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I am looking to refinance my current, primary residence, mortgage.
I want to lower the number of years left (from 22.5 to 20) and the interest rate.
My current lender is pushing the MHA really hard. No formal appraisal and about $2000 lower closing costs. WHY? The rep almost doesn't want to discuss a normal refinance. Right away he told me how much higher the closing costs would be and that I would be taking a big risk.
I am not upside down on the house. There would be about $100K equity between what is owed and what MHA's appraisal is. If I go for conventional/conforming refinance, there's a appraisal and there's a risk that the property will appraise much lower and I would not have the minimum 80/20LTV.
So...the interest rate is 4.375 on the refinance on a 20 yr fixed (vs my current 5.625); APR would be 4.648%. Is this good?
I'm not exactly sure what's behind all the numbers and the type of refinance program. It's tempting to go for the lower closing costs, etc. but what would I be getting into down the road that is unknown now?
Got your PM - this might be better answered by one of the mortgage guys.
My $00.02
Refinancing to another bank, you will have higher closing costs.
Refinancing directly with your existing lender - known as a Stream Line Finance, your escrows do not need to be set up, there's no title charges and less fees because your staying with the same Lender. This is why there are less closing costs.
The program you are referring to to is part of the HARP program (Home Affordable Refinance Program). You are required to have an existing Fannie Mae loan. It allows refinancing up to 125% and the 625 min credit score requirement is waved. They look at the last 12 months of on time payments.
If you were going to refinance into a FHA loan, the first 5 years have a mandatory requirement for mortgage insurance before it could drop off. THE HARP Program - if your LTV is less than 80%, there is no MI.
The goal of the refinance effort, as announced by the President, is "to provide access to low-cost refinancing for responsible homeowners suffering from falling home prices.
Bottom line ask yourself - what will be the reduction in payment, or your what do you gain by refinancing?
Location: Lots of sun and palm trees with occasional hurricane :)
8,293 posts, read 16,155,259 times
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Quote:
Originally Posted by Modification Specialist
Got your PM - this might be better answered by one of the mortgage guys.
My $00.02
Refinancing to another bank, you will have higher closing costs.
Refinancing directly with your existing lender - known as a Stream Line Finance, your escrows do not need to be set up, there's no title charges and less fees because your staying with the same Lender. This is why there are less closing costs.
The program you are referring to to is part of the HARP program (Home Affordable Refinance Program). You are required to have an existing Fannie Mae loan. It allows refinancing up to 125% and the 625 min credit score requirement is waved. They look at the last 12 months of on time payments.
If you were going to refinance into a FHA loan, the first 5 years have a mandatory requirement for mortgage insurance before it could drop off. THE HARP Program - if your LTV is less than 80%, there is no MI.
The goal of the refinance effort, as announced by the President, is "to provide access to low-cost refinancing for responsible homeowners suffering from falling home prices.
Bottom line ask yourself - what will be the reduction in payment, or your what do you gain by refinancing?
"
Thanks for your reply.
That's something I'm a little confused about. I thought that by staying with my lender, I would have lower costs even going through a regular refinance (not the MHA) but not according to what the rep said. My closing costs are over $8K. They still have to do title search, they still have to get all the documentary stamps, Florida has I don't know how many other things I need, and I'd have to pay for the appraisal AND a $400 application fee.
With the MHA Refinance, some things are not necessary (like the formal appraisal but does have a $400 application fee) and I don't know what else, that reduces the closing costs by about $2K going the MHA route.
The interest rate & APR is exactly the same under either refinancing option.
The rep said I'd save 2.5 yrs worth of mortgage (because I'm going to 20 yrs and still have 22.5 yrs left currently) and then it's only $44/mth less for the life of the loan but, all in all, it's about $36K over the 20 years. I'd break even in 18 mths for the closing costs.
Something just doesn't add up with me but I don't know enough about this to figure it all out by myself.
Doesn't the bank get some money from the govt for doing MHA loans?
My FICO is over 800. Have never been late with payments. I'm not looking for cash out. I think I should get a better deal.
You are right - what was said things do not add up. Why would your bank need to do a title search if they hold your loan now?
