Looking for guidance with refinancing

iVillage Member
Registered: 07-24-2001
Looking for guidance with refinancing
17
Wed, 08-01-2012 - 1:51pm

This stuff makes me feel stupid . . .

Anyway . . . I'm looking for any insight anyone may have regarding refinancing my mortgage.

The situation is, I owe $81,500 with 22 years left on a 30 yr mortgage at 6%.

My bank is offering me a few options, but the one that seems to make the most sense is 2.875 for a 15 yr with closing costs of $650 out of pocket and $650 rolled into the mortgage.  This would mean we'd recoup the closing cost in approx 4 months (recouping in a short amount of time is important to me since I will be putting my home back on the market once the refiancing is complete - though I don't anticipate selling it yet this year given the market).

The monthly payments come out to approx $71 less a month (though I'm not really concerned about monthly payments and I will likely continue to pay what I have been paying each month - which is approx $150 more than the base payment.)

Does this make sense?

I'm a bit surprised at the high (relatively speaking) costs for closing.  They are asking for an assessment and inspection and telling me that Fannie Mae and Freddy Mac require it.  But I didn't think my mortgage was owned by either.  I bank with a small independent community bank, and I thought they owned my mortgage. (Are Freddie and Fannie just some sort of underwriting thing?)  My home will have no problem assessing higher than the mortgage amount and I've recently had a home inspection done on my own dime when I placed my house for sale.  It just seems silly to me.  I'm also working with a fairly young inexperienced loan officer.  Everytime I ask her a question she has to get back to me after she speaks to someone else who knows the answer.

I'm not really sure how to proceed.  I'm asking for a detail breakdown of closing costs and want to sit down and talk thru all costs line by line . . . but I'm getting the sense that this is irritating them, and they have been slow to get back to me.

I have excellent credit, have my mortgage, checking and savings with this bank.  Last year my H and I each opened a Roth IRA with them.  I'm thinking I deserve alittle more of their effort and time.  

Any ideas for me???

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iVillage Member
Registered: 07-12-2008
Wed, 08-22-2012 - 2:22pm

Some of the numbers in your post are suspicious given that you are working with an inexperienced loan officer.  You can calculate the payments yourself with http://www.amortization-calc.com/  Given the numbers in your post, I had to figure out what the initial loan was. At $93000 for 30 years at 6%, leaves $81,500 balance after 8 years of payments. Your current monthly payment is $557.58. For a 30-year loan, the total payments is $200,730, Total Interest paid is $107,730. You have paid $42,291 in interest after 8 years of payments.

New loan will be your $81,500 balance + 650 in rolled up closing costs which equals $ 82,150.

$82,150 for 15 years at 2.875% gives you the new monthly payment is $562.39. Total payments is 101,229. Total interest paid 19,079.

New loan costs $5 more per month, not $70 less. Therefore, there is no break-even point for the monthly payment.

In general, to calculate the break-even point, you would take all the costs and divide it by the difference in the mortgage payments to figure out how many months it would take to recoup the costs. For example, using your numbers if the loan officer told you that you will save $70 on monthly payment, the fees were 650+650 = $1,300. Therefore the break-even point will be 1300/70 = 18.6 or 19 months of payments (not 4 months) before you recoup the costs.

If you have updated numbers, exact year/month of original mortgage, I can calculate it more precisely.

You said that you are putting the house on the market.  Usually you do not refinance if you are selling the house because you will lose your refinancing costs ($1300) if the house sells quickly (within 2 years).   

 

Steve

 
iVillage Member
Registered: 04-15-2008
Wed, 08-22-2012 - 2:04pm

You can use the following sites to find out if Freddie Mac or Fannie Mae owns your mortgage. 

Freddie -- https://ww3.freddiemac.com/corporate/

Fannie -- http://www.knowyouroptions.com/loanlookup

Both sites also have information about some of the rules of the two so if an appriasal is required by them I would think that info might be on one of these two sites.   But I didn't read through them.

iVillage Member
Registered: 10-10-2011
Wed, 08-15-2012 - 8:09am

Hi,

This is an interesting subject as I work in the area of Credit Management and Debt Collection, including re-financing.

