Must Read If You Have A Mortgage (Not Spam I Promise)

Lounge By KoryAK Updated 24 Mar 2012 , 2:31am by GarciaGM

KoryAK Posted 22 Mar 2012 , 6:47pm
post #1 of 15

I'm just so excited about this and I wanted to share in case it can help someone else and I know it can!

With rates so low right now and money (always) tight, I wanted to refinance my house to get the interest rate reduced. I went to my personal bank but they were unable to as my debt to income (DTI) was a little too high. They suggested that I contact the bank that currently holds the mortgage (Bank of America) and see if they will do it. Well, it worked!

There's a program called "Making Home Affordable" and they were able to take care of it over the phone in about 20 minutes. Because I am self employed, I will need to fax a little info but really it was totally painless. When I first called to inquire they said someone would call me back in 60-90 days because they were so busy with them - but it only took them a week. It still may take 60-90 days to close, but who cares?! I went from a 6.625% interest rate to 4.25%, lowered my minimum payments, and knocked 5 years off the term of the loan. The out of pocket cost was just $35, the refinancing fees (about $3500) they were able to roll into the loan.

Please, please consider at least a call to your current lender (must be the house you live in, not an investment property) to see if you can save money too. There is no reason NOT to do this!

14 replies
jason_kraft Posted 22 Mar 2012 , 7:23pm
post #2 of 15

I absolutely agree, just make sure to go for a fixed rate mortgage since rates won't stay this low for long. We are about to close on a new property with a 30 year fixed 4.125% loan, which is about as low as it's ever been.

Rosie2 Posted 22 Mar 2012 , 10:21pm
post #3 of 15

Wow KoryAk, thanks a million for the tip! I wil certainly contact my lender since my mortgage rate is currently 7% aggghhh icon_cry.gif

btrsktch Posted 22 Mar 2012 , 11:34pm
post #4 of 15

They don't offer this though, if you are upside down on your home - i.e. owe more on your home that it is current market value.

GarciaGM Posted 23 Mar 2012 , 2:03am
post #5 of 15

Hey KoryAK, what are the consequences to your credit score for doing the Making Home Affordable program? Does it affect it at all? I am helping my mother-in-law with her paperwork right now, and my husband wants us to look into doing it too.

jason_kraft Posted 23 Mar 2012 , 2:15am
post #6 of 15
Quote:
Originally Posted by btrsktch

They don't offer this though, if you are upside down on your home - i.e. owe more on your home that it is current market value.



They actually do offer this if you are upside-down, it's called a Short Refinance and if you are eligible you may even be able to get a principal reduction. Your bank would have to agree to this though, and I'm pretty sure there would be a hit to your credit (since it is essentially a partial default).

http://www.makinghomeaffordable.gov/programs/lower-rates/Pages/short-refinance.aspx

If you just do a refi without principal reduction (i.e. you still have, say, 10% equity) then it shouldn't affect your credit score, but your bank would know for sure.

This program is a huge improvement over even a couple years ago, I tried to get a refi in my previous property at >80% LTV with excellent credit but my bank wouldn't even consider it because I had too many liquid assets -- basically my emergency fund in a savings account. But if I spent it all on a luxury car and stopped making payments, then I would qualify for a "hardship" refi.

Texas_Rose Posted 23 Mar 2012 , 3:18am
post #7 of 15

I called today and they said the Making Home Affordable program was only for people with a Fanny Mae or Freddy Mac mortgage. There's another program if you have a FHA loan.

There's lots of info on the website: http://www.makinghomeaffordable.gov/pages/default.aspx

KoryAK Posted 23 Mar 2012 , 3:30am
post #8 of 15
Quote:
Originally Posted by GarciaGM

Hey KoryAK, what are the consequences to your credit score for doing the Making Home Affordable program? Does it affect it at all? I am helping my mother-in-law with her paperwork right now, and my husband wants us to look into doing it too.




