Refinancing house mortgage... options?

[cpals]

Looking at the possibility of refinancing my house due to its high interest rate.

Current mortgage:
Amount left - $157,000
Rate - 6.5%

I found a company called 'James B. Nutter' that looks like they aren't going anywhere and also offer a zero closing costs refinancing somehow. They're offering me 5.5% which would drop my monthly payments by $130 or so.

Is it too good to be true? They also don't need/do house appraisals (which is good for me since I owe more than it's worth - live in FL), but some of my friends are saying if a company doesn't need an appraisal that should be a warning?

Any other companies I should look at or am I pretty much screwed since I'm upside-down on my house?

Update:
I just did a little more searching online and it looks like what I would be doing is called an 'FHA Streamline' refinancing. They don't require an appraisal as long as I meet a certain criteria (no late payments, good credit, etc).

I just got off the phone with Quicken Loans and he talked to me about it also and the whole process sounds very good.

Update 2:
Yes, just to clarify on some of the posters below:

1. I am upside-down on my loan so getting a regular mortgage is not going to help me since they would require an appraisal. A FHA Streamline loan, which reputable lenders are doing does not require an appraisal as long as my new loan is not greater than the old one.

2. Even if 5.5% is deemed 'high' to current standards, it's still a lot better than the 6.5% I'm paying now. I believe it's higher since I'm having them pay all the lending fees since I don't have much money for closing costs.

3. I've spoken with two different companies now and they are all pretty much giving me back the same numbers.

Update 3:
Called BOA and he also said the same things as Quicken Loans. He's offering 5.5% as well, but said I'm catching the rates on a upswing.

Do you think the rates are going to come down or should I lock in now?

 

[MiniDoom]

nutter lol

 

[PepePeru]

That's a great porno star name.

 

[cpals]

Doh. I forgot middle school probably let out already... should've posted it sooner when only the adults were on.

 

[handyrandyrc]

Is it too good to be true? They also don't need/do house appraisals (which is good for me since I owe more than it's worth - live in FL), but some of my friends are saying if a company doesn't need an appraisal that should be a warning?

Don't go with this guy. And I'd REPORT him. This kind of garbage is what got us into this mess in the first place. Financing something without appraisal, or with INFLATED appraisal is BAD. Part of why the market is so inflated in the first place. We've had bad greedy brokers, greedy people, buying more than what they could afford, 100% financing, etc. Bad ju-ju

You live in more house than you can afford? Sell it. Can't sell because you're upside down too far? Settle for a short sale, and take the huge ding. Otherwise, you just have to suck it up and pay. I'd not re-finance, even if it were to save me a little each month. Those costs are all rolled in and you'll be paying for stupid fees for 30 years.

 

[misle]

They run commercials all the time here in Kansas City (I believe they are a Kansas City company). They advertise their $0 closing costs a lot. I've never heard anything about them, good or bad. But I rarely ask people about refinancing.

Edit: Just did a search and the BBB gives them an A+ rating.

 

[Linflas]

Don't go with this guy. And I'd REPORT him. This kind of garbage is what got us into this mess in the first place. Financing something without appraisal, or with INFLATED appraisal is BAD. Part of why the market is so inflated in the first place. We've had bad greedy brokers, greedy people, buying more than what they could afford, 100% financing, etc. Bad ju-ju

Depends entirely on what kind of mortgage he currently has. I can refinance mine tomorrow if I want through the VA streamline program with no income verification, no appraisal etc. as long as I am current. If I am paying the mortgage on time the VA assumes that I will continue to do so at a lower rate, it is just common sense. I believe that there are similar streamline programs for FHA mortgages etc.

 

[cpals]

I just did a little more searching online and it looks like what I would be doing is called an 'FHA Streamline' refinancing. They don't require an appraisal as long as I meet a certain criteria (no late payments, good credit, etc).

I just got off the phone with Quicken Loans and he talked to me about it also and the whole process sounds very good.

 

[rudder]

Just look over the contract. $0 closing costs means cost rolled up into your new mortgage. Some lenders may be tricky and throw some extra crap in there hoping you will not notice. I recently refinanced with bank of America. My original lender got shut down by the feds and it was picked up by BoA. Refinanced with $1600 closing costs so I was pretty happy.

