I have a mortgage refinance question.....

[cciota]

I got home two days ago and there was a FedEx envelop at the front door. I was from my lender Chase Finance. They are offering to lower my interest rate a full point and there will be no closing cost if I refinance my current mortgage. The wife and I have been talking about a refinance for a few weeks The "something don't seem right" buzzer is going off in my head. My wife call Chase to find out if this was legit. The customer service rep said everything is on the up and up so my wife called the number list about the refinance. Come to find out that this is part of the HARP program and because my loan is backed ba Freddie Mac, we qualify for a interest rate reduction. I had no idea my loan was connected with Freddie Mac and am not pleased with this fact.

I read an article a while back and posted it here a while back that this program was having people not qualify for it or after a short time they fall out of the program. I have questioned the gentleman who is handling the refinance as to how I can qualify for this. The program was set up for people who were upside down on their loans. I have read that people who owe more than 80% of what their home is worth. You must not be behind on your payment. We are not upside down on our loan, in fact, we only owe 53%of what our house is worth. We have never been late on a payment. So how can we qualify?

It just doesn't make sense that a bank is willing to reduce my payment and pay for all the closing cost and no appraisal is required. Has anybody else gotten this type of offer and if so, what did you do?

[samiam]

if they're offering 1% ask for 5% then settle for anything in between if the sent you a letter there must be some room for negotiation and you've got nothing to lose by trying

[Richard Simmons]

Depending on the rate of your current mortgage it might be an attempt by Chase to keep you from refinancing with another lender? Even if it's legit you might try shopping around before you do it and see what's available else where.

A friend of mine is a loan office with a mortgage company and recently told me I could drop my 20 year mortgage (5.375% fixed) for a 10 year (4.535 fixed). He'll wave his fees and commission but I'll still have some closing costs. The wife and I decided to just keep making extra principal payments for now which will have us paid off in 12 years anyway. With the current economy we didn't feel it prudent to add $250 a month to our monthly expenses to save two years worth of payments and interest.

[Congo]

I've been out of the bean side of this for a long time, but unless your mortgage is done by private investors, your mortgage should be a "government mortgage" as they guarantee the institutions that "invest" in mortgages. That's why they have a vested interest in getting homes built--they guarantee the loans/institutions, but also they get a lot of tax revenue out of it, directly (sales/income taxes) and indirectly (property taxes for example).


It just doesn't make sense that a bank is willing to reduce my payment and pay for all the closing cost and no appraisal is required.
Being involved in government often leads to things that make no sense.
Don't know much about that, but they get some kind of "reward" for "converting" a certain percentages of the mortgages they hold over to this government program. Economically it may not make sense, but they may get some back end bennies, become a preferred govt lender/agent, or just will now be allowed to stay in the game, etc.

I'd just do what economically makes sense to you and yours.

[cciota]

Depending on the rate of your current mortgage it might be an attempt by Chase to keep you from refinancing with another lender? Even if it's legit you might try shopping around before you do it and see what's available else where.

.

That was one of the reasons the rep gave at Chase. I think they are trying to keep good customer and avoid them shopping with others. They are willing to drop our rate to 5.13% That will save us $75 a month. I guess every little bit helps.

[matshock]

That was one of the reasons the rep gave at Chase. I think they are trying to keep good customer and avoid them shopping with others. They are willing to drop our rate to 5.13% That will save us $75 a month. I guess every little bit helps.

Yep, if you take their offer it will be at least a year or two before another lender will refinance you.

[1 Patriot-of-many]

Didn't see how many years in your post. If your credit is excellent and your loan to value standard, you can get under 4% for a 10 or 15 year loan.

We're seriously looking, but loan to value might be a problem with us, housing going kaput. Standard is 70% loan to value.

http://www.usbank.com/cgi_w/cfm/personal/products_and_services/mortgage/interest_rates.cfm

[cciota]

Didn't see how many years in your post. If your credit is excellent and your loan to value standard, you can get under 4% for a 10 or 15 year loan.

We're seriously looking, but loan to value might be a problem with us, housing going kaput. Standard is 70% loan to value.

http://www.usbank.com/cgi_w/cfm/personal/products_and_services/mortgage/interest_rates.cfm

Thirty year loan.

