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Transcription (Tulsa Mortgage)

Steve Currington: This is stevecurrington.com in the Steve N’ Tyler Show, Episode Number 67.
[intro music]
Automated Automated voice: Welcome to the Steve N’ Tyler Show, with stevecurrington.com and TylerWhyburn.com
Steve Weiber: Who negotiated the contract for you?
Guest: A realtor.
Steve: Oh, you’re pretty smart. Well, good for you, man.
Automated voice: They’re talking about everything you need to know about Tulsa mortgage, home loans and more. Nobody knows Tulsa mortgage like these two. Get ready, because here’s Steve and Tyler.
Steve: What is up my Tyler, man?
[music] Tulsa mortgage
Steve: It’s a good morning from stevecurrington.com. Today, we talk about paying points on a refinance, yes. Does anyone know what a rescission period is?
Automated voice: Tyler, are you awake? Wake up, Tyler!
Steve: I think I’m going to start every podcast with that.
Automated voice: Broadcasting live from the Koala Studios in Tulsa, Oklahoma. You’re listening to the Steve N’ Tyler Show.
Steve: It’s story time Tulsa mortgage.
[laughter]
Steve: Listen, first of all paying points on a refinance. This is kind of like a hot topic. People always ask that, like “Ugh, I don’t want to pay any points. I don’t wanna pay any points. I don’t wanna pay any points.” But most people don’t even know what that means. Really, they don’t, and I’m not dogging anyone that doesn’t know what it means, but it’s kind of like– I was talking to somebody this weekend about this, people have opinions about things that they know nothing about. For example, this guy I was talking about this weekend, he was talking about this airplane, and he’s “Ah man, I’d never get that airplane, that thing it’s a maintenance hog.” What it came down to, he heard about the plane, he’d never been in one of them, he’d never seen one of them Tulsa mortgage in person, he’d never read anything about one, he’d never known anyone that owned one. He just heard that they were maintenance hogs and they weren’t good airplanes. The same thing with refinancenancing and paying points, people have heard that “Oh, it’s not a good idea and it’s a bad– Don’t pay points because you’ll totally get messed up and someone’s gonna screw you over” or whatever. But they don’t know–
Automated voice: Tyler, are you awake? Wake up, Tyler.
Steve: For the audience out there, it’s early in the morning, okay? We do these podcasts really early in the morning. We have to, because that’s the scheduled time that we have to do it. Tyler yawns, I’m sitting across from him, I’m watching him. He yawns, and so I made this wake up Tyler thing–
Automated voice: Tyler, are you awake? Wake up, Tyler Tulsa mortgage.
Steve: If I stop in mid sentence and play that, it’s because Tyler just yawned. It’s just my way of punishing him for not going to bed early last night.
Tyler: Hey, I’m just being courteous and I only yawn whenever you’re talking. [laughs]
Steve: Oh, right. He only yawns when I talk. It would be weird if he yawned when he talked. Anyway, [laughs] we’re talking about paying points. Listen, as I was saying, most people, Tyler, don’t– they just don’t, right? They haven’t been down that road and really been educated. Tulsa mortgage To be completely frank with you, we wouldn’t be either. If we didn’t do this for a living, we wouldn’t be the guy that knew everything about whether or not he should pay points. Right?
Tyler: True story Tulsa mortgage.
Steve: It’s just part of what life is. Two things are going to be: What are points? Do you need to pay them on a refinance? And then, there’s a new thing called TRID which kind of, on a refinance, makes your rescission period six days. In a way, right? It used to be three, but now it’s– I’ll kind of explain that, so let’s talk about points. Is it a bad idea, Tyler, to pay points on a refinance? What is your opinion? Just straight up, uncoached, I haven’t told you what to say. What’s your opinion of– when we come back.
Automated voice: What are you listening to? The Steve and Tyler show.
Steve: That’s one of my new sounds, I wanted to play that.
Tyler: I think it’s totally dependent on how long are you going to stay in the house for one, because that’s going to add cost to your refinance, but at the same time– You can pay a ridiculous amount of points to get the lowest rate ever, but it makes zero sense. It’s got to make sense with the cost and what you’re saving completely.
