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]

Originally Posted by 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?

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]

Originally Posted by 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.

Originally Posted by 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.

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.

Originally Posted by 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.

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.

Originally Posted by 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.

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.

Originally Posted by 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.

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.

[polishmafia]

Originally Posted by Halon

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

This really kills me. I understand why this type of rule is in place, but why would a lender not even take me into consideration for a refi? I can pay my bills, I just want a lower rate.

Over the next 30 years, is the lender going to make more money sitting on non-payers and selling their foreclosed property? It makes NO sense to me.

[Goat Blower]

I've had several friends that weren't able to make their payments, the banks didn't help them a bit, they lost their houses. All that BS about the government helping homeowners is just for show, I haven't heard of one person that it's helped.

[Halon]

I know of plenty of people who've had monthly mortgage payments waved by their lender for several months due to income issues.

[TalonFiero]

Originally Posted by Halon

I know of plenty of people who've had monthly mortgage payments waved by their lender for several months due to income issues.

Right, there is another program and one that gets used a lot more than the HARP I posted a bout early. It's called HAMP home affordable mortgage program and pretty much anyone who has used it ended up foreclosing in the end anyway.

Slowbubblecar is right, I have had a hard time getting my lenders to look at the HARP, most haven;t done many and say things like they are not ready or have you fill out applications for the wrong programs. It's seems like they want you just to get lost in the paperwork and just go away.

[slowbubblecar]

Originally Posted by polishmafia

This really kills me. I understand why this type of rule is in place, but why would a lender not even take me into consideration for a refi? I can pay my bills, I just want a lower rate.

Over the next 30 years, is the lender going to make more money sitting on non-payers and selling their foreclosed property? It makes NO sense to me.

You can always apply, but their goal of the loan is making a profit. If they allowed everyone to refi to lower rates, they won't make as much money. If you would have signed up for a variable rate loan, you would have had the benefit for the change in rates the past year and a half or so. You also would have possibly had to pay more down the road when rates increase as well.

Originally Posted by Goat Blower

I've had several friends that weren't able to make their payments, the banks didn't help them a bit, they lost their houses. All that BS about the government helping homeowners is just for show, I haven't heard of one person that it's helped.

Many banks are doing a bad job working with their members. I think it is primarily due to the volume they are dealing with. Often times, the bank moves so slowly that the member doesn't make any payments and by the time the bank goes to resolve the issue, it is too late and the bank just decides to foreclose.

I have a friend who hasn't made a payment on his home the past year. It still hasn't even gone to the sherrif sale yet.

I have been interested in buying a house that was in a short sale for the past year and a half. Eventually the owners just said F-it because the bank wouldn't take what the house was worth and they didn't want it. When the seller gave up on selling it, I was told the bank wanted $80k more than my offer for the house (highest offer over past 1.5 yrs) which is rediculous. I am waiting for it to come back up again as the sherrif sale was completed recently and the member didn't have any interest in keeping it. I decided to just wait it out since the bank will be holding it for a while. I don't think the bank realizes the house needs 35k in repairs as it sits to fix 2 issues let alone the updating that needs to be done... The house has also been winterized the past few years so who knows what works now. I am hoping to get it for less than my original offer sometime next spring-summer.

Originally Posted by Halon

I know of plenty of people who've had monthly mortgage payments waved by their lender for several months due to income issues.

If they are struggling with making their payments, banks will be more willing to work with them to some extent. This practice is ok as long as the borrower has fixed the issue relating to his/her lack of repayment. Letting someone skip payments doesn't make any sense if it repayment issue will continue going forward.

[asshanson]

I actually called US Bank about refi, and they do approve them up to 125% loan to value which I barely qualify for. So everything was approved for me at < 4.5% until they realized my mortgage was FHA instead of a conventional loan. Sucky.

[slowbubblecar]

Originally Posted by asshanson

I actually called US Bank about refi, and they do approve them up to 125% loan to value which I barely qualify for. So everything was approved for me at < 4.5% until they realized my mortgage was FHA instead of a conventional loan. Sucky.

I don't understand why it would make a difference if it was FHA. FHA standards are more strict than conventional loan standards and all they would be doing is paying your loan off and creating a new loan. It would be no different than if you refinanced a car loan at a different bank (aside from additional paperwork).

Their explanation doesn't make sense to me. I am guessing it is something else and they just said that as a reason. I guess it is possible if they were trying to qualify you under the HARP program, but if they are holding the loan, they can make what ever changes they want.

[asshanson]

Yea the only way they'll give me a good rate being underwater is through a government program like HARP. They called it something else but it's basically the same thing, and FHA loans don't qualify for some reason.

[slowbubblecar]

If they really wanted to help you out, they could do it. I am not sure what incentices the banks have for using the government programs, but it is possible that it might not qualify under US Banks program because of the LTV. I would be amazed if US Bank was originating anything new >90% unless they have PMI.

[stikx]

Was your loan not through Fannie Mae? My brother's mortgage is through PNC, which is apart of the Fannie Mae network.

They refinanced him from 6.xx% to 5.xx% (I forgot the exact APR); they basically streamline refinance and you pay the closing cost or put it on the loan.

What's interesting is that other banks have called to offer better rates and the same process. I guess banks are being notified within the Fannie Mae network once you are in the system.