CashCall Mortgage Review: Same APR and Mortgage Rate

March 19, 2012 7 Comments »
CashCall Mortgage Review: Same APR and Mortgage Rate

So I listen to the radio here and there, and even though I only listen occasionally, I still tend to get bombarded with mortgage advertisements.

The latest was from a southern California based company named CashCall, which I believe started as a personal or payday loan lender before jumping into the mortgage game.

Anyways, I noticed in their radio ad that both the mortgage rate and APR were the same, which doesn’t tend to be the case with most mortgages.

Typically, you’ll hear something like, “Get a low, low 4% mortgage rate!,” followed by some fast talking terms and conditions speak that says 4.55% APR or something higher.

So that bit jumped out at me initially. It sounds like a great deal, right? Instead of the usual “bait and switch,” where your mortgage refinance is riddled with fees, you’re actually getting the interest rate they advertise with no fees!

But wait, this must be too good to be true. How can you get a super low rate and pay no fees. The short answer is you can’t. There’s no free lunch, or free mortgage, for that matter.

CashCall “No Closing Costs” Mortgage

CashCall, like many mortgage lenders before them, touts no cost refinance loans as their marquee product.

Put simply, a no cost loan, or in their case, a “No Closing Costs” mortgage, means the borrower doesn’t have to pay for their closing costs….out of pocket.

They still pay for their closing costs, just not all at once at the time of closing. Instead, they’re saddled with a higher than par mortgage rate to make up the difference.

I took a gander at some of CashCall’s mortgage rates and noticed that the “No Closing Costs” loans tend to have interest rates roughly an eighth to a quarter of a percentage point higher.

This premium essentially covers a borrower’s closing costs, including things like the appraisal fee, credit report fee, flood certification fee, tax service fee, notary fee, and title/escrow fees.

So borrowers that elect to take the No Closing Costs option won’t have to pay those fees at closing. However, they’ll wind up with a mortgage rate of say 4.125% instead of 3.99%, or 3.50% instead of 3.25%.

While it may not seem like a lot, that little eighth or quarter point can cost you a pretty penny over the life of the loan.

Let’s look at an example of CashCall’s No Closing Costs mortgage:

Loan amount: $300,000
Loan program: 30-year fixed
Mortgage rate: 3.99%
No Closing Costs rate: 4.125%

If you paid your closing costs out of pocket and took the lower rate, you’d end up with a monthly mortgage payment of $1,430.52, and total interest of $214,987.20 paid over the life of the loan.

If you went with the No Closing Costs rate, you’d have a monthly mortgage payment of $1,453.95, and total interest of $223,422 over 30 years.

As you can see, the monthly payment wouldn’t be all that much different, about $25. But the total interest paid over the life of the loan would be roughly $8,500 more.

So for those who actually keep their mortgage and pay it off over 30 years, they’d be paying more for those closing costs over the life of the loan.

But most borrowers don’t hold onto their home loans for the full mortgage term, either because they sell, refinance, or prepay.

In other words, the savings may not actually be realized if you pay your closing costs upfront. And even if they are, they aren’t all that spectacular, especially with the effects of inflation at play.

The big question is whether the mortgage rate will really only be an eighth of a percent different, or if in reality, it’s closer to a half point different. That’s when it may make a lot more sense to pay your closing cost out of pocket.

The takeaway is that the mortgage rate on a no cost loan will always be higher than a home loan where you pay your closing costs upfront, all else being equal.

Tip: If you take the time to shop around, you may be able to find a no cost loan with a lower interest rate than a mortgage where you must pay your closing costs upfront.

CashCall ‘Do Over Refi’

The company’s latest and greatest mortgage product is its so-called “Do Over Refinance,” which allows owner-occupied borrowers to refinance with CashCall if their loan recently funded elsewhere.

Call it a play on mortgage rates marching lower and lower as time goes on.

By recently funded, I mean within the past 18 months.  Borrowers must provide a copy of the mortgage note or statement with the current fixed interest rate, the mortgage term and loan type, then CashCall will offer a lower fixed rate with no closing costs.

Just watch out for that lower rate coming with a shorter mortgage term, such as a 10-year fixed instead of a 15-year of 30-year fixed, as shorter terms will always come with lower rates.

Oh, and the loan must fund within 30 days of application, which isn’t so easy these days. If CashCall can’t hold up their end of the bargain, they’ll pay the borrower $500.

