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[ThreePiMatt]

This is something I've been thinking about for a while now, just never really got around to doing it. I bought my townhouse in Sept 2009, as prices were on their way down, but before things have bottomed out. So I'm nearly five years into a 30 year, fixed rate loan.

Without going into too many details about my personal financial situation, here's roughly where I'm at:

1. I'm not in any financial distress. I have no problems making the monthly payments for principal/interest/taxes/PMI.

2. My house has lost value since purchasing and the loan is "underwater" as they say. I think the last assessment has it at like 75% value compared to what I purchased it for.

3. My credit since purchasing has significantly improved. I had a kind of limited credit history when purchasing the house in 2009, with a tiny blemish for late payment on a credit card (which has since been disputed off my credit report). Since then, I've never missed a payment on my mortgage, car (now paid off), credit cards, etc.

4. My mortgage is through Bank of America, which has recently been subjected to a court settlement brought forth by various state's attorney generals. Hopefully this qualifies me for, I dunno, something.

5. Mortgage is FHA insured.

To be honest, I'm not quite sure where to start. Obviously I could go into a bank, ask about refinancing and they'll throw a ton of numbers at me and I'll get quickly overwhelmed. But I feel in my situation there all sorts of government programs out there to assist with refinancing or adjusting principals that I have to qualify for something, right? I don't qualify for HARP because my mortgage isn't owned by Sallie Mae/Freddie Mac. And it doesn't sound like I qualify for PRA because I bought my house after Jan 1st 2009 and haven't had a "hardship."

But anyone out there have any tips or want to share recent experiences?

 

[Linsies]

We recently did (this month). My husband and I also bought in 2009 and it was an FHA loan. With the new loan (not FHA), we have the same payment but the loan term went down to 15 years, which removed hundreds of thousands in interest. The lower the term, the lower the interest, and we had better credit than 5 years ago.

Wanted to add: my husband did the entire process through our mortgage company without ever having to go in. They sent us paperwork, which we filled out, and sent back. We did have to pay to appraise the house ($500 I believe) and you have to pay closing costs (from what my husband says - they give you a break between the last payment on your old loan and the first payment on your new loan so you can use what you would use as your mortgage payment for closing costs).

 

[ThreePiMatt]

We recently did (this month). My husband and I also bought in 2009 and it was an FHA loan. With the new loan (not FHA), we have the same payment but the loan term went down to 15 years, which removed hundreds of thousands in interest. The lower the term, the lower the interest, and we had better credit than 5 years ago.

Holy crap, that'd be baller.

 

[Dalek]

I did it-and it may be anecdotal evidence but for me it was gigantic pain in the ass. My loan was with BofA but it was sold to Nationwide - who seem completely incompetent. Either that or they were just fucking with me to delay it.

 

[CrankyJay]

My wife and I refinanced so we could get a lower interest rate. We went from like 5.8% to like 3.9%.

We rolled the new closing costs into the new mortgage. We also opted to go from a 30yr mortgage to a 15yr. The loan officer told us we would be saving ourselves like $120k over the life of the loan so it was a good move on our part despite adding an additional $5k because of the closing costs.

 

[Linsies]

High five. Feels so nice knowing you will own it that much quicker.

Oh OP - it also helps if your property appraises for more than you paid. For example: ours appraised for almost 100k more than we bought it for.

 

[CrankyJay]

High five. Feels so nice knowing you will own it that much quicker.

Oh OP - it also helps if your property appraises for more than you paid. For example: ours appraised for almost 100k more than we bought it for.

Yeah, still feel really good about it. Can't wait to get the entire thing paid off in full.

 

[Squirrel Killer]

2. My house has lost value since purchasing and the loan is "underwater" as they say. I think the last assessment has it at like 75% value compared to what I purchased it for.

That's not necessarily underwater. A loan is underwater if you owe more than the collateral is worth. If the house is underwater (loan balance is still like $500k, but the house is only worth $400k,) refinancing is a bad idea.

The details that will really help guide advice would be original loan amount, interest rate on the loan, current loan balance, current house value, etc... ballpark figures are fine.

 

[ThreePiMatt]

That's not necessarily underwater. A loan is underwater if you owe more than the collateral is worth. If the house is underwater (loan balance is still like $500k, but the house is only worth $400k,) refinancing is a bad idea.