I e-mailed the guy this morning questioning our eligibility and haven't received a reply. The wife is going to call and find out what's going on. I either asked the right questions doubting this program or I pissed the guy off by asking too many questions. We'll see.

[mriddick]

Check it out for variable interest, any balloon payments, and so on. Normally for me an offer too good to be true usually is :)

[cciota]

Check it out for variable interest, any balloon payments, and so on. Normally for me an offer too good to be true usually is :)

We have already checked into all that, but I got this gut feeling that something ain't kosher.

[tank_monkey]

We have already checked into all that, but I got this gut feeling that something ain't kosher.
But look at the times. The Banks aren't lending to ANYONE without sterling credit. A bunch of other institutions are starting to jump on the bandwagon to grab mortgages away from the major lenders by offering good re-fi (even some scammers) the banks need to play ball lest they lose their customers. Also the Prime rate is ridicuilous low so they can afford to lower their lending rates. I would check it out thoroughly but a major player like Chase isn't like a no name bank. It is a good time to take advantage of the lower rates. My friend just re-fied his house and he saves abouit $150 a month now.

[Oswald Bastable]

cciota, how many years are you into your present mortgage?

If it's quite new, it may make sense to refi, but understand how mortgages work. At the beginning, you're paying almost all interest and very little premium with each payment. By the end, you're paying almost all premium and very little interest. This is inferring you're only making your expected monthly payment.

If you're a number of years into your mortgage and refi, you start that process all over again (paying almost all interest), and many banks count on this because they get more free money that way.

If you're say, 5 or 6 years into a mortgage and start over, only paying the expected monthly payment, you're effectively raising your interest rate, not lowering it, unless you get such a serious interest reduction that it makes sense. With a 1% reduction, depending on where you are in the mortgage cycle, you could be effectively raising the overall interest you'll pay on the loan by 2 to 3%, rather than getting the savings you're thinking you'll get.

You're far better (if you can afford it), to make extra payments each month, half as much again as your normal payment if you can swing it. All that extra goes directly to principle, thus lowering the amount of interest you pay on the loan over its life. Even starting to make such payments several years into the loan, you could effectively lower your interest rate by 2 to 3% over its life, without a refi and as an added benefit, have the loan paid off in half the time it would take just making the monthly.

[cciota]

cciota, how many years are you into your present mortgage?

If it's quite new, it may make sense to refi, but understand how mortgages work. At the beginning, you're paying almost all interest and very little premium with each payment. By the end, you're paying almost all premium and very little interest. This is inferring you're only making your expected monthly payment.

If you're a number of years into your mortgage and refi, you start that process all over again (paying almost all interest), and many banks count on this because they get more free money that way.

If you're say, 5 or 6 years into a mortgage and start over, only paying the expected monthly payment, you're effectively raising your interest rate, not lowering it, unless you get such a serious interest reduction that it makes sense. With a 1% reduction, depending on where you are in the mortgage cycle, you could be effectively raising the overall interest you'll pay on the loan by 2 to 3%, rather than getting the savings you're thinking you'll get.

You're far better (if you can afford it), to make extra payments each month, half as much again as your normal payment if you can swing it. All that extra goes directly to principle, thus lowering the amount of interest you pay on the loan over its life. Even starting to make such payments several years into the loan, you could effectively lower your interest rate by 2 to 3% over its life, without a refi and as an added benefit, have the loan paid off in half the time it would take just making the monthly.

We are 4 1/2 years into this loan. We built the house 5 years ago and we converted the construction loan into a 30 year fixed loan 6 months after we moved in. Would we be better off refinancing and taking the money we would save on the monthly payment and make a larger payment paying off the more of the principle?

[Oswald Bastable]

We are 4 1/2 years into this loan. We built the house 5 years ago and we converted the construction loan into a 30 year fixed loan 6 months after we moved in. Would we be better off refinancing and taking the money we would save on the monthly payment and make a larger payment paying off the more of the principle?

You'd be far better off, if you can swing it, to pay at least 50% more each month and you'd have it paid off in about 10-12 years. If you could double your payments, you'd be able to pay it off in under 7. (note: without knowing the exact details of your mortgage, amount financed, interest, monthly payment...these are just rough estimates on my part, but there are mortgage calculators online that you can use to get more precise figures/estimated payoff dates. Find one, plug your current details in and see what you get, then plug in the refi rates and see what you get)