- This topic has 23 replies, 7 voices, and was last updated 12 years, 5 months ago by
sdrealtor.
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July 21, 2012 at 5:12 PM #19995July 21, 2012 at 6:56 PM #748677
bearishgurl
ParticipantWhy do you want to refinance so soon, Mark? Did you remodel and re-landscape it sufficiently so as to appraise for enough to get you out of the (FHA) MIP??
July 21, 2012 at 7:21 PM #748678HLS
Participant1. When dealing with a refi of a purchase loan, speak to your tax advisor or a QUALIFIED party to explain recourse debt vs. non recourse debt and YOU decide whether this is a concern for you.
2. If recourse debt is not a concern, if you can qualify to refinance and save .25% or more on your rate, (which you should be able to do from 4.25%) at zero cost to you, there is absolutely no reason to not refinance.** Sadly, many people do not get this**
3. With an FHA loan, I assume that you had a very small down payment (3.50%?) Make sure that you compare your MIP (mortg ins) payment on the new loan to your existing payment.
Your payment should drop about least $125 a month.
Assuming that you still qualify, you should be able to get <3.75% at zero cost.There is no such thing as an easy loan today, but it should be easier than your purchase loan.
July 21, 2012 at 7:27 PM #748679pencilneck
ParticipantIs a broker recommended / needed for a refi?
I’d personally recommend a broker over a bank. Last time I shopped around both my bank and a credit union didn’t offer very good rates and had exceptionally bad service (lost paperwork repeatedly, didn’t return phone calls etc.).
Is the process of a refi easier than the original mortgage process?
for me it was exactly the same. Although, this time I knew what I was expecting.
The loans I got had a little clause agains refinancing again within 6 months of issuance. You might want to double check the terms of your loan before you get too far along.
July 21, 2012 at 7:48 PM #748680ParticipantIf you are getting a 15/30yr fixed loan that is FNMA/Freddie/FHA in most cases BANKS ARE MORTGAGE BROKERS. It’s a division of the bank just like a credit card division.
Many think that bank have lower rates which may or may not be true. They usually don’t.Credit unions can do whatever they want and make their own rules if lending their own money for 30 years.
A good broker will get you very competitive pricing. Pricing changes almost every day.
There are some bad brokers out there.
Nobody can tell you that they always have the lowest pricing.A refi loan is NOT exactly the same as a purchase loan, it should be slightly easier.
‘Direct lenders'(which includes banks) can deceive you and get away with it, It is not possible for brokers to do this.
If you only care about price, you may find an internet lender someplace far away with lower pricing and you can take your chances if you wish.
It usually isn’t that much better.July 21, 2012 at 11:23 PM #748697lpjohnso
ParticipantHi Mark! My husband and I closed last November with a 30 year fixed FHA at 4.125%. We are in the process of refinancing through Quicken Loans (they are the largest online mortgage lender and came highly recommended) with a 30 year fixed at 3.5%. We are getting a “streamline” refi, which is much simpler compared to other loans. We do not need to get an appraisal.
We owe $319,000 on the home right now and after they roll the cost of the refi into our mortgage our new balance will be $323,000. We will need to bring $1,600 to closing, and they will time our closing right before our existing mortgage payment is due so we do not have to pay it. Then, we will receive $2000 back after escrow closes.
Best of luck to you!
July 22, 2012 at 6:26 AM #748706Participant[quote=lpjohnso]
We owe $319,000 right now and after they roll the cost of the refi into our mortgage our new balance will be $323,000.We will need to bring $1,600 to closing, and they will time our closing right before our existing mortgage payment is due so we do not have to pay it. Then, we will receive $2000 back after escrow closes. [/quote]
You are not getting a no cost loan, you are adding
$4000+ to your balance.Did they explain where the $2000 is coming from ?
Why do you need to bring in $1600 if you are going to get $2000 back?July 22, 2012 at 11:25 AM #748721ParticipantYes, I understand that it is not a no cost loan. That is what I was trying to convey when I shared what our mortgage balance is now and what it will increase to after the refi. We will be adding $4000 to our balance with 3.5% interest over 30 years. It doesn’t sound great, but on paper it works in our favor. Not by a ton, but some is better than none.
As far as I understand, the $2000 is a refund from our existing escrow account that will be due to us within 30 days after closing.
