hockeysc23 Posted February 1, 2011 Share Posted February 1, 2011 I was recently contacted by Wells Fargo (who has my loan) about qualifying for refinancing of my house loan. I've been reading a ton up on it and using mortgage calculators but honestly it's making my head spin haha. Some say do it you are saving $$ others say keep going and pay more per month. So I was hoping someone here could help educate me. Here are some details: I currently have a 30 year fixed very high 6.375% loan. I have owned the house for 3 years this month and have unpaid principle of 339k roughly. Never missing a payment. Wells Fargo offered me: 5%, no money down, closing costs and fees get rolled in for a new HARP loan of 341k. I have mortgage insurance that I currently pay for that is why she said I couldn't get a lower rate then that unless the market moves. I can afford my monthly payments although a little extra cash and not having to use savings every now and then is always appreciated but I felt like I rushed into buying a house (thus the high %) and want to make sure I don't repeat the same long term mistakes over short term gain. I plan on owning this house for at least 5-10 more years, renting it out if I start a family and need more space or selling should I make any money on it. Not likely since the corner lot sold very quickly for 299k the other month. Thoughts, suggestions and commentary is appreciated. Thanks in advance. Link to comment Share on other sites More sharing options...
Bliz Posted February 1, 2011 Share Posted February 1, 2011 I'm not a financial advisor/planner. You should talk to one. Lots of them will work for you for free when you're young and easy to manage (so they can get you in the door and turn you into a paying customer when you're older and more complicated finances). That said, here's my two cents: The HARP program is what allows you to refinance if you're upside down, which was most people's problem. Want to refinance for the new rate, can't hit the appraisal. If you can substantially reduce the rate that's always a great thing to do. The reduction you're talking about seems to me to be a no-brainer. The only question is what to do with the money once you have the lower rate. Do you keep paying your same monthly payment (thereby knocking off the principal faster) or do you invest it? IMO the equity you will make in your house in the 5-10 years, considering where the market is right now, is a pittance. Put the difference per month into your 401(k) or some other investment account and you'll end up way ahead. If the market turns around, you can always change your mind. Wells should calculate for you the differences in what would happen if you kept on paying your same monthly payment. You'd probably finish paying off the house in less than the 27 years you have left. On it being a no-brainer to go through with, think about it this way: So you're paying approx 2k in closing costs and fees. Personally I'm a fan of just paying that money out instead of rolling it into the new loan. If you do that, you might be able to get the rate a little lower. Figure out how much your monthly payment will go down (recognizing that you're starting over on a new 30) and how long it will take you to recoup that money and if it's under 2 years (which I'm sure it will be) you're best off doing it. You will probably recoup the costs in 6 months or less. Link to comment Share on other sites More sharing options...
Mursilis Posted February 1, 2011 Share Posted February 1, 2011 Why would you NOT want to lower your rate? I'm having a hard time seeing any negative whatsoever in this deal. 6.375% is just way too high. Link to comment Share on other sites More sharing options...
TD_washingtonredskins Posted February 1, 2011 Share Posted February 1, 2011 How does someone qualify for the HARP program? Does it have to do with Fannie or Freddie? Link to comment Share on other sites More sharing options...
hockeysc23 Posted February 1, 2011 Author Share Posted February 1, 2011 Why would you NOT want to lower your rate? I'm having a hard time seeing any negative whatsoever in this deal. 6.375% is just way too high. Because it starts the mortgage over. I mean my theory is there has to be some reason the banks do this or why would they volunteer to lower my rate? As for qualifying there is a bunch of information online but basically your loan has to be owned by Fannie or Freddie, upside down and some other factors about not missing a payment I believe. Bliz thanks for the detailed response. I appreciate it. I've talked with some financial advisors and all seem to want 1.5k to 2k to go through everything and with getting married in October my fiancee and I were going to wait until we had a joint account so we wouldn't have to pay and start all over again then. I'll ask if I can just pay the restructuring fees etc. out of pocket. Thanks! Link to comment Share on other sites More sharing options...