There is a very interesting programme comming up on Radio 4 this afternoon regarding PPI and other issues regarding "false" banking and sale of products which are not fit for the puropose and atlernative banks.   It is actually a 4 part series called " What went wrong with British Banks", and is available on their i-player, where the previous two programmes are avaialable,  Although they are foucsed very much on PPI issues, the second does lead in to private and independent banks

Visit: http://www.bbc.co.uk/radio/player/b01lsqkd  

 

The above address will take you to the second part of the documentry, but the first will be on their i-player too and that is equally interesting in respect of the mis-selling and the collective agreement situation drove the banks in to a profit making bonanza, and also why to beware of the PPI Reclaim companies advertising on the internet and advertising on the TV.

The fact is that if you were mis-sold PPI and other forms of inappropriate "financial products", you do not need go through any of these organisations just go through Trading Standards and report the details.  If you know enough about the legal procedure and conduct a case in the County Court, even if it is just drafting the Particulars of Claim and summons, you can actually recover the mis-sold  PPI Premiums through County Court, or going through Office of Fair Trading to make a complaint, and one of their Solicitors will take the case forward. 

 

Hope this is of interest to some.

 

regs.

 

Patsy  x

 

 

iVillage Member
Registered: 12-31-2010
Thu, 08-09-2012 - 3:57pm
You are not overthinking this, it is a big decision and one we cancelled this year due to some of the details.

You can ask who will own it, but Freddie and Fannie back banks who do first home mortgages, so they have the right to set parameters. Most mortgages will be sold as packages with other mortgages to a secondary market, regardless of who you think you are going through.
You should be able to get a good faith estimate.
I would ask the bank to use the appraisal if you can, it is worth a try.

Good luck
#Marie
Community Leader
Registered: 08-25-2006
Mon, 08-06-2012 - 5:09pm

Wow, not even sure what to say to all of that!

But...I went around with PGE and my electric bill one time.  To shorten the story, I knew the new Average Pay was way too low.  I simply wanted it reevaluated, but apparently that was too much to ask.   Common sense tells you that when your lowest electricity bill in the summer is about $75 and can get close to $200 in the winter,  that your average is not $84.   The lady just talked to me like I was stupid.  I gave up and paid what I knew it should be.

Then, of course, I thought it was supposed to straighten itself out when it renewed a year later, but I was wrong.  Then the next average was way too high, and by me overpaying left a significant difference in the two balances. 

Ugh, so I called again, and he wasn't much better.  I know how to read my Average Pay bill and besides, do you really think my average went from $85 to $144 a month?  At least this guy told me the gal a year ago could have changed my monthly payment to where I knew it should be. 

Praise the Lord, he finally told me "the only way to straighten it out is to make sure it is paid in full, the cancel the averaging."  Geesh, why didn't that lady tell me that a year ago.  So I did, and I am now paying the lower summer bill, and as it creeps back up in the fall, I will get it averaged again.

I don't mind being wrong, but just please show me where I am wrong.  Repeating to me what my bill says isn't helpful. 

 

Serenity
iVillage Member
Registered: 07-24-2001
Mon, 08-06-2012 - 2:59pm

Well Norma - ya know, it was just silly.  

My savings being in the negative happened once before about two months ago.  They told me then, something posted to the wrong account, and I accepted that explanation completely.   Mistakes happen.  I get that.

But it happened again.  

And as I said the first person just kept saying, "I'm sure it's an auto deduct you forgot about".  I told her it was NOT an authorized auto deduct, and that it had happened once before.  She finally just told me to call back after the weekend (why?  I guess to see if it somehow corrected itself?).  I asked to speak to someone else, who was able to tell me that the bank had recently introduced a new internal routing number that was a digit off from my savings account number.  She actually told me, "When it happens again, feel free to call in so we can correct it".  WHAT???  I told her calmly that was really an unacceptable answer.  And she basically said (not mean or anything), "sucks to be you."

I've banked with this bank for more than 20 years, and there have been some minor flukes, but this latest stuff was really over the top.

Arg!

It seems to be all better again, but I'm lacking some confidence in their professionalism right now.

