Refi options

Adrian_Thompson wrote: $7K!!!! Damn, I'm just closing on a re-fi and my closing costs are less than $2K, plus 1 point so I'm at right around $4k with 4.75% APR

Seeing Adrian's quote in another post prompted me to start a new thread. Given the drop in rates recently, I'm going to start shopping for a refi. Would those of you who've recently gone through the process share some thoughts on the current state of the market? Who did you shop, who did you use, what are typical costs/rates right now, etc.

I, for one, would appreciate the insight.

Thanks!

I used americaninterbanc.com. They had the lowest rates I could find and they post all the rates available, qualifications, required, etc...online. No more wondering what black hole your loan agent pulled your rate out of. That said-they sucked. Slow, forgot stuff, sold the loan before it even closed, etc... I would go local-a client of mine used a local credit union and got within 1/4 percent of what I got with none of the headache.

It depends upon where you live. Different states have different laws and different ways to do things. Rates also vary by area.

In Texas closing costs will be approx. $2,100 + 1%. That's not exact but it does get you in the ball park no matter the price. In other words the 1% doesn't equate to any specific charge, but is a way to make the figures work no matter the price.

Now that's the costs with 0 points and 1% origination fee. If you get a loan with no origination fee then the costs are lower, but your interest rate is higher. You don't get something for nothing. The costs exist so you don't get rid of anything, you just shift it to another spot.

A local lender lender will always give you a lot more and better service than the black hole of an internet lender who doesn't know and doesn't want to know you. As a matter of fact some states don't allow internet lenders who don't have a local office, so that you DO have a person you can talk to. This is due to the horrific number of complaints and issues of the faceless lenders.

Getting a home loan is a lot more than just the figures, especially nowadays.

They are requiring much higher credit scores and much lower loan to values. You might need someone to help you "massage" your credit scores to get you to a higher number so that you can get a lower rate.

Contact your current lender, tell them that you are considering refinancing elsewhere and ask if you can do a "rate modification".

I've done this twice with my bank. Since it's not a new mortgage, they have all of the pertinent information and they already have done the title search, etc, so you don't have to pay all of the closing costs. My bank's only real stipulation was that they only allow you to do it once every three years, so it's a bit of a gamble. But now, rates don't have much more room to fall and it's a pretty safe bet.

I had been kicking the option around in my head for a few months but never contacted my bank. Then, one day last week, I called my bank from work and took care of the whole transaction with two phone calls. I dropped my rate three quarters of a percent with zero points and saved myself nearly $16,000 over the remainder of the loan. Total cost was $650.

Then I explained to my wife that our savings are, coincidentally, the same as the price of a good used Porsche 911.

Grassroots Re-Fi!

Negotiate and you'll get those fees removed. Come on this is GRM

ignorant wrote: Negotiate and you'll get those fees removed. Come on this is GRM

Not hardly.

The fees are for third parties to do their work and don't go to the lender. As I said, you can move them around, but you can't get rid of them.

carguy123 wrote:

ignorant wrote: Negotiate and you'll get those fees removed. Come on this is GRM

Not hardly. The fees are for third parties to do their work and don't go to the lender. As I said, you can move them around, but you can't get rid of them.

Sorry meant closing costs. That crap is pure profit. The fees you can get greatly reduced. People around here are advertising $375 fees no closing cost no points 4.8%

ignorant wrote: Sorry meant closing costs. That crap is pure profit. The fees you can get greatly reduced. People around here are advertising $375 fees no closing cost no points 4.8%

I'm exhausted and had a couple beers, so I might weigh in with more later, but believe carguy on this one, he's giving you good advice.

Edit - TMI

I agree with Woody. Call your current lender first, at least to get a quote. I was charged over $5K in closing costs. A buddy of mine went with his current lender and only paid just over $500. Worst case is they say no and you shop around anyway.

Look also with thought over the time required to recover the cost of the refi. Take mine for example, generally speaking, it would take me 10 years to recoup the cost. I likely won't be in this house in 10 years. So refinancing would cost me money, not save me money.

Bank of america won't do a rate modification on a fixed loan, just called to find out, doesn't matter that the value of the home is 25% less than we owe and that we have never missed a payment. Go stimulus

Most lenders will no longer do the rate modifications. They have become very conservative cause they can't figure out where Obama's going. Until you have a clear picture of the Big O's goals and how far he will go or can go none of your financial markets will gamble.

A rate modification is the only type of "refi" that doesn't involve scads of outside people doing various jobs, (appraising, title work, filing forms, attorneys, etc.) and therefore is the only type that might have lower fees. All other types have these third party people to pay (closing costs are not a profit center for a lender) and therefore while you can move them around you can't eliminate them.