CashCall Jumbo Loans

In May 2013, CashCall began offering super jumbo loans as well, with loan amounts of up to $2 million at a maximum loan-to-value ratio (LTV) of 70% (720 minimum FICO score required), which is certainly pretty aggressive post-mortgage crisis.

If you are able to keep the loan amount at or below $1.5 million, you can push the LTV up to a maximum of 80% with a minimum FICO score of 700.  Again, aggressive stuff here.

CashCall offers jumbo loans on both 30-year and 15-year mortgages – adjustable-rate mortgages (ARMs) aren’t available at the moment.

The rates on their jumbo offerings are pretty competitive as well, with no closing cost options available in the low 4% range for 30-year loans, and the low 3% range for 15-year loans.

If you’re shopping for a jumbo, you may want to consider them alongside other options seeing that very few lenders are in this space at the moment.

7 Comments

  1. Gregg January 9, 2013 at 1:34 pm -

    CashCall offers the most competive rates for no cost loans.
    In a market where rates are dropping why would you pay points only to refi again and again. If the rate is 1/4 percent
    lower than your current rate and it is no cost then do it!

  2. pluto January 10, 2013 at 10:56 pm -

    Very impressed with Cashcall mtg.. they did our loan in 14 days (application to payoff) on a no-cost loan. In my case, I dropped the rate from 5% prior to 4% after refi, so didn’t mind an 1/8 etc. My strategy: never try for the LOWEST rate, just leave an 1/8 in rate for the lender, you’ll be amazed how well they treat you and how fast they will work on your file. Afterall, they need to make money as well ;-)

  3. Larry Gray January 30, 2013 at 8:21 pm -

    That is great Pluto. Of course Yelp…still far from perfect…
    has more accuracy then most. People have to have
    their information provided to do reviews and report
    to the public. Cash Call has their usual best customers that loan officers have persuaded to go on or some went on their own…but the negatives are alarming.

    I checked long time lending groups with experience
    lenders who funded many millions of loans each year
    and none…none had any negative comments. You really
    have to screw up to get negative comments for your
    two weeks or 30 days or whatever in the loan process
    with a loan officer for someone to take the time
    to publicly complain about you on YELP! And they
    do in numbers,…lookout at not losing your property
    if a purchase loan!

    Advertising heavily means order taking loan officers,
    that even if they are knowledgeable and following with
    the incredible amount of information you have to keep up
    with (doubtful they will) most have no time to deal properly
    with all that is required to be near perfect in the
    purchase loan process. Refi- well you take your chances
    and at worst you still end up with the rate you already
    have!

  4. Kim July 22, 2013 at 7:45 am -

    Amazingly, they closed my refinance loan in less than two weeks. I was very, very skeptical, seeing that I heard refinances were taking two months on average everywhere else. Their lock period was only 15 days, so I figured that was the bait and switch. But we closed before the lock expired and I got the rate I was originally quoted. Of course, my loan was easy and stayed on the company like a hawk. Do the same if you want to get your loan closed fast.

  5. Brandi February 10, 2014 at 10:39 pm -

    I noticed CashCall has two options now – no lender fees and no closing costs. Make sure you pay attention to the difference because the former means you are on the hook for third party charges!

  6. fred February 11, 2014 at 2:29 pm -

    If I have a 5 year old “first time homebuyer” mortgage, what options would I have to refi? It was a FIXED 30 year at 4.875%, (25 years to go). There isn’t enough equity for most conventional refi loans because the first time loans allow for a much smaller down payment. We don’t have 20% to put down just to reduce our rate. Still, there must be a way, even if we put down little or nothing and it gets rolled into the finance. The key would be we would need a loan with no penalty for early payment. So what we would save, lets say $200 to $400 a month, we would apply right back to principal.

  7. Colin Robertson February 11, 2014 at 4:11 pm -

    Fred,

    The going rate for a 30-year fixed is around 4.5%, so your rate of 4.875% isn’t necessarily high. And it sounds like your loan-to-value is higher than 80%, which could make you eligible for HARP if your loan is owned by Fannie/Freddie, but even then the rate might still be 4.625% or higher. I’m looking at CashCall’s current mortgage rates and that’s the case with them. So the savings won’t be very high assuming the loan isn’t enormous.

    Check out this payment chart for more on that:

    http://www.thetruthaboutmortgage.com/use-this-mortgage-payment-chart-to-easily-compare-rates/

Leave A Response