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Old 03-10-2010, 03:29 PM
 
Location: Wake Forest
2,834 posts, read 11,264,384 times
Reputation: 1054

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So, my Mom only has 45k left on her mortgage (she is retired), and she has a 6.5 interest rate on the current loan. She has a 30 year mortgage on the property and has been paying for 15 years. When I have talked to a couple of different lenders about refinancing, they have said that they do not refi loans that are that small, and the smallest they do is 50k. They have also said that with the closing costs, she would not recoup that amount.

So the question is, what should she do? It seems like there should be a solution for her to get a lower rate, but I don't know much about this field!!!

Any information would be helpful. Thanks

leigh
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Old 03-10-2010, 04:39 PM
 
28,461 posts, read 75,413,332 times
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I suspect you are not really getting a complete answer. If mom has been in house for 15 years I am quite certain she has very signficant equity. If she has a 6.5% rate on a 30 that is not attractive for her at all.

I further suspect that she could recoup any costs if she went with a 15 year loan at about 4.25% interest and took out about $5000 in equity she would see her cost of borrowing drop by at least $800 a year. The costs of the loan would almost certainly be far less than the cash she took out and if she did not need the rest of the money she could immediately apply that to principal, further shortening her payment period.

There are probably other ways to do this that are even more cost effective.

If the folks she has talked to don't want her business, just find some one who does, but also ask them if they have creative ideas to help you achieve want is best for mom -- paying off loan MORE quickly at LESS cost. Some lenders understand this and others have a script that they read off and are useless...
Might be worth talking to lenders of different SIZE / organizational model, as sometimes the willingness to help can be very different from a mortgage broker, credit union, big money center bank or regional bank.

I'm assuming mom has sold income, has great credit, has nothing bad to scare off lenders other than the fact they cannot milk her for a big pile of points up front...

Another idea -- how much equity does mom have? Would a reverse mortgage wipe out her payments altogether? A sharp lender would run you through the details of this could work.

Good Luck!
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Old 03-10-2010, 05:09 PM
 
Location: Wake Forest
2,834 posts, read 11,264,384 times
Reputation: 1054
You are right in that she does have excellent credit and a very steady income. She is just ready to have the thing paid off more quickly. I had thought about her getting the 50k, then just putting the 5k back on the principal for her first payment or something.

I have, at this point, sent out some feelers to a couple of mortgage people that my friend's have had good experiences with recently.

Thanks for the advice, I will definitely look at my options. You verified what I was already feeling, that this particular person did not want to work with us.

Leigh
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