First – thank you to the dozens and dozens of TBH friends who have trusted me to handle your refinance, purchase, or construction loan this year. A good number of my loans this year have come from you. I sincerely appreciate your support! 
We continue to see 30-year interest rates below 3.0%. If you feel like you missed the boat on the 2020 refi craze, you have not. Fine print – this is not a rate quote for you. Rates vary for each borrower based on a number of factors.
If you would like to know how a refi would look for your family, I would love to help. Shoot me an email with the following information and I’ll let you know a rate/monthly payment based on the information provided. (trey@treypowers.com)
Late Year Refi - Escrow Considerations
There are considerations to understand when refinancing late in the year – and they relate to the escrow of taxes/insurance. If you choose to not include those two in your monthly payment, read no further.
If you choose (or are required) to escrow, here’s what happens: Within 30 days of your loan closing, you will receive a full refund of your current escrow acct balance. If your taxes have not yet been paid (usually December), the balance of that account will be significant. Consider you have been contributing monthly for 10-12 months.
At the same time - when your refi closes, your new escrow account must be full enough to pay property taxes in December, as well as hold two months of ‘cushion’. This is called your escrow prepaids and is on top of hard closing costs. There are two ways to handle populating that new escrow account: (1) bring those funds to closing as cash; or (2) roll them into the loan. Here is why you would do one or the other.
Bring Prepaids Cash to Closing
From a pure financial perspective this makes the most sense because rolling them in is essentially financing 2020 taxes for 30 years. In order to do this, you obviously have to have the available cash up front. It’s only a temporary hickey to your savings account as (1) that refund is coming and (2) you will be missing a monthly mortgage payment. Side note – you never have a mortgage payment due the month following the close of your loan. These two together usually cover escrow prepaids. You just have to be willing/able to “float” it.
Roll into the Loan
All closing costs and prepaids can be rolled into the refi loan with zero cash to close. If you roll escrow prepaids into the loan, you will be receiving a “windfall” check a few weeks later. This will be several thousand, maybe over $10,000 depending on your taxes. Note - your current escrow balance should be a line item on the latest mortgage statement. This is a slick way of getting cash equity out of your property without doing a standard cash-out refi (higher interest rate, higher closing costs) or a home equity line of credit (much higher interest rate). Think…pay off credit card debt, small bathroom remodel, new bow. And if you simply do not have the available funds to bring $1000s to closing? Roll it in and use your refund to build up your savings account.
I hope this information is helpful. Please feel free to pass it on (along with my contact info).
Your TBH Mortgage Sponsor….
Trey Powers
City Bank Mortgage
Trey@treypowers.com
512-203-5869
NMLS 1294913
We continue to see 30-year interest rates below 3.0%. If you feel like you missed the boat on the 2020 refi craze, you have not. Fine print – this is not a rate quote for you. Rates vary for each borrower based on a number of factors.
If you would like to know how a refi would look for your family, I would love to help. Shoot me an email with the following information and I’ll let you know a rate/monthly payment based on the information provided. (trey@treypowers.com)
- Copy of your last mortgage statement
- Estimated home value
- Estimated credit score
Late Year Refi - Escrow Considerations
There are considerations to understand when refinancing late in the year – and they relate to the escrow of taxes/insurance. If you choose to not include those two in your monthly payment, read no further.
If you choose (or are required) to escrow, here’s what happens: Within 30 days of your loan closing, you will receive a full refund of your current escrow acct balance. If your taxes have not yet been paid (usually December), the balance of that account will be significant. Consider you have been contributing monthly for 10-12 months.
At the same time - when your refi closes, your new escrow account must be full enough to pay property taxes in December, as well as hold two months of ‘cushion’. This is called your escrow prepaids and is on top of hard closing costs. There are two ways to handle populating that new escrow account: (1) bring those funds to closing as cash; or (2) roll them into the loan. Here is why you would do one or the other.
Bring Prepaids Cash to Closing
From a pure financial perspective this makes the most sense because rolling them in is essentially financing 2020 taxes for 30 years. In order to do this, you obviously have to have the available cash up front. It’s only a temporary hickey to your savings account as (1) that refund is coming and (2) you will be missing a monthly mortgage payment. Side note – you never have a mortgage payment due the month following the close of your loan. These two together usually cover escrow prepaids. You just have to be willing/able to “float” it.
Roll into the Loan
All closing costs and prepaids can be rolled into the refi loan with zero cash to close. If you roll escrow prepaids into the loan, you will be receiving a “windfall” check a few weeks later. This will be several thousand, maybe over $10,000 depending on your taxes. Note - your current escrow balance should be a line item on the latest mortgage statement. This is a slick way of getting cash equity out of your property without doing a standard cash-out refi (higher interest rate, higher closing costs) or a home equity line of credit (much higher interest rate). Think…pay off credit card debt, small bathroom remodel, new bow. And if you simply do not have the available funds to bring $1000s to closing? Roll it in and use your refund to build up your savings account.
I hope this information is helpful. Please feel free to pass it on (along with my contact info).
Your TBH Mortgage Sponsor….
Trey Powers
City Bank Mortgage
Trey@treypowers.com
512-203-5869
NMLS 1294913
Comment