 

[Linflas]

I just did a little more searching online and it looks like what I would be doing is called an 'FHA Streamline' refinancing. They don't require an appraisal as long as I meet a certain criteria (no late payments, good credit, etc).

I just got off the phone with Quicken Loans and he talked to me about it also and the whole process sounds very good.

What rate are they offering for the streamline?

 

[alkemyst]

Don't go with this guy. And I'd REPORT him. This kind of garbage is what got us into this mess in the first place. Financing something without appraisal, or with INFLATED appraisal is BAD. Part of why the market is so inflated in the first place. We've had bad greedy brokers, greedy people, buying more than what they could afford, 100% financing, etc. Bad ju-ju

You live in more house than you can afford? Sell it. Can't sell because you're upside down too far? Settle for a short sale, and take the huge ding. Otherwise, you just have to suck it up and pay. I'd not re-finance, even if it were to save me a little each month. Those costs are all rolled in and you'll be paying for stupid fees for 30 years.

Your advice is basically junk and unrealistic, you get these ideas by playing the SIMS or something?

 

[alkemyst]

I just did a little more searching online and it looks like what I would be doing is called an 'FHA Streamline' refinancing. They don't require an appraisal as long as I meet a certain criteria (no late payments, good credit, etc).

I just got off the phone with Quicken Loans and he talked to me about it also and the whole process sounds very good.

How are you re-financing being upside down?

Usually a modification is the only option in these cases...

 

[cpals]

How are you re-financing being upside down?

Usually a modification is the only option in these cases...

I just spoke with Quicken Loans and they also are able to do a 'FHA Streamline' mortgage (http://www.hud.gov/offices/hsg/sfh/buying/streamli.cfm) which has the option to not needing an appraisal as long as the refinance does not exceed the old mortgage.

Quicken Loans is offering me 5.5% for my existing loan and all I would need to bring to closing is $300. They are covering the lender fees.

 

[JEDI]

Looking at the possibility of refinancing my house due to its high interest rate.

Current mortgage:
Amount left - $157,000
Rate - 6.5%

I found a company called 'James B. Nutter' that looks like they aren't going anywhere and also offer a zero closing costs refinancing somehow. They're offering me 5.5% which would drop my monthly payments by $130 or so.

Is it too good to be true? They also don't need/do house appraisals (which is good for me since I owe more than it's worth - live in FL), but some of my friends are saying if a company doesn't need an appraisal that should be a warning?

Any other companies I should look at or am I pretty much screwed since I'm upside-down on my house?

Update:
I just did a little more searching online and it looks like what I would be doing is called an 'FHA Streamline' refinancing. They don't require an appraisal as long as I meet a certain criteria (no late payments, good credit, etc).

I just got off the phone with Quicken Loans and he talked to me about it also and the whole process sounds very good.

penfed 3.99% fixed.

and they pay ALL closing costs. nothing is rolled into your new mortgage

 

[mshan]

I found a company called 'James B. Nutter' that looks like they aren't going anywhere and also offer a zero closing costs refinancing somehow.

Umm, perhaps that are offering you an interest rate 0.25% or more higher than what you actually qualify for? (there was another thread about someone who worked at a mortgage company or bank and said actual cost to servicer of refi was $1300 - $1500 for them).

 

[sjwaste]

5.5% is an awful rate. Whenever you see "zero closing costs" go ahead and double check that you're paying an above-market rate. You almost always will.

Check USBank: http://www.usbank.com/cgi_w/cfm/personal/products_and_services/mortgage/interest_rates.cfm

Or Penfed as someone else mentioned. There's no need to do an FHA refi unless you have very little equity.

 

[OCGuy]

How are you re-financing being upside down?

Usually a modification is the only option in these cases...

.....

I have done so many damn HAARP loans. Where do you get your info?

Edit: OP: 5.5% is paying the lender a crapload on the back end right now, so that is how they are giving you your "no-cost" loan.

My bank is paying almost 5 points on the back end at that rate.