Bliz Posted February 1, 2011 Share Posted February 1, 2011 Because it starts the mortgage over. I mean my theory is there has to be some reason the banks do this or why would they volunteer to lower my rate?As for qualifying there is a bunch of information online but basically your loan has to be owned by Fannie or Freddie, upside down and some other factors about not missing a payment I believe. Bliz thanks for the detailed response. I appreciate it. I've talked with some financial advisors and all seem to want 1.5k to 2k to go through everything and with getting married in October my fiancee and I were going to wait until we had a joint account so we wouldn't have to pay and start all over again then. I'll ask if I can just pay the restructuring fees etc. out of pocket. Thanks! No problem. I'm going through it myself right now (application pending with Wells) so I've done a bit of research lately. I'm not getting as big a rate reduction as you, but by paying out $1,100 I can reduce my payment by $200/month (I've still got 25 years to go) all of which I'm putting into my 401(k). Had a conversation with a financial advisor about it too. Your loan has to be owned by Freddie or Fannie. Many are. There's a website that will give you the answer, since most people don't know. If Freddie owns it, you can only refinance with your current lender. If Fannie owns it you can shop around. Or maybe it's vice versa, I can't remember. There are some other qualifications as well. Link to comment Share on other sites More sharing options...
Darth Tater Posted February 1, 2011 Share Posted February 1, 2011 Because it starts the mortgage over. I mean my theory is there has to be some reason the banks do this or why would they volunteer to lower my rate? Because when real estate values are expected to be pretty flat or even fall, banks prefer to continue to receive the current income of a mortgage payment as opposed to getting the real property . When the mortgagee is upside down on the mortgage, the best decision is often to walk away and let the bank have the property. This leaves the bank with a property that is not producing income and does not generate any, very low or, in some cases, negative equity earnings. Link to comment Share on other sites More sharing options...
Maximus71 Posted February 1, 2011 Share Posted February 1, 2011 If you qualify for harp then do it!! You are lowering your rate by 1.375% and it's a no brainer unless you are going to sell your house in the next 3 years. You should recoup the closing costs within 3 years with the amount of your monthly payment savings. I work for Wells, not being biased just stating facts. Link to comment Share on other sites More sharing options...
The Sisko Posted February 2, 2011 Share Posted February 2, 2011 I agree with Max that in your case it's a no brainer. Your interest rate plus the fact that you're planning to keep the house for several years means you'll get your closing $$ back and then some. Mrs. '06 and I just did a HARP refi a couple of months ago and it's saving us about $300/month that we're socking away for retirement. About the only downside is that we were stuck with our existing lender and the interest rate wasn't as low as I could've found elsewhere. Even so I think it was a good move for us.. Link to comment Share on other sites More sharing options...
hockeysc23 Posted February 2, 2011 Author Share Posted February 2, 2011 Thanks all for the info. My lender just emailed me and said rates went down to 5.375% from the 5.5% she quoted yesterday with 0 points. I can pay the 3k in closing costs out of pocket which would save me roughly 20 bucks a month or roll it into the new loan. Any thoughts as I think I am going to move forward with doing this. Link to comment Share on other sites More sharing options...
TD_washingtonredskins Posted February 2, 2011 Share Posted February 2, 2011 Thanks all for the info. My lender just emailed me and said rates went down to 5.375% from the 5.5% she quoted yesterday with 0 points.I can pay the 3k in closing costs out of pocket which would save me roughly 20 bucks a month or roll it into the new loan. Any thoughts as I think I am going to move forward with doing this. This could be the wrong advice, but MY preference would be to pay the $20 per month rather than part with $3,000 out of pocket right now. Link to comment Share on other sites More sharing options...
Bubble Screen Posted February 3, 2011 Share Posted February 3, 2011 This could be the wrong advice, but MY preference would be to pay the $20 per month rather than part with $3,000 out of pocket right now. Exactly. And I'm speaking from experience. Link to comment Share on other sites More sharing options...
Bliz Posted February 3, 2011 Share Posted February 3, 2011 This could be the wrong advice, but MY preference would be to pay the $20 per month rather than part with $3,000 out of pocket right now. Although I said the opposite in my prior post, I have to agree with this here. $20/month isn't worth it. It will take way too long to recoup that money. The reason I'm paying mine out of pocket is that I'm going with an attorney I know instead of Wells' attorney and he's going to be MUCH cheaper than Wells would be, and it reduces the rate on top of that. I can handle an $1,100 hit out of pocket, and I generate a little work for a friend. Link to comment Share on other sites More sharing options...
Mursilis Posted February 3, 2011 Share Posted February 3, 2011 Because it starts the mortgage over. I mean my theory is there has to be some reason the banks do this or why would they volunteer to lower my rate? Unless it includes a prepayment penalty (and most mortgages don't), it does not "start the mortgage over", it merely extends the term, which isn't the same thing. Your principal remains the same (or close, if you roll the closing costs in), which is good, and you still have the option of paying the same amount every month that you're paying now. If you do that, more of your monthly payment goes to paying down the principal, and you save yourself thousands of dollars in interest down the road, and you pay off your mortgage faster than you would have if you kept your old mortgage. Under the terms you've described, it's a no-brainer. I don't see a down side here. Link to comment Share on other sites More sharing options...