 

iVillage Member
Registered: 10-01-2008
Mon, 08-06-2012 - 2:08pm

LOL, nothing like raising a little hell every now and then to get someone's attention.  I worked at a bank just like you described for 19 yrs.  The front line people are often paid minimum wage and are not capable of handling peoples money with the training they have.  You will find three or four people in these institutions that are actually well trained to handle people's needs.  I think you handled the situation well. BTW, what the heck did they do with your savings?  Wrong account? 

LOL, sometimes your money needs to be handled by professionals. I myself have found my reliable and trained personal at a credit union.  I have found locally that they train their personal better. 

Norma


"Patience is the best remedy for every trouble"- Plautus


iVillage Member
Registered: 07-24-2001
Mon, 08-06-2012 - 1:55pm

I want to thank everyone for their replies.  They were VERY helpful to me.

Stupid of stupid things . . .  while I was STILL waiting for my loan officer to get back to me (even if it was just to tell me that it would take her a few days to get the info I needed . . . for her to tell me ANYTHING . . . geezee), I looked at my bank accounts online (to make sure H's payroll posted), AND my savings account was IN THE NEGATIVE.  What the hell!!  I called the bank asap, and the first person I talked to was just so annoying.  She just kept telling me that I probably had an auto deduct I forgot about.  Yeah, right . . . an auto deduct for some $3800 that I FORGOT about.  

Anyway, it was really (understandably) the last straw.

As I said, I live in a small town and it's a small town bank, so I ended up calling a member of the bank board (who I know well) and he was VERY UNHAPPY about what I told him.

Anyway, now I have the closing cost breakdown in hand, and my savings account is back to normal, AND the bank president told me he'd personally oversee my refi.

We'll see how this goes, I guess.

Why do these stupid things happen to meeeeeeee?

Avatar for mahopac
iVillage Member
Registered: 07-24-1997
Fri, 08-03-2012 - 3:11pm

I just refinanced my home with the same credit union where I've been a member since 1979 and where I had my original mortgage in 2005 (30yr fixed @ 5.65%).  It was so darn difficult that I almost called it quits several times.  The only thing that made me stick it out was that I would save over $100K in interest, and it was obviously worth my time to try to avoid spending $100K if I don't have to.  Fortunately, I had a pretty good loan officer who was really patient with me even though I got so frustrated that one day I ended up yelling at him!  (Of course I apologized.) 

The rules for refinancing are much stricter now than they used to be, and Freddie Mac or Fannie Mae (I forget which) underwrites many of them, even if it is through your community bank.  THAT'S the reason they made me jump through hoops.  As assessment and inspection were absolutely required, but they were the least of my worries.  They wanted me to close my HELOC (which is open though has had zero balance for 6 years, and is what I'd use in place of an e-fund if I were completely desperate, so I did NOT want to close it).  The worst part was that I'm self-employed, so even though I make 5x what I made when I took out my first mortgage, they wanted endless documentation.  Everything I provided, they'd ask for more.  After months of this, they suddenly said they wouldn't approve it!  I called the loan officer, who told me this was a Fannie Mae issue, and he gave me the contact info for the head of mortgage loans at the credit union.  I emailed him, and within an hour, the whole thing was approved and I had a closing date.  I guess Fannie Mae has requirements but the credit union could actually apply some common sense to the whole thing.

Now, as for the bank's documentation, the first thing I got was a form that guaranteed the loan rate of 3.125% for 90 days from the date I called to apply.  Once that was signed, then the paperwork started coming fast and furious:  all the state and federal papers that have to be signed before you can close on the house.  I don't think I got a document listing the closing costs until after I'd signed those, though they did give me a general idea upfront.  There is a document that lists them, but that came toward the end of the process.  I had to make them apply my tax escrow (they wanted me to basically escrow the next year's taxes of $10K even though I had just paid them a few weeks before).  I had to pay 1/2 a point for some dumb reason, but what's $750 compared to a savings of $100K?  On and on and on. . .

So you're not stupid and you're not alone.  If I were you, though, I might call the bank and request a different loan office who can be more helpful. 

 

iVillage Member
Registered: 11-14-2008
Fri, 08-03-2012 - 10:31am

This sounds like a good idea to me. You are knocking years off your loan term too which gets rid of interest. Plus you don't know if you will be selling or not.  I say go for it.

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