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HLS
ParticipantHow’s your refi going ??
Participant[quote=FlyerInHi][quote=HLS]
There are people with $1,000,000 homes with an 800 credit score, $1M in the bank and no mortgage who don’t qualify for a $200,000 refi loan.
The govt regulations have made getting a loan denial a humbling experience. I chuckle every someone tells me that they will have ‘no problem’ getting approved for a loan.[/quote]
Can you please explain how “govt regulations have made getting a loan denial a humbling experience.” Or is it that private lenders have their arbitrary guidelines?
I don’t understand why some people feel upset about being denied. These are private contracts, and outside of discrimination, denial is the prerogative of the lender. Why should someone with lots of cash in the bank be entitled to a mortgage?[/quote]
Private lenders can do whatever they want(and they do)
They charge 3-5 points up front and 8%-12% interest rates.FNMA/FREDDIE MAC approvals are the same through every broker, bank or direct lender; (These are govt regulations) although some have additional overlays.
If you want the low govt backed rates you need to fit in a box perfectly.Onky when you understand that someone with a net worth of $2m-$3m, 800 credit score, 6 figure liquid assets/cash in the bank, 5 figure monthly cash flow and very little monthly debt cannot qualify for a $200,000 loan on a $600,000+ house
YET
a salaried employee with 3% down payment (that was a gift)
negative net worth, a 680 credit score, and no other assets can qualify for a 97% purchase loan can you grasp what a humbling experience is.Participant[quote=ucodegen]
One thing to also consider:- What is the penalty on the second?
- What is the interest rate on the second?
- How big is the second?
Generally (not always) a cash-out refi boosts the interest rate you are paying up 0.5%. Run the numbers with the cash out vs subordination and see which results in lower total costs.If the second has a significantly higher interest rate than the first and combining still keeps you out of PMI(if you currently are out of PMI) – it might actually benefit to combine and take the hit on the new first’s interest rate – you got to run the numbers for both to know. I don’t have enough info of your situation to do that.
NOTE: An increase in interest is not quite as bad as most people think. Remember that mortgage interest is tax deductible. To get the real ‘effective’ rate on your disposable income, use your marginal tax rate (amount that each additional $ of income increases your tax). So, if you are in the 30% total (fed and state) marginal tax bracket, real interest rate increase would be 0.005 * (1 – 0.30) = 0.0035, or 0.35%.[/quote]
I could not disagree with you more.
*****Your (mis)information is dangerous.Cash out generally does NOT increase your rate .50%
A subordination of a HELOC is almost always a far better choice.
Who is talking about PMI ?Penalty to close HELOCS are usually $300, only in the first 3 years.
Interest rates on HELOCS is usually not more than prime rate
currently 3.50%
Most people who have HELOCS, have them for relatively low amounts.Increase in interest rate is WORSE than most people think.
Are you a CPA ?
You are still paying the interest. Who cares how much of it is
tax deductible. For every extra dollar you pay and save 30c, aren’t you still paying 70c ?When your rate goes up for cash out, you aren’t only paying the higher rate on the cash out portion, the higher rate is on the entire loan amount. .25% over 30 years is a lot of money.
Do you understand the standard deduction ?
For a couple with $12,600 standard deduction, the first $12,600 of Interest/Property taxes is a wash.
With current low interest rates and old property tax base, many couples (filing jointly) are better off with the standard deduction.
Their mortgage interest is a complete waste of money as it’s NOT tax deductible when taking the standard deduction.In many parts of the country, interest + property taxes is nowhere near $12,600
2 huge myths that get repeated (Not only by ignorant Realtors):
a) Rent is throwing money away
b) You should buy a house to get the tax deduction
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a) No it’s not
b) You should get tax advice from a qualified tax adviser*Everyone’s situation is different; there are always exceptions.
Participant[quote=moneymaker]Yes the second is a HELOC, it was to purchase solar, so if it costs $250 to subordinate or $500 for ETF I guess the difference is kinda small. I was hoping to not have to pay anything like most people. I guess if I don’t like the final mortgage contract I can spin the interest rate wheel and hope we go down even more. Thanks all for your input, it is stuff like this that needs to be taught to our high school kids before they graduate. I don’t regret buying solar or refinancing twice but I’ll have to admit I didn’t see this coming, who knows it may not be a problem at all. By the way HLS the loan people have not brought it up but we all know how they like to spring things on us at last minute, we have been conditionally approved and are at the underwriting/funding stage.[/quote]
I don’t make a habit of ‘springing things on people at the last minute’ I ask before I lock a loan if they have a 2nd, HELOC or solar lien. I don’t like surprises any more than anyone else.
It could affect the accurate pricing and /or ability to qualify for a loan.A subordination will normally not cause a problem; just a cost and time to get approved. Cash out to pay it off can cost a whole lot of money in the long run due to a higher rate.
Why would anyone ever regret refinancing ?? (if it was to a lower rate at no cost) Conditional (initial) approvals are the easy basic part, it could still be 2-3 weeks to get to the funding stage.