As Foxtrapper says you need to balance your costs vs. your savings to see if a refi is worth it for you. Mentally you might kick yourself for missing out on the lowest rates since the mid 1960s, but practically they might not be low enough to make it worth your while.

You could always just stop paying your mortgage and wait for Uncle O to bail you out. People who don't pay their mortgage seem to be the ones getting a piece of the rest of our pie. Those of us who pay our mortgage just get to pay their's too.

I called Countrywide, my lender until the name change because of their failures, on a refi. All the extras tacked on make it a screw job. Why do I need title insurance on a refi? I know exactly who's name the title is in. I put it there. If the title insurance is to protect the lender, then let them pay for it. And $250 for "filing fee" is insane. Why should I pay someone $250 to walk across the street and hand the clerk a piece of paper and ten bucks?

carguy123 wrote: Most lenders will no longer do the rate modifications. They have become very conservative cause they can't figure out where Obama's going. Until you have a clear picture of the Big O's goals and how far he will go or can go none of your financial markets will gamble. A rate modification is the only type of "refi" that doesn't involve scads of outside people doing various jobs, (appraising, title work, filing forms, attorneys, etc.) and therefore is the only type that might have lower fees. All other types have these third party people to pay (closing costs are not a profit center for a lender) and therefore while you can move them around you can't eliminate them. As Foxtrapper says you need to balance your costs vs. your savings to see if a refi is worth it for you. Mentally you might kick yourself for missing out on the lowest rates since the mid 1960s, but practically they might not be low enough to make it worth your while.

It sucks that lenders are so skittish. Credit that to their bad behavior and the overwhelming government intervention. My current loan is with WaMu (now Chase I believe) so I'm going to call them first to see if they're interested in doing anything. Otherwise I'll begin shopping and they'll lose a perfect customer.

And we plan on being in this house for the duration, so I have a long horizon to make the math work.

Dr. Hess wrote: You could always just stop paying your mortgage and wait for Uncle O to bail you out. People who don't pay their mortgage seem to be the ones getting a piece of the rest of our pie. Those of us who pay our mortgage just get to pay their's too.

It does seem odd to me that the current programs seem to encourage bad behavior of the part of the borrower. If my lender won't talk to me now and then I don't pay for 3 months, I wonder if their tune would change. That is ass backwards to the nth degree.

Dr. Hess wrote: I called Countrywide, my lender until the name change because of their failures, on a refi. All the extras tacked on make it a screw job. Why do I need title insurance on a refi? I know exactly who's name the title is in. I put it there. If the title insurance is to protect the lender, then let them pay for it. And $250 for "filing fee" is insane. Why should I pay someone $250 to walk across the street and hand the clerk a piece of paper and ten bucks?

The simple answer is that you are getting a new loan even if you are using the same lender. Because you aren't moving it doesn't feel like a new loan. The new lender knows nothing about what you've done to your title situation and besides the govt. requires it on any new loan they get involved in which includes all FHA, VA, USDA and most Conventional loans.

You could have caused several new liens to be placed on the property since you bought it. How would the lender know that without doing a title search?

The $250 isn't for someone to walk across the road to hand the clerk the piece of paper, the $250 is what the county charges to file that piece of paper.

As far as it being a screw job the closing costs are paying 3rd parties to do their job. They won't work for free so as I've said several times, you can shuffle around the costs, but you can't make them disappear. If getting paid to do their job is a screw job then screw job it is. You don't work for free do you?

The govt. requires all those jobs be done (and hence the fees) to ensure sellers have the legal capacity to sell the property, to ensure the property really is worth what you are paying, to ensure the new ownership is recorded properly so no one can take your house away from you or sell it again, plus the lender also wants to make sure the world knows of their claim to your property so you can't go out and borrow and reborrow much more money than the house is worth and then walk away from the loan.

Basically all these procedures and costs are to keep you from buying the Brooklyn Bridge - again.

Oh, and dyintorace, when the dust settles I think you will find the "A" lenders weren't doing anything wrong except following govt. guidelines. The guidelines were the culprit, most notably Clinton's 1999 change. The lenders had no choice but to follow the guidelines if they didn't then they would have been discriminating.

Now the "B" lenders have always been crooks. The whole "B" system is built upon the premise that the people have screwed up so badly they can't get a loan any other way so lets screw them. But before you start railing against them too much the Tote the Note car lots, pawn shops, etc. are much worse. It was and is an accepted business practice. You get penalized if you don't pay your bills. Clinton wanted it to be otherwise but history is showing us once again that is a valid concept. People who historically haven't paid their bills don't just wake up one morning and change their ways.

