experience with this? I thought I was a desirable borrower (800+ scores, ~ 60-75% LTV, conforming DTI, stable job), and I’ve used zillow three times already and the top lenders/brokers couldn’t sweeten the deal at all, not even to waive the escrow waiver fee, which is usually 1/8th-1/4th of a point.
[/quote]I do have a lot of personal experience with it. It is definitely YMMV, but I have refinanced a lot and in every case have been able to get the lenders to sweeten their Zillow offers.


#13

[quote=“techrover, post:9, topic:657, full:true”]
Everyone should try zillow marketplace…I have tried 3 times for refi and found its a bait and switch scheme for the lowest rate apr lenders. Once you get an estimate of closing costs and compare APR there will be surprise fees etc.

What I have learnt from my experience(5 refi) is that one should also consider local brokers who are not on internet/zillow because they have a way to compensate you for a truly 0/0/0 exp with competitive rates - that were better than zillow in my case.

Zillow is a good place to start, but you may not get best pricing when comparing total cost. You will not know till you have tried.
[/quote]In my experience, it is generally not bait and switch, although, as scripta correctly mentioned above, the actual line items may end up being different. What I have noticed, however, is that because of the exact issues that scripta mentioned above with Zillow’s engine only allowing lenders to display a couple of line items in their quotes, the lender that shows up on Zillow as having the best terms won’t necessarily end up having the best terms. Hence, the reason that you need to contact multiple lenders there to get the best quote.

I do agree with you that depending on the situation, a local broker/lender can also end up being highly competitive. This is especially true for somewhat unusual situations – Zillow’s mortgage marketplace generally favors high volume, but low profit margin places, which tend to only work well for very clean and streamlined files. If you or your situation will require more time, attention and hand holding, your experience with Zillow’s lenders is likely to end up being subpar.


#14

Like, “favors?”


#15

Nope its cashback via check. They are parting out with portion of their commission - and they make large commissions based on volume…

I had always been refi over internet till I figured this out via someone I trust. Last 3 refi have been better same rates as zillow with 0/0/0 and personal attention.