(Underwriting & funding are not the same thing) How long has it been since you locked your pricing ?I don’t care who you are dealing with but it sounds like you are hoping your HELOC is just not a big deal and they’re going to let it slide. I’d love to hear more about the progress of your refi, if you care to share. Something just doesn’t sound right.
You are correct that you are under no obligation to sign the loan docs if you aren’t happy for ANY reason. No explanation is required.
ParticipantFLU,
Your 5 details are the epitome of anecdotal evidence and completely meaningless.
Not one of your 5 points meant anything regarding your HELOC
subordination approval, which is the thread topic.He didn’t have to mention HELOC. I’m 99.5% sure it’s a HELOC based on the details.
MM…. If the HELOC is left in 2nd position, it’s going to require a subordination whether it is at zero, maxed out or any balance in between. It’s probably going to cost $250 to subordinate.
Another recent issue recently is Solar lien subordinations, which can also delay loan fundings.If your loan originator isn’t on it from the beginning, it could delay your closing which could cost you even more money if you need to pay for a lock extension at the end.(In addition to sub. fee)
In FLU’s example, extending a $350K loan for 3 weeks could cost $1400 with some lenders.
It should not take that long if addressed from the beginning.Different lenders can have different policies about open available line on HELOCS. There was a time that you were better off having your line maxed out VS. having no balance drawn; because the payment factor was lower.
It may still be true with some lenders.Believing that a loan was approved solely because of low LTV, W2 income & lack of debt is completely missing the point.
Your loan was approved, because it was approved based on guidelines. You didn’t get ANY extra credit for things that you point out.Self employed people with a 680 credit score and lots of debt can get approved for 97% LTV loans.
Loans are approved on income & expenses.
They are priced on a combination of credit score & equity.Lots & lots of people get approved with 3% equity.
Lots of people with 800+ credit scores and 50% equity get turned down, even if they have $1 million dollars in the bank.Although W2 income without bonus, commission or overtime is easier to figure, those with other sources of income qualify also.
You don’t get extra credit with W2 income.
Being on a job for 6 years or 20 years means nothing extra to an approval. If 30 or 60 days income is needed, you get no extra credit for 6 years.
If a 740 credit score is needed for best pricing, you get no extra credit for 800 or 830.
2 months bank statements are generally required.
You get no extra credit for providing 12 months bank statements.
60% LTV is best pricing, it isn’t any easier to get an approval with 35% equity.Getting loan approvals can involve 100 pieces of a puzzle all coming together, 80% of which the borrower isn’t even aware of.
If there’s only 99 pieces available, the loan gets denied.There are people with $1,000,000 homes with an 800 credit score, $1M in the bank and no mortgage who don’t qualify for a $200,000 refi loan.
The govt regulations have made getting a loan denial a humbling experience. I chuckle every someone tells me that they will have ‘no problem’ getting approved for a loan.
ParticipantHow far along in the process are you that your nice loan people haven’t discussed this with you yet ?
Before they locked your pricing, they should have asked if you had a 2nd lien/HELOC/Home Equity Loan OR Solar lien.
Depending on how much equity you have, it may or may not affect your pricing.
Paying off a 2nd lien is considered a cash out refinance.
Early termination fee is usually $300You have some choices:
1) A subordination so your 2nd stays in 2nd place and your new 1st replaces your existing 1st. Usually costs about $250 and takes several weeks.
Exact guidelines to follow. Depends on how much equity you have as to whether it will affect your loan pricing OR if it can be done at all2) Pay off the 2nd with a cash out refi. Loan pricing could change (worse) depending on your equity. Pay early term. fee
3) pay the 2nd off with your cash. Close line. Pay early term. fee
OR
Pay off with your cash and leave line open.Regardless of the current amount of your HELOC, there is a 2nd recorded for the maximum amount of your HELOC.
With some lenders this could present a problem.ParticipantBG wrote “I don’t think the DRE will even look into it unless she can prove she was somehow “damaged” by what the seller’s agent told her”
I completely disagree with this. MLS is intended to be an orderly market place.
Imagine if everybody listed properties for 20% less than they had any intention of selling the property for.
(expecting offers of 25% more than the listing price)It would be mass chaos with hundreds/thousands of agents & buyers scrambling to look at properties, wasting everyone’s time.
Most agents don’t call listing agent to discuss specifics. They spend several hours showing a property and have to prepare a 20 page offer. NOT OK.Agent has been licensed for 2 years, currently with Coldwell Banker. I would also contact Coldwell Banker corporate and let them know how disgusted I was about this.
Agent listed this at $299,900 so anyone searching up to $300,000 would see the property. Misleading.There are penalties for abusing the MLS system. I’m not the one who decides or enforces them, but this is blatant misrepresentation. It’s not a court case where one needs to prove damages. It’s unethical and I think the BRE may have an issue with it.
