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Posted by Avrum Lapin on May 5, 2009, 7:04 pm
>
> > We're told there's a "credit crunch", that banks are afraid to lend
> > money because they're afraid of defaulting borrowers. In such
> > conditions, the loans that are actually made would have relatively
> > high interest rates, since when risk to the lender is high, or
> > perceived as high, then the interest rate goes up, reflecting a
> > 'risk premium' demanded by the lender. But I just refinanced my
> > home mortgage at 5% for a fixed-rate 30-year loan: a very low
> > interest rate relative to recent history. That looks like
> > free-flowing money to me . . . so why is the bank willing to lend to
> > me at such a low rate during a "credit crunch"?
>
> I was going to refinance also, so I would like to know, what were your
> costs of refinancing?
>
> I am a low risk borrower, as I have about 55% equity and our payments
> are only appx. 11% of our income.
>
> i
30 yr fixed
SoCal 5.125% with 0 points and about $2200 in non recurring costs
4.875% with 1 point and 1 pt + $2200 non recurring costs
Nonrecurring - appraisal, title insc, escrow, filing
Recurring costs - interest, 2 mo of impounds
For me this meant that non recurring costs would be paid off
in 32 months.
Documentation (income, assets etc) was over an inch thick
I did find lower rates but the recurring costs were running about $4500
with charges for notaries, couriers, processing etc. In terms of
recovering non recurring costs we were looking at 60 months.
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