Forehead Posted February 3, 2011 Share Posted February 3, 2011 I looked into this myself at one point, I meet all the qualifications except for one, that my first mortgage can't be more than 125% of the value of my home. I bought in 2006; our townhouse has plummeted in value since then, so unfortunately we don't meet that criteria. Otherwise I'd probably be all over this. Link to comment Share on other sites More sharing options...
Hunter44 Posted February 3, 2011 Share Posted February 3, 2011 We recently modified our mortgage with Wells also. They were after us for a long time and each time they made a pitch, the offer got better but this last time I thought it was time to move on it. We've been in the house just under 5 yrs and they offered a 20 yr fixed at 4.75%. (We were at a 30 yr with a little over 6%) So our payment is a little lower and we save 5 yrs off the back end. They also covered all the closing costs. Link to comment Share on other sites More sharing options...
Popeman38 Posted April 4, 2012 Share Posted April 4, 2012 I am in the process of refi with Wells Fargo now. Going from a 7 year ARM to a 30 year fixed. My 7 year ARM is set to adjust in November, and in 2016 my monthly payment would have jumped. I am going from a current 6% soon to be adjustable rate to a fixed 4.375% My monthly payment is only going down by about $90, but it is worth it to me because my payment will be set for 30 years. Link to comment Share on other sites More sharing options...
USS Redskins Posted April 4, 2012 Share Posted April 4, 2012 Cant beat that, Popeman.... I refi'd with HARP last year with Bank of America out of an ARM but my payments went up by about $50. I didnt qualify for a modification b/c I make too much. Heck, I was just happy to get out of the 2014 ARM adjustment and now have a 5.2% loan. also -the process was really easy and BOA was really nice to deal with (though I wish I got one of those modifications I kept hearing about). I was really counting on winning that Mega Millions... damn. Link to comment Share on other sites More sharing options...
Hutad Posted August 29, 2012 Share Posted August 29, 2012 There is a new version of HARP out called HARP 2.0. I realize this thread is from 2011 but for anyone interested in refinancing with an unlimited LTV, you should check out HARP 2.0. Fannie and Freddie refinance applications are skyrocketing. You may be asking yourself how do I qualify for HARP 2? Certain requirements must be met to qualify for HARP Loans. While there may be additional criteria imposed by the mortgage servicer, the government requirements are as follows: 1. The mortgage must be owned or guaranteed by Freddie Mac or Fannie Mae - Many homeowners are unaware that their mortgages are linked to one of these organizations, since neither Freddie Mac nor Fannie Mae deals directly with the public. 2. The mortgage must have been acquired by Freddie Mac or Fannie Mae on or before May 31, 2009. 3. The homeowner must not have a previous HARP refinance of the mortgage, unless it is a Fannie Mae loan that was refinanced under HARP during March-May 2009. 4. The homeowner must be current on their mortgage payments, with no (30-day) late payments in the last six months and no more than one late payment in the last twelve months. 5. The current loan-to-value ratio (LTV) of the property must be greater than 80%. 6. The homeowner must benefit from the loan by either lower monthly payments or movement to a more stable product (such as going from an adjustable-rate mortgage (ARM) to a fixed-rate mortgage). Hope this helps. Link to comment Share on other sites More sharing options...
Forehead Posted August 29, 2012 Share Posted August 29, 2012 I don't know if Hutad is a shill account trying to drive traffic to a website, but conuter to my earlier post in this thread from February of last year, we did use Harp 2.0 to refinance from 6.25 to 4.5%. Definitely worth it. Link to comment Share on other sites More sharing options...
THEREALTOR1 Posted August 29, 2012 Share Posted August 29, 2012 And if your current lender is the company that promises "together we'll go far" with the picture of the stagecoach behind it shoot me a pm, I'll tell you if your conventional mortgage is eligible for the harp 2.0 or not. Link to comment Share on other sites More sharing options...
The Evil Genius Posted August 30, 2012 Share Posted August 30, 2012 I wish my LTV would come back to the plus side. I have a Freddie Mac (we made the mistake of accepting Chase's offer 18+months ago to a "no cost" refi - in which they offered to knock our loan down from 5.75% to 5.25% at no cost out of pocket since we were such great customers). So I would have qualified for the HARP 2.0 but the documents now reflect a loan date of after 2009. Doh. Link to comment Share on other sites More sharing options...
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