The details that will really help guide advice would be original loan amount, interest rate on the loan, current loan balance, current house value, etc... ballpark figures are fine.

Original loan was about $160k, interest rate 5.375%, current balance is about $148k, and the "Full Fair Cash Value" from the latest county assessment is a little over $110k.

 

[n64coder]

Original loan was about $160k, interest rate 5.375%, current balance is about $148k, and the "Full Fair Cash Value" from the latest county assessment is a little over $110k.

Usually the tax assessor valuation can be on the low side. You should look at what recent similar houses sold for recently to get a good idea on the real value.

When you bought the house, what did you pay for it? How much equity did you have at the time?

If you are truly under water, it will be very hard to refinance it.

 

[Yankee Ruin X]

I just did this a few weeks ago I owed £50k on my mortgage so remortgaged on a lower interest rate, took an extra £50k in cash so total is now £100k on a £220k house. Going to spend the £50k on refurbishing the entire house, already stripped it out and currently fitting a new kitchen, bathrooms, garden landscaped and converting a garage into a cinema room with a 10ft screen so can't wait for it to be finished. Plus most of what I am doing is just going to add value to the house anyway so it's not like I really lost anything if I decide to sell so definitely happy with the decision so far.

 

[Various Artists]

I just did this a few weeks ago I owed £50k on my mortgage so remortgaged on a lower interest rate, took an extra £50k in cash so total is now £100k on a £220k house. Going to spend the £50k on refurbishing the entire house, already stripped it out and currently fitting a new kitchen, bathrooms, garden landscaped and converting a garage into a cinema room with a 10ft screen so can't wait for it to be finished. Plus most of what I am doing is just going to add value to the house anyway so it's not like I really lost anything if I decide to sell so definitely happy with the decision so far.

Sorry to break if to y but there are almost no upgrades that increase the value of your house I. The long run. Especially not a home theater.

 

[Squirrel Killer]

Original loan was about $160k, interest rate 5.375%, current balance is about $148k, and the "Full Fair Cash Value" from the latest county assessment is a little over $110k.

Essentially what happens when you refi is that you're taking out a mortgage to re-pay the original mortgage. The lower interest rate, higher equity as a percentage of the property's value, and "take out" some cash are the main reasons to refi. The assessment is likely low, so let's assume the appraisal value would be $132k (meaning the assessor is ~20% off.) You're essentially going to the bank to ask them to give you a loan for $16k more than what the property is worth. That's not likely to fly.

You should be able to do better than the 5.375% from a cursory look at mortgage rates, but the $12k difference between your original loan and the new one won't be a huge difference. Plus, if you weren't paying PMI before, being underwater, you definitely would now.

This is pretty much why the housing crash was such a shitty proposition. If you had to move right now, you'd be looking at a short sale and walking away with nothing to show for all you mortgage payments.

 

[Arken2121]

A little off-topic but also not significant enough to where I wanted to create another thread. Say if you owned a home, still had a mortgage but it was current and wanted to transfer ownership to another family member. How would one do this?

 

[WoodWERD]

Sorry to break if to y but there are almost no upgrades that increase the value of your house I. The long run. Especially not a home theater.

6 month old post but I'll still call this bullshit out. Sure, some 'upgrades' don't create value.

A little off-topic but also not significant enough to where I wanted to create another thread. Say if you owned a home, still had a mortgage but it was current and wanted to transfer ownership to another family member. How would one do this?

It's called an assumption which is far from a refinance. It has to be allowed in the original note, contact the servicer to see whether it's possible and what the requirements are.

 

[Arken2121]

6 month old post but I'll still call this bullshit out. Sure, some 'upgrades' don't create value.



It's called an assumption which is far from a refinance. It has to be allowed in the original note, contact the servicer to see whether it's possible and what the requirements are.

First time i'm hearing this, when I did some research it directed me to something called a Quit Claim Deed(I live in Florida). Thank you for your help.

 

[Rentahamster]

It depends as long as you calculate out your lifetime payments and make sure you're not getting suckered into a shitty deal.

 

[Arken2121]

It depends as long as you calculate out your lifetime payments and make sure you're not getting suckered into a shitty deal.

