Folks, while Provident Funding does not offer a no closing cost mortgage per se, they present you a rate sheet of the rates and allow you to pick, in effect, the amount of closing costs you want to pay, regardless if it’s $0, or the whole kit and caboodle.
A little about Provident Funding, they are a lending institution out of Burlingame, California; and are also know as Provident Funding L.P. They loan in what appears to be the contiguous 48 states which excludes Alaska and Hawaii. They loan direct to you and me, the consumer, but they also loan through mortgage brokers as well through their mortgage wholesale section. While I am no mortgage ‘insider’, they claim on their website that they are the 10th largest wholesale lender in the US and service over $25 billion in loans.
You can go to their website and see what kind of mortgage interest rate you qualify for by running your numbers through their ‘Advanced Calculator’ option on their website to see what kind of rates you may qualify for. You will get a wide range of rates with the rates on the top being the lowest rates you can get by paying closing costs or buying points. As I write this, the lowest rate for my state is 4.25%, but that will cost you regular closing costs AND 3.125% in points. You could go all the way up to 5.5% for your mortgage rate and get a no closing cost mortgage, which is labeled as ‘No NRCC.’
What does ‘No NRCC’ mean? Well, it means that for that interest rate, there are ‘No Non-Recurring Closing Costs’ associated with that interest rate. Or, what I like to refer as a no closing cost mortgage. Now, if you are paying real estate taxes or insurance, that is not considered NRCC because you will always those costs year in and year out.
Funding fees however, title fees, mailing costs, lawyer fees, whatever however, that you only pay in the course of getting your mortgage is covered under the ‘No NRCC’ option which is what this website is about. We want no closing cost mortgages because they allow the most flexibility to us as the consumer.
I’ll restate it like I have in the past, BUT, if you are moving into your forever house, then you may look into paying closing cost and even potentially purchasing points to get that lower interest rate, but if you are like most Americans, you won’t be living in your forever house and will move in short order, so it would be best to get a no closing cost mortgage if it is less than three years as I pointed out in a previous post with the analysis.
If you decide to go with the ‘No NRCC’ option however, you do also have the option of taking a bit lower rate for just a tad bit in closing costs. For instance, looking at my situation, if I wanted to pay no closing costs, I would be looking at a interest rate of 5.5%. If however, I paid $145.40 in closing costs, I could get the one lower interest rate of 5.375%. Heck, looks to me like I could potentially get 5.25% for only $290.81. Sounds like I need to give Provident a call and look at refinancing my mortgage again from when I refinanced with Wells Fargo back in April. While I will admit that will re-amortize my mortgage, it will save me about $22 a month, or $264 a year. Not a large sum of money I will admit, BUT, that is money in my pocket today which is what I am after, cash flow today. If however, you want to pay off your mortgage as quickly as possible, then you may want to pay it off quicker, or with larger payments. BUT, you could refinance, apply the payment savings to your mortgage, AND add in the payments you were making.
Let me illustrate, and I’m using round numbers again because that’s how I operate, my brain is simple although randomly it will do semi-complex numbers, but we’re keeping it easy today.
If my mortgage is $1,000 a month right now. If I refinanced, I could potentially save $150 a month at a lower interest rate, but make payments for 30 years from the day my mortgage closed again. Well, I could keep making payments of $1,000 and pay my mortgage off that much quicker, less than 30 years because I’m making more than the required payment. And you’ll pay less in interest over the life of your mortgage.
Provident Funding charges a $1,099 funding/commitment fee to do a loan for you. This fee is flat and does not adjust like it would if they charged a 1% fee like many mortgage brokers do. If we divided the $1099 fee by 1%, we get $109,900. If your mortgage is $109,900 or less, the fee would be the equivalent of paying a 1% funding fee. If however, your mortgage is larger than $109,900, that is when you start saving money over going with a traditional mortgage broker that charges a 1% funding fee. If your mortgage amount is $200,000, Provident Funding Mortgage will still only charge you $1,099. If you go with a mortgage broker however that charges you 1%, then you’ll pay $2,000. You can see that you’ll pay $901 more to a broker over directly going with Provident Funding.
Why am I talking about Provident Funding though and what do I know about them? Before I refinanced my mortgage with Wells Fargo, I had refinanced prior to that with Provident Funding with a conventional 30 year mortgage. It has been some time, so the statements I am about to make are from my memory which may or may not be accurate.
They were easy to deal with and my mortgage refinance went relatively painlessly except for the issue in which I asked to close with one group and they tried to close with a notary. While I would probably go that route NOW, I didn’t then and my mortgage closing had to be rescheduled until the people I wanted to close with could get the documents and close.
Otherwise, the application process, lock process, everything was pretty painless. My processor was responsive and was pleasant to deal with. I unfortunately don’t know if she still works for Provident Funding, but she was all right to deal with. Another thing that I enjoyed about Provident is the fact that in the five years they held my mortgage, then NEVER sold my mortgage. I always made my payments to them the loan was never sold.
Because of this reason however, Provident may be a little bit more conservative in their lending criteria, so unless you have awesome credit and a stable income, they may or may not be the lender to go to.
If I remember correctly, from application to closing took me about two months which isn’t out of the ordinary, I believe it’s about average as far as mortgage refinancing goes.
While visiting their website, they are associated with a bank now out of Colorado and are offering a high yield savings account currently running 1.7%. For a savings account with no minimums, that is a respectable rate. Even Ally bank where you see those funny commercials on TV about the restrictions and no fees, is running a lower interest rate than Colorado Federal Savings Bank.
Enough about Provident, post your experiences with them if you have them or are looking at using them. I’d be interested to hear what you have to say about them and see if they are still right for me to refinance with. I will of course be calling them to inquire further on the rates.
Speaking of rates though, they have gone down a bit recently and if you have a no closing cost mortgage, you may be looking to refinance again to lower your mortgage amount.
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