Refinance mortgage for profit

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Lots of lenders are offering credits that exceed the closing costs, leaving you with a large check at closing. My last refi put a $3500 check in my hand, on top of the lower rate and lower payment. So my question is, will lenders do a refi with same/similar terms? I don't think they'll lower my rate, but a new lender would be able to initiate a new loan, make their numbers for that month, and profit over the course of the loan. Is this unheard of? People doing this already? If not, what is stopping them? Seems like there could be possibilities to "churn" your mortgage while the lender credits are large.

- I know the VA won't allow a refi unless there is a savings on the monthly payment, but what about other types of loans?

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One of my favorite strategies

http://www.fatwallet.com/forums/arcmessageview.php?catid=52&threadid=54865

Yes you can keep pocketing lender credits for profit , assuming you find enough lenders willing to put cash in your hand rather than just apy the credit to closing costs

SUCKISSTAPLES said:   One of my favorite strategies

http://www.fatwallet.com/forums/arcmessageview.php?catid=52&thre...

Yes you can keep pocketing lender credits for profit , assuming you find enough lenders willing to put cash in your hand rather than just apy the credit to closing costs


I could see this working 10 years ago, but now since lenders have tightened up so much?

wvtalbot said:   SUCKISSTAPLES said:   One of my favorite strategies

http://www.fatwallet.com/forums/arcmessageview.php?catid=52&thre...

Yes you can keep pocketing lender credits for profit , assuming you find enough lenders willing to put cash in your hand rather than just apy the credit to closing costs


I could see this working 10 years ago, but now since lenders have tightened up so much?


The process is grueling but if you are in position to do it then by all means. I haven't taken out much ($100 here, $200 there) but have been locking lower rates along the way. When/if I am in position to pay it off I am going to take the wosrt rate with most credits for closing and escrow then pay in full and have my tax bill + insurance covered for the year. Make sure there are no prepayment penalties or scape clauses for credits not used for the close.

Just used this strategy to bounce out of a 5/5 3.5% Penfed loan into a new 5/5 2.5% Penfed loan and Amerisave paying me $3,000 for my trouble.

Amerisave was painful (4 months for a relatively easy refi) but Penfed dropped their rates during that time so all is good.

HappyGuy said:   Just used this strategy to bounce out of a 5/5 3.5% Penfed loan into a new 5/5 2.5% Penfed loan and Amerisave paying me $3,000 for my trouble.

Amerisave was painful (4 months for a relatively easy refi) but Penfed dropped their rates during that time so all is good.


How did this work? Did Amerisave "price match" Penfed?

I had an existing Penfed mortgage, I did a standard fixed rate 30 year mortgage refi with Amerisave at the highest rate I could take. By taking the high rate I got approximately 2% rebate from Amerisave. About half the rebate covered closing costs and half was used to fund my escrow accounts.

I then did a refi back to Penfed to get the 5/5 arm at 2.5% with a 1/8 buydown. I don't plan on churning this but never say never.

Is this the infinite money making loop you are talking about?
I was quoted by my mortgage company
3.625% (0 points)
4.75% (-3 points) i.e Cash Back for accepting this higher rate.
Lets say your mortgage refinance is a fixed cost of $4,000 dollars and your mortgage is $400,000
No matter what your current rate is you should refinance to 4.75 and get 0.03 x 400,000 = $12,000 , you use this to pay the 4,000 dollar fees and you make a good $8,000 dollar profit!
You then immediately refinance (I was told I could do this again after 3 days) back to 3.625 for 0 points and pay another $4,000 closing /refinance cost.
You still come away with a net $4,000 profit!
Now 3 days later you could refinance again to 4.75 and repeat.
Whats the catch?
I dont have such a big mortgage but if I did I would be rich!
This only seems to work if 0.03 x Mortgage Amount > 2 x refinance cost and if mortgage rates stay about the same.

In my case going from my current 5% to ~ 3.5% in one step costs me, but doing it in this tow step approach saves me money! Who wins who looses in these schemes?

dack25 said:   Who wins who looses in these schemes?

Who wins? Who loses? Who knows? Who cares?

Just make sure that you pocket some cash at the end of the day!

There's no way they are going to give you 3 points and allow you to payoff the mortgage in 3 days with no penalty.

Well, it takes longer than 3 days to get a mortgage anyways.

I have already gone through appraisal and underwriting everything which is good for 4 months...
In my case I am currently at 5% and have a few options

-Go to 3.625% and pay for closing costs

-Go to 4% with no closing cost mortgage (negative points are used to zero out closing costs)

-Go from my current 5% to 4.75% pocket some money. And then immediately refinance to 3.625% , But use the money I pocketed from the First refinance to pay for the second one. This two step approach gets me 3.625$ with almost no closing costs. And would have cost me $$$ if I went in one step.

All this assumes rates don't change much, and I can lock in my new rate 3 days after I close the first one according to my mortgage company.

it can work, but some lenders won't let you refi if you've had a title transaction on the same property within 6 months. a smart underwriter could also see the trend of the mortgages hitting your CR and being paid off within a short timeframe and decide that's not happening.

dack25 said:   Who wins who looses in these schemes?

WINNER:
You

LOSER:
The issuing bank--or, if the mortgage has already been securitized and sold, then whoever bought the mortgage security into which your mortgage has been packaged.

SUCKISSTAPLES said:   One of my favorite strategies

http://www.fatwallet.com/forums/arcmessageview.php?catid=52&thre...

Yes you can keep pocketing lender credits for profit , assuming you find enough lenders willing to put cash in your hand rather than just apy the credit to closing costs

SiS - Is this still viable?

Who do you use for the HEL instead of Netbank now?

SUCKISSTAPLES said:   One of my favorite strategies

http://www.fatwallet.com/forums/arcmessageview.php?catid=52&thre...

Yes you can keep pocketing lender credits for profit , assuming you find enough lenders willing to put cash in your hand rather than just apy the credit to closing costs


About to go house hunting, is there a quick list of online lenders who give you these credits?

SUCKISSTAPLES said:   One of my favorite strategies

http://www.fatwallet.com/forums/arcmessageview.php?catid=52&thre...

Yes you can keep pocketing lender credits for profit , assuming you find enough lenders willing to put cash in your hand rather than just apy the credit to closing costs


If you go with option 2, do you have to worry about that income being taxed?



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