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I was doing a cash-out refinance comparison on Credit Karma, with a total loan amount of ~$335,000, and received this list of offers to consider:

enter image description here

Google's mortgage calculator shows the standard monthly payment for this loan as being $2,234 enter image description here

and obviously that lines up well with the 2.25% and 2.375% payments listed.

Is there any way the RocketMortgage loan could be structured to have the same loan amount, a 25 basis point higher interest rate, and a 15% lower monthly payment, and still qualify as a 15-year fixed mortgage?

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    I am thinking that the bankrate automatically added a down payment into your calculation. ~2233 is about right for a 15 year fixed @2.5% for 335K.
    – Pete B.
    Jun 24, 2021 at 17:19
  • That's the only thing I could come up with, and the mortgage calculator gives me an $1,834 monthly payment for $275K. But the search specifically asks for an existing loan payoff + cash out value, which comes to $335K (which is below the 80% LTV threshold, FWIW). It just seems improbable that the search engine saying "Oh BTW, if you don't actually want the loan you searched for, this one has a lower monthly payment!" would make it out of acceptance testing.
    – Matt Mills
    Jun 24, 2021 at 17:25

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The only way that a fixed-rate loan could have a lower monthly payment is if there were a balloon payment at the end, or if the monthly payments increased over time, both of which should be very unusual and would need to be clearly indicated early in the process.

I originally thought that the "fees" could include points that would lower the rate, but that payment would equate to a roughly 0% rate (1831 * 15 * 12 = 329,580), and those fees aren't nearly high enough to lower the rate 2.5%.

Personally I'd assume it's just using a different loan amount (that payment gives a PV of $274,600).

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  • Those were the same lines of thinking I'd followed, but I've been amazed in the past at some of the clever ways people come up with to take other people's money and make them think they're getting a good deal in the process, so I wanted to see if there was something I didn't know about.
    – Matt Mills
    Jun 24, 2021 at 20:57
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    There are all kinds of creative ways to loan money, but the mortgage industry is pretty well regulated, so either of those cases would be highly unusual. Which is why I'd bet on bad data :)
    – D Stanley
    Jun 24, 2021 at 20:59

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