Four years ago when I bought a house on an island off Long island, New York, I contacted my accountant about which bank he would suggest. He didn't. He gave me the name of a mortgage broker. Instantly, my back went up. Who wanted one of those mercenary mortgage brokers, which to me are akin to the boiler room stockbrokers. However, my accountant was a partner in a very, very big accounting firm and he advised me that this chap (David Steinberg, president of Summit Funding in Kew Gardens Hills, N.Y.) was the broker for the firm and did tons and tons of mortgages.
"Besides, he is much more honest than you."
Which isn't saying much.
So, I called David and he proceeded to give me some fairly sage advice. One I especially liked was the fact that he wasn't taking any commission from me for he got his fee from the bank, and another was "I will get you the best rate right through to closing."
Sure, yeah, of course. I'll tell him when he comes in. Brokers wrap up rates well in advance of closing so that they can turn to other clients.
But, David kept his word. Even at the closing, he was on the phone with the bank trying to squeeze some more points and he did. The lawyers weren't too happy when they had to change numbers at the eleventh hour. Who cares? Not my table. Not my problem.
I mention all of this because at the moment people seem to be running in droves to banks and mortgage brokers to refinance their properties.
A few weeks ago, I called David for two reasons: one, to lower my rate and two to find out what was really going on.
David says that the rates today are as low as they have been in decades but surprisingly, only 30 percent of the people who would benefit by refinancing have done so. "In other instances," he notes, "people are refinancing even though they will not benefit financially because they are not getting the best advice."
What is that best advice?
"If you have a short period remaining on your mortgage such as, for example, six years left on a mortgage at 7.75 percent, refinancing to a 5.5 percent mortgage and keeping the same terms is not beneficial. The savings would barely offset the transaction cost."
Similarly, he points out that anyone who plans to move in three to five years should stay away from refinancing unless it can be structured in a way to minimize costs "Take someone who owes $300,000 on her co-op. We can assist by doing a zero cost refinance. She will pay a slightly higher rate but still benefit from a 1.5 percent drop from her existing mortgage." (Incidentally, for those in New York, New Jersey, and Connecticut who own coops, with a loan amount of at least $250,000, the rate can be bumped .25 percent plus or minus to accommodate the closing costs.)
The $64,000 question, of course, is whether these low percentage rates will be with us for some time to come. "Rates are near the long term lows," says David. "That being the case, you can anticipate some upward pressure. That being said, I am optimistic for the next three months."
So, I refinanced. You want his e-mail? Let me know.
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