Steve: A situation where it wouldn’t make sense would be, if I was going to pay $2,000 in points and by paying those 2,000 in points maybe I was going to lower my rate enough that it was going to lower my payment by $50 a month, okay? Do the math. This is for me the reason and this is super easy for you to do. If you want to do that math and figure it out, it’s like “Well, how much is it going to cost me? Well, it’s going to cost me 2,000 bucks. How much is it going to save me? 50 bucks a month.” Okay, so it’s going to take my 40 months for that to pay for itself. So 3.33 years. Here’s the question, “Is it a good idea for me to pay points?” Are you going to live there for 4 years?
Tyler: Yes Tulsa mortgage.
Steve: Okay, then yes. But if you sell, or you refinance again, or you do something with that loan, in the next 3.33 years you’ll break even, at that point. You have been able– Listen, there’s value to this, Tyler. You have been able to brag to your friends about your low rate Tulsa mortgage.
Tyler: Right.
Steve: When you’re out on the back patio by the fire having a beer, whatever you like to drink, maybe a coffee, you can say “Oh man, I got a really low rate.” But if you sell it, refinance it, or you do something with that loan, within that time frame– and listen, it’s really easy to do that. In this case, we’re only looking at points, but more importantly you should look at the total cost of the refinance. Because your total cost to your refinance isn’t going to be two grand. That’s just paying the points. That’s just saying “Well, I’ve already determined the refinance is good, but now do I want to pay to get a little lower rate?” Because really, you ought to be looking at the total cost. Let’s say you pay two grand in points, you’re paying title, you’re paying appraisal, you’re paying underwriting, you’re paying all that stuff. Your cost come out to 5,000 and it saves you 50 bucks a month. That’s 100 months that it takes to pay for itself. That’s 8.33 years. Tyler, it’s going to cost me five grand refinance, it’s going to save me 50 bucks a month, is it worth it?
Tyler: No.
Steve: No. Not–
Tyler: Well, not if you’re going to leave in four years.
Steve: Are you going to– I’m going to live there for 10 years.
Tyler: Yes, okay. Yes.
Steve: How many people tell us they’re going to live in a house forever? [laughs]
Tyler: Everybody Tulsa mortgage.
Steve: They’re like, “Agh, this is my dream home, I’m gonna live here forever.”
Tyler: That’s their forever home.
Steve: “This is my forever home. This is my forever home.” [laughs] This is what they do when they close. [noise] And then they’re like, “I think I want a new house.” Two years later, three years later, they have a kid. You got another kid, you adopt a kid– we have some friends that started fostering some kids. Their four kids, added two more kids, now they go from six people to the family to eight. Your living situation might change because of some reason like that. All I’m saying is have some foresight, maybe some wisdom to think before you go pay for a refinance that isn’t worth it, or pay points as we’re talking about, that you kind of consider all options. Now, I will tell you this. It’s a lot more complicated math if you’re changing your term. This is only based on “I’m on a 30, I’m going to go on another 30 year fixed. It’s going to save me $50,” whatever the number is, “it’s going to save me x dollars a month,” right? Because if you’re going to a 20 or 25 or if you’re reducing your term, then I’m not going to say it’s always worth it, but it’s a whole different calculation. Right, Tyler?
Tyler: Yes. Tulsa mortgage.
Steve: It’s completely different calculation.
Automated voice: You’re listening to the Steve N’ Tyler Show. Don’t forget, visit out website at getkoalified.com
Steve: That’s one of my new sounds too. I hope you guys like it. It’s really cool. All right. We’re talking about paying points on a refinance. You got to consider all the options, we’ve said that, right? I think. You’re probably clear on that. Consider all of the options, all your cost and your monthly savings. People ask me all the time, “Well, if I can lower my rate by a point then it’s usually worth it.” What do you owe? Because if you owe 67 thousand bucks you can lower your rate by three points and it is not going to matter. It’s just not. It will lower your payment by 50 bucks but it’s going to cost you. Just look at all the cost and the paying points is only one little tiny piece of the pie. Right?
Tyler: Yes. Tulsa mortgage.
Steve: Little tiny piece. Rescission period, Tyler tell the folks about this three day waiting period now on– we don’t have Good Faith Estimates anymore. We don’t have HUD-1s anymore. What do we have?
