Re-financing Home Mortgage

[Halon]

I have 3 people I know now that have recently refinanced their home loans. They all said they were given a couple options.

For example say their current rate was 6% interest. They were given an option to lower to something like 5.2% for free basically. No closing costs, no fees, nothing. They were also given an option to lower to something like 4.9%, but in that case they'd have to pay closing costs, or have the closing cost added to their loan. They all took the 5.2% option as it was free. Basically just a new loan, at lesser interest, no fees, done deal.

So I just called my lender (TCF) and asked about this. In my case my loan is 6%, and tha actual amount is probably about $5000 more than my house is worth (due to housing market situation). So he didn't sound too optimistic that I would be able to refinance to a lower rate.

Anyone have any experience with this? I was kind of suprised, because I thought there are tons of people like me who actually owe more than their house is worth now, and so I didn't realise that was going to be a big issue as I thought tons of people are in my same shoes.

So I don't really get it. I will hear back in a couple days, but now I don't feel too optimistic. Kinda bummed because after hearing what these other people did, I was looking forward to possibly getting somewhat of a better rate.

[polishmafia]

In in the EXACT same situation. I called my lender, and they said not to try to refi because my house was worth less than what I owe on it. Let me know if you hear anything. I'd love to get a lower rate.

[asshanson]

I think you have to get two mortgages in that case (same situation for me). A lower rate for what your house is worth, and a second one for the remainder at a higher rate. Or you pay cash for the difference of what you owe if you have the money to spare.

This doesn't really save you money in the short term though, which would be the whole point for me to try and get a lower rate. I don't plan on keeping it a long time so having the second mortgage doesn't really make sense, plus I'm about $30k under so I really have no choice but to stick it out for awhile.

[TalonFiero]

What about the HARP program?

You may be eligible for HARP if you:

* Own a one- to four-unit home that is your primary residence;
* Have a mortgage owned or guaranteed by Fannie Mae or Freddie Mac
* Are current on your mortgage payments and have not been more than 30 days late making a payment within the past 12 months
* Have a first mortgage not exceeding 125 percent of the current market value of your home;
* Have income sufficient to support the new mortgage payments; and
* Can improve the long-term affordability or stability of your loan with the refinance.

This is what I am looking into as my mortgage is secured by Fannie Mae and I am at least upside down by 10-15% on my mortgage.

I'm locked in a 30 year fixed at 6.375% which was lowest rate back in 2005. :(

[Tachyon]

I had a good friend in Duluth who bought a home 2 years ago @ 6.75% successfully refinance using FHA streamline program. All he did was go down to a small locally based bank and locked in at 4.25% + Closing costs. Not too sure what his home is worth now compared to when he bought it, however.

[Halon]

It looks like I'd qualify for all that. Exception being the Fanny Mae thing, I have no idea on that one. How would one know that?

As for Tachyon, I'm really not interested in anything that makes me pay closing costs again, so that one would be a no go for me. But thanks for the info!

[Goat Blower]

It looks like I'd qualify for all that. Exception being the Fanny Mae thing, I have no idea on that one. How would one know that?



http://www.fanniemae.com/loanlookup/

You all are lucky. My home is currently valued at about $75k less than what I owe, and I put down almost 20%. Early 2005 was not the time to build a new house.

[slowbubblecar]

I have 3 people I know now that have recently refinanced their home loans. They all said they were given a couple options.

For example say their current rate was 6% interest. They were given an option to lower to something like 5.2% for free basically. No closing costs, no fees, nothing. They were also given an option to lower to something like 4.9%, but in that case they'd have to pay closing costs, or have the closing cost added to their loan. They all took the 5.2% option as it was free. Basically just a new loan, at lesser interest, no fees, done deal.

So I just called my lender (TCF) and asked about this. In my case my loan is 6%, and tha actual amount is probably about $5000 more than my house is worth (due to housing market situation). So he didn't sound too optimistic that I would be able to refinance to a lower rate.

Anyone have any experience with this? I was kind of suprised, because I thought there are tons of people like me who actually owe more than their house is worth now, and so I didn't realise that was going to be a big issue as I thought tons of people are in my same shoes.

So I don't really get it. I will hear back in a couple days, but now I don't feel too optimistic. Kinda bummed because after hearing what these other people did, I was looking forward to possibly getting somewhat of a better rate.

In in the EXACT same situation. I called my lender, and they said not to try to refi because my house was worth less than what I owe on it. Let me know if you hear anything. I'd love to get a lower rate.

If you have equity or are thought to have equity by the lender, they will be more inclinded to work with you in these situations and might offer to lower the rate as it is easier for you to refinance elsewhere. Most financial institutions in MN have cut lending limits a bit and it is harder to find 100% lending. Since you don't have much equity (if any), the bank knows it is unlikely you would be able to refinance at a lower rate elsewhere and feels less inclined at granting concessions to a performing loan.


I think you have to get two mortgages in that case (same situation for me). A lower rate for what your house is worth, and a second one for the remainder at a higher rate. Or you pay cash for the difference of what you owe if you have the money to spare.

I would be suprised if someone could find a lender that would be willing to take in an underwater loan. Many lenders have been losing their but on underwater loans and some private mortgage companies have stopped insuring loans that are underwater.

What about the HARP program?

You may be eligible for HARP if you:

* Own a one- to four-unit home that is your primary residence;
* Have a mortgage owned or guaranteed by Fannie Mae or Freddie Mac
* Are current on your mortgage payments and have not been more than 30 days late making a payment within the past 12 months
* Have a first mortgage not exceeding 125 percent of the current market value of your home;
* Have income sufficient to support the new mortgage payments; and
* Can improve the long-term affordability or stability of your loan with the refinance.

This is what I am looking into as my mortgage is secured by Fannie Mae and I am at least upside down by 10-15% on my mortgage.

I'm locked in a 30 year fixed at 6.375% which was lowest rate back in 2005. :(

I am not sure I believe that this will be an easy program to do. You might be required to pay closing costs as well. I don't know many lenders that have refinanced loans through this program.

I had a good friend in Duluth who bought a home 2 years ago @ 6.75% successfully refinance using FHA streamline program. All he did was go down to a small locally based bank and locked in at 4.25% + Closing costs. Not too sure what his home is worth now compared to when he bought it, however.

He probably had a bit of equity in his home.

[Halon]

So from what I understand, the people who have an easy time reconfiguring their home loans with the bank are:

1) Those that were not the most affected by the housing market crash as they are still ahead on their loans (have equity)

2) Those that are not managing to pay on-time everytime (not 'performing' as you put it).


But, if you have been affected a bit by the housing market crash / economy and as such are in a situation where you owe more than your house is worth, and have still managed to pay your payments on-time everytime (performing) then forget about it? :( sucks, guess I'll just stay where I'm at if that ends up being the case.


Gotcha, thanks

[slowbubblecar]

You can try to go elsewhere, but it will be difficult. That is unless you have the cash to pay for the amount you are upside down and get a little equity. I know many lenders. Depending on where your loan is at, some won't even work with struggling members until the loan is at the point of foreclosure.

Look at things from the banks perspective. If rates lower, people want to refinance and get the benefit. If rates increase, the bank cant just call your loan because they are able to get a higher rate else where (unless you have been in default).

On the bright side, things could be worse. At least you have a home you can call yours and are able to make the payments.