OP’s agent should file a complaint with the board as well as every other agent who takes a buyer to look at the property thinking it’s available for sale in the $300K range, only to be told offers will be considered above $375K .
This is NOT OK.ParticipantOne more thing
I would call the Bureau of Real Estate and file a complaint against the
agent who listed a property at $299,000 and told your agent that
they will look at offers above $375,000
http://www.dre.ca.gov/Consumers/FileComplaint.htmlthis is absolute nonsense and the agent should have a formal complaint filed against them. Let the board deal with this.
As a Realtor I have zero tolerance for crap like this.
ParticipantIf Svelte is correct that it has fallen out of escrow twice,
you need to try to find out why.
As a Realtor, representing the buyer, I would be a pit bull.
As a mortgage broker, I find it odd that the property fell out of escrow twice in a short period of time; It’s not likely that 2 different buyers had their loans rejected in such a short period of time.Inspections by good inspectors are done quickly. The guy I use usually finishes his report within 12 hours of inspection.
It’s possible that 2 buyers cancelled because of their inspection, not their loan. It takes much longer to get through the loan app, file set-up and in front of an underwriter, especially right now as underwriters are swamped.A buyer is not obligated to provide the inspection report to the seller, and buyer can back out for ANY reason.
Seller cannot back out or cancel transaction.IF the inspection report was provided to seller through the listing agent, they can no longer ignore/pretend not to be aware of any defects/problems/items that need attention.
Disclosures & transfer statement must address these items clearly. Even if it was a rental property, seller can no longer say that “We didn’t live there, not aware of any problems”If you proceed and ever found out that they knew things that were
not disclosed to you, you would have a strong lawsuit against seller, listing agent and/or listing agent’s broker.They can play games with listing price, they can lie about having other offers. they CANNOT lie/mislead about known problems without possible severe consequences.
Your agent should be telling you ALL this and putting pressure on the listing agent to disclose why it fell out of escrow twice.
It’s sad if you have to ask you agent to do this.
That’s mediocre service at best, which is all most agents offer.Participant[quote=spdrun]
I’ve helped people who have done exactly this, but no longer possible around here.
Correct, not presently possible in San Diego, but possible in Northern NJ, other suburbs of NYC.[/quote]
It’s still possible in thousands of areas in at least 48 states, including CA.
Many people could retire on the income that they could create from the equity they have in their So Cal/Bay area homes if they were willing to relocate.
When I was a kid, rentals were basic 2-3 bedroom starter homes. Having higher end homes as rentals were rare.
There are many more these days.The opportunity to sell a primary within a few years of moving and taking the tax free gain (and investing elsewhere) in most cases makes more sense to me than converting to a long term rental and losing the tax benefit
Participant[quote=spdrun]I prefer to see all boats sinking, other than mine. If their life vests come loose, more life vests for me to rent out.
Here’s my goal. Buy more property. Hopefully cheaply. Get an income equal to 2x prevailing min wage from property rentals. Kick back. Live inexpensively. Laugh at all the rubes who are still breaking their backs doing actual work.
That’s the extent of my ambition in life. Not to do good. Not to build a career. Just to live with the minimum of interference from other humans as possible.[/quote]
I’ve helped people who have done exactly this, but no longer possibe around here. Their goal was cash flow.
It made no sense to them to hang on to inflated So Cal real estate with low cap rates and the belief that it will go up forever SO they went elsewhere and created monthly income with triple the cap rate around here.
It still makes no sense to me to collect $3K+/- monthly rent on a $500K-$800K house, regardless of equity position.
ParticipantEver heard of Daniel Mudd ? (Son of TV anchor Roger Mudd) another guy who cleaned up at the helm of FNMA, and got away with it…..
You can’t make this stuff upParticipantA rising tide lifts all boats has helped FNMA,
ultimately tax payers
https://www.americanprogress.org/issues/housing/report/2012/09/06/36736/7-things-you-need-to-know-about-fannie-mae-and-freddie-mac/ParticipantBG Wrote:
“I’m going to assume that a $417K mortgage loan on the *new* 1%/3% FF loan program costs at least $12K to close. Please correct me if I’m wrong on this”
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Of course there is a ‘cost’ for the program that is a fixed % of the loan amount.. If the lender needs to make up 2% of the loan to give back to the borrower + some other fees, it certainly could be $12K on a $417K loan, however the $12K is not paid in cash, it just translates to a higher rate for the life of the loan, no cash from borrower.If the payment is affordable, most people don’t care that it will cost them $30K +/- over the life of the loan,they only care about their monthly payment.
Even at 4.00%-4.25% with the kitchen sink rolled in, it is still near historically low rate for a 30yr fixed loan.I’m surprised that FNMA approved this program but their goal is to generate new loans and collect fees.
They assume a certain level of default just as credit card issuers do.
There’s enough anticipated profit to justify the loss ratio.Inflating the bubble is in the best interest of ‘the system’ ~People are happier with perceived wealth.
The Road to Ruin is littered with paper profits.
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