So don't blame the lenders, blame the govt regulations which are put in place by politicians instead of people who know what they are doing. Today's present set of politically instigated regulations is much worse than the old ones. The pendulum has swung and once again instead of stopping the middle it's gone way too far.

Were you aware that more than half of America can no longer get the low interest rates you see advertised due to the new regs on credit scores? Many can get loans, just not the good rates.

Did you know that the underwriting guidelines have changed so that they've cut about 25% of the good people out of getting a loan at all? I'm talking people with good jobs and who pay their bills, not dead beats. Heaven forbid you are self employed or have a commissioned income! That's another whole story.

Did you know that the appraisal system is about to be changed for the worse and will cause a massive value issue all across the country not just in the blighted areas? A law suit in NY state against one of the mega appraisal companies has somehow gotten twisted (by the politicians again) and caused ONLY the mega appraisal companies to be able to do appraisals soon. You can look forward to more of an area average for values rather than "your particular property is worth $X". People with the worst house in the neighborhood will like it but the guys with the better houses will hate it.

The new system does away with the old safeguards on appraisals whereby EVERY appraisal was checked to see if it fit values in the neighborhood and if a problem was found the appraiser had to provide further proof of value &/or a new appraisal had to be done. This new system makes it illegal to check the appraisal. If you get an obviously bad appraisal be it too high or too low you can't even tell/complain to the appraiser - that would be trying to influence the appraiser and he's required to report you to a special hot line they've set up just for these things. Mr. Seller don't even begin to think your house is worth more because you've painted it, added on, kept it up, have a nice yard, etc. cause the guy next door who has the junk cars up on the blocks now has a house that is legally worth as much as yours.

Lenders must use any and every appraiser on a rotational basis and you can't take an appraiser off the list for doing a crappy job. You can't reward the guys who do good work in a timely fashion by giving them more business than the guys who berkeley off all day long and don't really care if they do a good job or not. You can't fire an appraiser for anything less than an illegal act. Crappy appraisals aren't illegal.

And you can't get a 2nd appraisal to check the first guy. To get another appraisal you will have to change lenders and begin your process over again and pray the new appraiser does a better job than the first.

We have a lawsuit pending attempting to get a cease and desist on the appraisal, but we don't hold out much hope.

Don't get me started. Things have changed so much for the worse we have a huge housing problem developing that is so much worse than the little bubble we've come thru. This new one will not be economic related and could destroy most people value.

carguy123 wrote: Don't get me started. Things have changed so much for the worse we have a huge housing problem developing that is so much worse than the little bubble we've come thru. This new one will not be economic related and could destroy most people value.

And what is developing?

clownkiller wrote:

carguy123 wrote: Don't get me started. Things have changed so much for the worse we have a huge housing problem developing that is so much worse than the little bubble we've come thru. This new one will not be economic related and could destroy most people value.

And what is developing?

You mean beyond the minor details like credit scores, underwriting issues, and appraisal concerns? I didn't mention that Mortgage Insurance companies are in trouble which means your low down payment loans (less than 20% down) are in trouble did I?

FHA has a foreclosure rate that is about 3 times the rate of Fannie and Freddie, but you won't hear much about that cause that's almost totally under govt. control and you can't point a finger at yourself can you?

Well sometimes I wish I could just walk away, but screwing with my credit and having that be an issue for the next 5-7 years messes with the plans for moving out of state. Neighbor is actually doing that, it would actually cost him more to list and sell the house as opposed to moving, and letting things get foreclosed on here and just staying in the new place for a few years. Bah.

Just wish that those of us who were responsible, that have not been late on a loan would have the possibility of refinancing at a lower rate and that some sort of bailout would occur, this 5% B.S. just sucks.

Walking away is more than a 5-7 year hiccup.

Not only can they get a judgement against you and $50,000 balances don't expire in 7 years like other credit issues, but also you are on "The List". If it's the FHA or VA list you can never get another FHA or VA loan until you pay back the losses and then it's iffy.

If it's a Conventional loan and mortgage insurance was involved that particular mortgage insurance company has you on their list and they'll never give you mortgage insurance again.

That doesn't even begin to count the cross collateral defaults that triggers with credit cards so your CC rates go to the default mode of 27-33% interest rates and the games they will play with you to record, change dates, re-record, change acct #, re-record, change address of lender, re-record, change whatever, re-record.

Insurance companies will up your premiums IF they'll even insure you any more.

And the list goes on. People who walk away do so because they have no idea what kind of a living hell they can make their lives.

InigoMontoya wrote: Just wish that those of us who were responsible, that have not been late on a loan would have the possibility of refinancing at a lower rate and that some sort of bailout would occur, this 5% B.S. just sucks.