Tyler: We have a closing disclosure.
Steve: A CD they call it.
Tyler: Yes. Tulsa mortgage.
Steve: They have a loan estimate, which used to be the Good Faith Estimate; and we have a Closing Disclosure or CD, so LE and CD. Used to be GFE and HUD, and now it’s an LE and CD. The LE and CD, are designed basically to be the same document, because the LE is called an LE until it becomes a CD because it’s the same document. It looks exactly the same. It’s just one is at closing, one is when you’re still giving estimates. On a refinance. Well, let me back up. On a purchase, the new rules are, when does your CD get issued, and when do you close Tyler?
Tyler: CD gets issued three days before closing. After that CD gets in your hand, you sign it. You have three days, and then you can close on your house.
Steve: I think we need to upbeat this up here a little bit. You know what I’m saying. Here we go. I close, I want to close on Friday of next week. When does my CD have to be issued at the latest?
Tyler: Tuesday.
Steve: Because you count Tuesday, Wednesday– my mom says it like this, “Tuesdee, Wednesdee, Thursdee,” not Thursday, Thursdee. It’s like all weekdays end in “ee,” not “ay”. “Tuesdee, Wednesdee, Thursdee,” and then you can close on Friday, right?
Tyler: Yes. Tulsa mortgage.
Steve: On a refinance, you have a recession period. Not only do you have to wait three days from the day they give you your closing disclosure, after you close which would be Friday, now they count Saturday, Monday, Tuesday and your loan won’t actually fund, and all your payoffs everything be done until that next Wednesday, right?
Tyler: yes.
Steve: If you’re doing a refinance, and here’s why that’s important. Here’s the important part. You’re on a FHA loan now, and you close on– let’s say your CD is issued on the 27th. 28th, 29th, 30th. It’s going to fund– you’re going to close on the 30th, right? But because of your recession period, your loan isn’t going to fund until the second of the next month. You know what that means? I’ll tell you what it means. You’re going to pay interest on your current FHA loan for the entire month of the next month. Does everybody know what that means?
On an FHA loan, and Tyler may not even know this. On an FHA loan, there’s this little thing in there when you close that says, “Regardless of when you pay your loan off in the month, you’re going to pay interest through the end of that month.” The reason why this is important is because you need to be aware of this, because your lender may not tell you. It’s like the equivalent of you paying interest on two loans at the same time. You need to make sure on a refinance that you’re going to close and fund before the end of the month, if you’re paying off an FHA loan.
Otherwise, here’s what happens. You’re going to have a new loan. Let’s say you close on– it funds on the second. You have a new loan, and on that new loan at the very beginning of the loan, you’re going to pay 28 days of interest on the front-end of it. It’s called your prepaid interest. Okay? On your old loan, even though you paid it off on the second, you have to pay interest through the end of that month. Now, you paid 28 plus 28, which is 56 days of interest. It’s literally the equivalent of you paying interest on both your loans for that month.
The better thing to do would be, to make sure you close before the end of the month, and fund before the end of the month because sometimes, your loan officer maybe won’t tell you that. You know why? Because their commission is attached to that closing. The last thing they want you to do, is to wait until the 25th of the next month to close. Your lock might expire, there’s all kinds of things that go into that. Just be careful, and understand what your expense is. Understand this, you’re very protected on a refinance. That’s the good news. You almost kind of like really can’t get worked over, because you’re going to get your CD three days before you sign. You’re going to get to review everything and make sure that the rate is right, all your fees are right, you have three days to do that.
Then you’re going to go sign. Once you sign, they’re going to give you three days to decide if you even want to get the refinance. If you do all that, and then you still think that it wasn’t a good deal, you had every opportunity to cancel it and get out of it. No pressure at the closing table on a refinance like that. You know what I’m saying?
Automated Voice: Broadcasting live from the Koala Studios in Tulsa, Oklahoma. You’re listening to the Steve N’ Tyler Show.
Steve: Hey, that’s all we got for today about refinancing, your rescission period. Remember guys it doubled kind of, and paying points on a refinance. If you want more information, make sure you go to getkoalified.com. I’m stevecurrington.com with tylerweiber.com, and we are out.