July 22, 2012 at 12:19 PM #748724Participant[quote=lpjohnso]… As far as I understand, the $2000 is a refund from our existing escrow account that will be due to us within 30 days after closing.[/quote]
lp, will the “refund” be due to your property being reassessed downward by the assessor or due to elimination of MIP and thus the advanced MIP premiums you had sitting in the impound acct of your previous FHA loan?
If you will actually be getting rid of your FHA MIP’s, then this (conv?) refi so soon after you purchased is probably worth it, IMHO.
July 22, 2012 at 1:17 PM #748729Mark Holmes
ParticipantThanks lpjohnso – that sounds like it may be our best bet – a streamline loan, while we can’t do it for a couple months still (they require a minimum of 6 months since closing) may be perfect.
And thanks to everyone else for the advice as well!
July 22, 2012 at 1:19 PM #748730Participant[quote=bearishgurl]Why do you want to refinance so soon, Mark? Did you remodel and re-landscape it sufficiently so as to appraise for enough to get you out of the (FHA) MIP??[/quote]
That is our hope – we’re eager to get rid of the MIP, and if we can get a lower interest rate as well, we could cut our payment by over $500 a month. That would be really nice.
July 22, 2012 at 4:57 PM #748735ParticipantI’m troubled by the misinformation being thrown around here.
You will NOT get rid of MIP with a FHA refi, streamline or not.
FHA is a loan for those with either a very low down payment and/or crappy credit. You will always have MIP with a new FHA loan, and it isn’t going away for a long time, regardless of equity.
It is comparable to assigned risk auto insurance.
Possibly a product for those who are desperate OR do not understand other options.If you have great credit AND at least 5% down for a purchase (or at least 5% equity for a refi) AND a loan amount below $417,000 a FHA loan may not be your best option.
It seems that many people who can qualify for a better loan, end up with FHA at the urging of their mortgage ‘friends’ or bad advice on a blog.
Lpj, have you been told what your NEW MIP payment is going to be ?
I fully understand the benefit of lowering your rate to 3.50%, but I’m troubled by your $3600 net cost +/- and how much it is going to actually lower your total payment (AND extend your loan)Will your house appraise for more than $336,000 now? Are your mid credit scores above 740 ?
When is your loan scheduled to close and what is your exact current principal balance ?
Above or below $319K ?
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Mark, Do you have 5% equity (or more) AND mid credit scores above 740 ?
They can restrict you from doing a Streamline for 6 months but they cannot restrict you from paying it off if you find a better loan.July 22, 2012 at 5:16 PM #748737ParticipantHLS, I wasn’t thinking Mark was trying to get another FHA loan. I figured he may have spent the last few mos cleaning and fixing so he could possibly obtain an appraisal high enough to get OUT of his FHA purchase money (pm) mtg.
btw, you bring up a good point about subsequent mortgages (taken out after his pm mtg) being “recourse” and I agree that it is important for the borrower to understand that the lender of his refi mtg (even if for the same or lower amt than his pm mtg) could later come after him for the difference between what they could net in an REO sale and how much his delinquent loan balance was (in the event of foreclosure) vs whatever their pm lender could recover from an REO sale would have to satisfy them.
I don’t think too many borrowers really pay attn to this.
July 22, 2012 at 5:27 PM #748740
CoronitaParticipantOk I’ve heard about the entire recourse thing.
Can someone please give me an example (real court case) that a lender did go after the borrower….July 22, 2012 at 5:32 PM #748741Participant[quote=bearishgurl]
I don’t think too many borrowers really pay attn to this.[/quote]It’s very unlikely that anybody with an FHA loan can increase the value of their property by 21% in 3 months. Possible perhaps, but highly unlikely.
Recourse debt is PROBABLY not going to be an issue for most people, but they should be aware of what it is and get advice from someone.
Unfortunately many people who have borrowed hundreds of thousands of dollars are very confused
about their situations and have received horrible advice about what to do about their situations.In some cases it’s a personal choice, but in many cases it’s a no brainer to refi but they are paralyzed by fear,confusion,and/or greed.
With FHA loans it is possible that MIP payments will go up, making a refi less attractive, even at a lower interest rate.
I believe FHA is a problem, not a solution.
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