It appears he is trying to talk you into a refinance. A new lender would require a new title search to make sure the property is free and clear.
As for not doing an appraisal - there might be a program where the new lender does an AVM appraisal (a computer check on the value). I heard something a few months ago about AVM's in Florida, honestly don't recall that. Again one of the mortgage guys could give you more information.
If you really want to check out what help is available, go to your your lender directly.
Do not ask for a loan modification to lower your payment, say you want a Streamline Refinance into one of the making home affordable programs. Other than the cost of a new appraisal and an underwriting fee, it shouldn't cost you much....
The reason your current lender is charging you the costs is they dont have your loan... they are simply servicing it. Going through them will be the same as going with any other lender, it will be a refinance. You will do better if you go with a broker who can shop you with mulitple lenders to find the best deal. If you get a mortgage with bank of america, they are not lending you their money. They borrow the money short term, 30 to 60 days, then sell your loan off.
Direct banks realize when consumers call them, they feel they will get the best deal because you are cutting out the middle man(broker). That is totally false, I speak to retail loan officers and their rates are .25% to .50% higher with the same costs.
Lastly, about closing costs. Closing costs and interest rate has an inverse relationship. the more you pay in closing costs, the lower the interest rate. The less you pay in closing costs the higher the interest rate.
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Gosh. I have no clue what to think now.
My last two mortgages were with Countrywide and Bank of America took over Countrywide. They are my lender, there's nobody else (that I know of). It is a Freddie Mac or Fanny Mae backed mortgage (I don't know which) and that is why I can get into the Obama Making Homes Affordable refinancing program. It's just a plain ole refinance - not modification, not FHA Streamline, none of that. But there is about $2K difference between going the Obama route or a real regular refinance.
I have to call the guy back because he didn't say if that 4.368 interest rate was with or without points, but I really think that $6400 in closing costs should have a lower interest rate, or I should have lower closing costs.
I'll be gaining just over 1% in interest rate and chopping off 2.5 years but is it worth all the costs? I don't know that it really saves me $36K over 20 yrs like the BOA rep said.
How do I find out who "owns" my mortgage then if it's not BOA?
And why would they have to do title search and all if they are the lender?
I've been seeing some posts on this forum and people are getting much bigger refinance mortgages, with much lower interest rate and much, much lower closing costs.
I don't know any brokers and I don't know about trusting any in Miami.
The bank might not know who owns your mortgage. Could be a wealthy Asian investor(they buy a lot of mortgage backed securities), a teacher retirement fund, heck you might own it in your own investment portfolio.
Just because you saw a post of what someone said they got doesnt mean they did. Also, closing costs vary from state to state. Texas, where i am, is a high cost state. Other states have riduculously high tax stamps so it is very difficult to compare what you read somewhere to what you might get. Additionally, some states can offer better rates and terms than other states.
With where interest rates are right now, if you pay the closing costs on the loan which includes all lender fees, title fees, govt recording fees and 1 point loan origination you should get a rate of 4.25% to 4.50%. The larger your loan amount, except for jumbo mortgages, you might be able to get that rate with a half point or so.
If you like, send me another private chat and i will give you the name of a mortgage professional i know in Florida. He is in northern Florida so you can trust him.
I've recently talked to my BoA loan officer about the same thing. I was in for a different reason and they told me I qualified for a streamlined/expediated refinance that has to do with the MHA program.
I hadn't done a refinance before because even though i have a 6% loan, the closing costs were 4-5k$, and the break even wasn't worth it to me.
Closing costs on this program however, are only $675. Loan officer told me that it was about $35 for a credit check and the rest was a fee for BoA. Dropping my rate to 4.9%, i break even in less than 2 months, though it extends my loan back to 30 yrs from 26.5. haven't signed up yet, so I bet i can change the loan life.
Have good credit, never missed a payment in 3+ years, and have ~$300k equity in the house. No income check, no appraisal, they just want to see my home insurance policy.
Not sure why your closing costs are so high in either case. I'm in WA, maybe something is different here?
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Similar situation, but much lower closing costs.
