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Loan To Value (LTV)
Countrywide Fastrack program...max. LTV in Minnesota of 70%?
Question :

I'm a current Countrywide customer for almost 13 years, and we did a Fastrack refinance two years ago at 6.75% with cash out for minor home improvements and pay off some debts from putting our kids through private schools and college. This weekend I applied online for a new Fastrack refinance at 4.75% and was approved by their automated system.

We're not seeking cash out, just prefer to roll in closing costs. When I called to follow up with Countrywide, the agent said, the maximum Loan To Value (LTV) in Minnesota for their best rate was 70% of current tax value with no appraisal. We would be at 79%, so, he offered me instead a refinance rate of 5.5% with 1 point, which doesn't seem worth the closing costs.

Our credit scores are good: FICO of 770 to 790 for husband and 740 to 780 for me, combined annual salaries of $160,000, and other debt payments under $1,000 per month.
Does this LTV scenario seem valid, or could this agent be mistaken? Any recommendations for another lender for the refinance?

Answer :

I presume 'fastrack' program avoids some of the typical closing costs of a standard Refi, but, without exact details, it's impossible for me to compare what they are offering you to what we currently have available.

Although each lender would quote their own origination fee, our quote would be $2,834 (inclusive of all 800 section costs). Title and taxes would add another $1400 making the total closing costs about $4,200; which could definately be rolled into your no-cash-out refi.

By my calculations, the interest cost of $160,000 at 5.5% would cost you $8,800 for the 1st year. However, if you were at 4.625%, the interest cost would only be $7,400. I have a spreadsheet that I prepare for our clients to help them analyze the break even costs of refinances, let me know if you'd like a copy.

To summarize, if you compare the total costs of each loan over say 5 years, I think you'll see one of the loan options clearly in your favor.

Date: April 01