Assuming you're talking to me, it's actually an amazing deal just I wasn't sure if there was a more convenient way about doing it.

 

[Rentahamster]

Assuming you're talking to me, it's actually an amazing deal just I wasn't sure if there was a more convenient way about doing it.

How much will you be saving over the lifetime of the loan/monthly payments?

 

[WoodWERD]

First time i'm hearing this, when I did some research it directed me to something called a Quit Claim Deed(I live in Florida). Thank you for your help.

No problem. That just pertains to the title and not the mortgage. You're describing someone taking over payments on an outstanding debt. They might have to credit qualify and show proof of income.

 

[kiunchbb]

How much will you be saving over the lifetime of the loan/monthly payments?

Just added a little more to this post. The loan contract should state the total lifetime payment.

Just be careful of hidden fees, viable interest, and possibility that they will revalue your property, which will lead to increase in property tax (at least this is how it is in CA).

 

[Arken2121]

No problem. That just pertains to the title and not the mortgage. You're describing someone taking over payments on an outstanding debt. They might have to credit qualify and show proof of income.

Ah I see, completely understandable. Wouldn't that pertain to both though?

To Rentahamster

Edit:I won't be saving anything aside from having a very low mortgage to begin with. I guess that's savings in of itself?

 

[Rommel]

One thing to check into when doing this is see what your rate would be with a zero closing cost mortgage. Not a lot of people know about these.

I'm doing this on my house and it bumped my rate by .25% but then I had zero closing costs and I was able to use the concessions from the builder to bring down the purchase price further. (Dropped the price from 188k to 180k). Most of the time the builder or whatever will chip in that money towards closing costs.

3.5% to 3.75% is not that big of a difference payment wise and 5k in closing costs on a 180k mortgage is a metric ton imo so I felt the rate hike was worth it.

Obviously you are refinancing so the situation is a bit different but there are zero closing cost refi's out there. Just have to look around.

 

[Arken2121]

One thing to check into when doing this is see what your rate would be with a zero closing cost mortgage. Not a lot of people know about these.

I'm doing this on my house and it bumped my rate by .25% but then I had zero closing costs and I was able to use the concessions from the builder to bring down the purchase price further. (Dropped the price from 188k to 180k). Most of the time the builder or whatever will chip in that money towards closing costs.

3.5% to 3.75% is not that big of a difference payment wise and 5k in closing costs on a 180k mortgage is a metric ton imo so I felt the rate hike was worth it.

Obviously you are refinancing so the situation is a bit different but there are zero closing cost refi's out there. Just have to look around.

I get confused when I don't see quotes . I'm technically not refinancing, just assuming the payments(ownership).

 

[Rommel]

I get confused when I don't see quotes . I'm technically not refinancing, just assuming the payments(ownership).

I have to apologize for my reading comprehension fail lol

 

[Arken2121]

I have to apologize for my reading comprehension fail lol

It's all good. I'm the one asking you guys for assistance and it's greatly appreciated.

Edit: Aside from credit qualify and PoI, is there anything else I need to know?

 

[Damaniel]

We recently did (this month). My husband and I also bought in 2009 and it was an FHA loan. With the new loan (not FHA), we have the same payment but the loan term went down to 15 years, which removed hundreds of thousands in interest. The lower the term, the lower the interest, and we had better credit than 5 years ago.

This is the route I went back in 2010, though the resulting refinance was still FHA. I opted to go with the 15 year term, since the lower interest rate made the 15 year loan only cost about 10% more than I was already paying. It's *really* nice to see the amount owed on the principal drop by an appreciable amount every month (just under a third in 5 years!)

As far as getting one, just go to your bank or credit union of choice (the latter if you're already a member of one) and ask to talk to someone about refinancing your mortgage. They'll hook you up with the right people. A credit score of 700+ will probably be required if you want to get a rate that would actually be an improvement. It certainly makes the whole process a whole lot smoother than it would be if you had a score much below that.

 

[Horns]

Bought my house this past Summer, currently in the process of refinancing. The new rate saves me $135 a month almost $50k over the life of the loan. I have to come up with $800 at closing and need to front some money like taxes in escrow which I get back from my old mortgage company. It saves me in the long term and gives me a low rate that I'll likely never see again.