As far as I know, none. As I understand it, the banks that got government bail outs have to help us little guys by helping us refinance. Other than that, it's just a refinance.

BUT you now have me panicking a little bit... I have send a note to the bank guy and I will keep you all posted as to what he says tomorrow.

KoryAK Posted 23 Mar 2012 , 3:37am
post #9 of 15

Reading online, it seems like there might be a difference with the impact to your credit score between getting a "modification" (bad times) and a "refinance" (just fine)

Kiddiekakes Posted 23 Mar 2012 , 2:20pm
post #10 of 15

The banks here have been offering low motgage rates as low as 2.99%...The economy was never that bad here in Canada as the US but they had to balance their interest rates to reflect what was going on globally.We refinanced our home 2 years ago from 10% down to 2.99% for 3 years fixed..We knocked off 8 years and saved over $72,000 dollars so it is well worth it to check it out..I also dropped out payments by $400.00 a month...Penalty for ending our mortgage 2 years early was well worth it for the money we saved over the long run.

btrsktch Posted 23 Mar 2012 , 4:02pm
post #11 of 15

Jason_kraft: In my area, they won't even bother with you if you are upside down. My neighbors and I have been trying for at least 2 years to get something and we discuss new options all the time. We are each in different scenarios (i.e. no financial/job changes, job changes, income loss, income reduction,etc.) and NONE of us has been able to find a program that will refi or reduce the amount if you are upside down. The best scenario has been my husband and I, where we were able to get 2.5% for 3 years and then step increases for the next 10 - but back to full payment of the original balance after 10 years.

The key words here are: If you are eligible - and we don't know the magic formula that makes you eligible.

jason_kraft Posted 23 Mar 2012 , 4:16pm
post #12 of 15
Quote:
Originally Posted by btrsktch

The key words here are: If you are eligible - and we don't know the magic formula that makes you eligible.



If you meet the criteria below you are eligible for the FHA Short Refinance program. Unfortunately participation by banks is voluntary so if your bank is not participating in this program you are SOL even if you are eligible. Then again this is a relatively new program so if your bank does not currently participate that may change in the future.

Your mortgage is not owned or guaranteed by Fannie Mae, Freddie Mac, FHA, VA or USDA.
You owe more than your home is worth.
You are current on your mortgage payments.
You occupy the house as your primary residence.
You are eligible for the new loan under standard FHA underwriting requirements.
Your total debt does not exceed 55 percent of your monthly gross income.
You must not have been convicted within the last 10 years of felony larceny, theft, fraud, forgery, money laundering or tax evasion in connection with a mortgage or real estate transaction.

KoryAK Posted 23 Mar 2012 , 5:11pm
post #13 of 15

I talked to my bank guy today and he said that the HARP (refinance program) will have no negative impact on my credit score.

btrsktch Posted 23 Mar 2012 , 5:46pm
post #14 of 15
Quote:
Originally Posted by jason_kraft


If you meet the criteria below you are eligible for the FHA Short Refinance program. Unfortunately participation by banks is voluntary so if your bank is not participating in this program you are SOL even if you are eligible. Then again this is a relatively new program so if your bank does not currently participate that may change in the future.
...




I know they SAY that, but when you call and send in paperwork - its more criteria you must meet, or something else like the bank doesn't participate, or some other run around. My point is, with my neighborhood, houses are selling at 60% of the original value - and we collectively, don't know one single person who has gotten their mortgage reduced to actual current values. Not one. [/b]

GarciaGM Posted 24 Mar 2012 , 2:31am
post #15 of 15
Quote:
Originally Posted by KoryAK

I talked to my bank guy today and he said that the HARP (refinance program) will have no negative impact on my credit score.




Well that's great. My mother-in-law's paperwork will probably be ready by Monday, but she doesn't even know which "Making Home Affordable" program she will qualify for. Either way, thanks for sharing this with everyone!

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