You do, as long as you are no worse than "slightly under-water". This is part of the HASP program. You have to qualify for credit and income - but you can go to 105% LTV.

It is designed specifically for borrowers who have paid on time and met their obligations, could benefit from refinancing to a lower rate, but can't because the value of their property has dropped.

It won't help everybody.

click: http://www.makinghomeaffordable.gov/

There is a separate part to encourage servicers to modify agency paper for people who are behind, but that needs to be a separate discussion.

Yeah, that is the problem, we would need more that 105%, not because we bought out of our means, but because of the number of foreclosed homes in the area. Right now we owe about 25% more than the home could be sold for. 5% doesn't do diddly.

carguy123 wrote: As far as it being a screw job the closing costs are paying 3rd parties to do their job.

Now wait a minute there. Some of those charges are real, but many are vastly inflated, or artificial.

The filing fee is real, but the delivery fee and document arrangement fee and copy fee and handling fee and signing fee are not.

An inspection is a real requirement. But charging me for an inspector not used because I got one myself is not real. Nor is the inspection review fee, the inspection copy fee the inspection document preparation fee, etc.

A transaction fee, document preparation fees, loan purchase expense, credit review fee, long distance call expenses, etc are all bogus cost of business expenses or just plain ficticious expenses tacked onto the closing to make money for the lending institution, the lawyer(s) and others involved with the transaction.

For the most part lenders must have receipts and be able to prove costs. They aren't allowed to inflate these costs or make a profit on other people's work.

I won't say that someone somewhere hasn't found a way to add a few dollars to the fees, but if so it has to be very minor in nature like to the tune of $50. Jail time is a real possibility so a lender is very careful on fees.

I haven't a clue what you're talking about on many of the fees you've listed, like the inspection fee. Since there's no standard nomenclature I'm guessing the names don't mean the same thing you are thinking. What was inspected? You are thinking the house they may be saying something else. When in doubt ask what the fee is for, they will tell you.

Yes, someone does prepare your docs and that someone wants to be paid as well.

To keep floundering this thread-if you put less than 20% down you have to buy mortgage insurance. Who does that insure? Not the buyer obviously so it must be the bank. But if the banks have insurance on all these defaulted loans-why are they in such trouble?

MrJoshua wrote: To keep floundering this thread-if you put less than 20% down you have to buy mortgage insurance. Who does that insure? Not the buyer obviously so it must be the bank. But if the banks have insurance on all these defaulted loans-why are they in such trouble?

You are correct, PMI covers the lenders, not the borrowers. They pass the cost on to the borrower directly (vs building it into the loan costs).

The problem isn't the defaulted mortgages. The problem is the secondary mortgage market. When you buy a house, a bank loans you money. They then bundle that loan with other similar loans and sell that package as an investment (similar to a mutual fund, which is a bundle of stocks). Whoever buys that package is buying, what in theory, is a guaranteed income stream (the mortgage payments).

BUT, government deregulated the mortgage industry on both ends. They made it easier for banks to loan to subprime borrowers. And at the same time, they made it easier for banks to bundle and sell these mortgages.

This led to several problems (some obvious, others not so obvious).

First, subprime borrowers couldn't keep up with their payments (especially when they used adjustable loans or balloon payments). Poof, there went the guaranteed income stream, killing the value of those bundles (the bundles are called "mortgage backed securities").

Second, banks are required to carry a certain amount of cash relative to the amount of deposits they have. They were allowed to use mortgage backed securities, as they were considered low risk and almost as good as cash. When the value of MBSs fell, banks had to hoard real cash to make up the difference, or risk FDIC stepping in and taking control. This led to part of the credit crisis - banks couldn't loan each other money, so they couldn't lend to business, snowball, we're screwed.

Then enter AIG. AIG as a total has lots of good businesses (normal insurance and stuff). But, they had one relatively small unit that traded in credit default swaps. These are basically faux-insurance. More like gambling really. So, a bank buys a mortgage backed security. Then, to make sure they're covered if the security declines in value, they buy "insurance" in the form of a CDS from AIG. Because it's a CDS and not real insurance, it isn't regulated (and AIG doesn't actually have to have cash on hand to pay out on the policy). AIG sells billions of dollars worth of CDS all over the world. Further compounding the problem - companies bought CDS against other companies investments (it really is gambling at this point).

So, everybody is now gambling in the CDS market. But because it isn't regulated, none of them have the cash needed to pay out if they lose the bet. Then the housing market collapses, AIG is called on all their bets in a short time. AIG can't pay. None of the banks can pay their obligations, because they were expecting money from AIG. We're double-screwed.

The galling part of this is the guy responsible for the whole thing made billions of dollars personally. He's no longer at AIG - probably chilling on some Caribbean island until the economy recovers.