 

[coaster831]

penfed 3.99% fixed.

and they pay ALL closing costs. nothing is rolled into your new mortgage

That rate is only for a home equity loan. PenFed won't allow him to have an HEL in first position. PenFed is a good lender, but they recently added a 1% origination fee to all of their fixed rate loans (30 yr is at 5.00%, which is a good rate). Also, despite PenFed not charging lender fees, there are still lots of other fees that go along with a refinance (county recording fee, etc.) that will have to be paid for (but that will be true regardless of lender). PenFed is also adamant about an appraisal and 80% LTV.

 

[alkemyst]

He was saying there were no fees...AFAIK without an appraisal the borrower has to cover all the fees...they can't be rolled in. I see now he is paying $300 at closing....

Your rates are always 2 points below what anyone else is posting...so I don't know where you get yours.

Also to others quoting "RACK RATES"...you have to have major credit, usually more than 20% down for those.

Also the OP already stated he is upside down...PenFed at 3.99% would not be an option.

Until you get this in writing though I'd be careful.

 

[OCGuy]

Your rates are always 2 points below what anyone else is posting...so I don't know where you get yours.

Didnt I send you my rate sheet one time when you tried to call me out?

@OP: If you are currently in a FHA loan they will let you "Streamline" in some states. Most FHA requires an appraisal now, but they are company overlays. Good luck!

 

[cpals]

Yes, just to clarify on some of the posters below:

1. I am upside-down on my loan so getting a regular mortgage is not going to help me since they would require an appraisal. A FHA Streamline loan, which reputable lenders are doing does not require an appraisal as long as my new loan is not greater than the old one.

2. Even if 5.5% is deemed 'high' to current standards, it's still a lot better than the 6.5% I'm paying now. I believe it's higher since I'm having them pay all the lending fees since I don't have much money for closing costs.

3. I've spoken with two different companies now and they are all pretty much giving me back the same numbers.

 

[sjwaste]

Yes, just to clarify on some of the posters below:

1. I am upside-down on my loan so getting a regular mortgage is not going to help me since they would require an appraisal. A FHA Streamline loan, which reputable lenders are doing does not require an appraisal as long as my new loan is not greater than the old one.

2. Even if 5.5% is deemed 'high' to current standards, it's still a lot better than the 6.5% I'm paying now. I believe it's higher since I'm having them pay all the lending fees since I don't have much money for closing costs.

3. I've spoken with two different companies now and they are all pretty much giving me back the same numbers.

How much does your payment really drop with a 1% rate dip on a balance that small? Or are you refinancing and spreading it out over a new 360 month term?

I suppose if you do it without closing costs, any savings is money in your pocket. But if you have to pay closing, it might not save you anything. Make sure you run those numbers against the effective APR.

 

[dullard]

How much does your payment really drop with a 1% rate dip on a balance that small? Or are you refinancing and spreading it out over a new 360 month term?

I suppose if you do it without closing costs, any savings is money in your pocket. But if you have to pay closing, it might not save you anything. Make sure you run those numbers against the effective APR.

In most cases, a 1% change is a worthwhile refinance (unless the balance is miniscule or unless you plan to pay it off/sell the house or refinance the refinance soon).

Since he owes $157k now at 6.5% interest, that means he pays $850 in interest a month. Even if he had $3k in refinance costs and it moved to a $160k balance, at 5.5% interest, that is $733/month of interest. His savings would be $117 a month.

He'll lose on the refinance if he touches the refinance in the next 2 years. He'll make a miniscule profit with this move if he keeps that refinance untouched for 2-3 years. He'll profit nicely if he keeps that refinance untouched for 4+ years.

 

[alkemyst]

Didnt I send you my rate sheet one time when you tried to call me out?

@OP: If you are currently in a FHA loan they will let you "Streamline" in some states. Most FHA requires an appraisal now, but they are company overlays. Good luck!

You never sent me a rate sheet...but rate sheets are worthless.

Credit score, length of tradelines, income, debt ratios, what type of property, etc all play into that.

When anyone advertises rate, they are giving best case, best borrower.

Plus there are tons of ways to make up the rate on the back end as you have stated yourself or to just pass bad loans on to investors.

 

[StageLeft]

OP HOW underwater are you; what is your LTV? I refied late last year, went from 6.375 to 4.875 (paid a few points, though). I had a prime loan and maxed out heloc but an LTV basically right at 100%. I was able to refi ONLY by going back to Bank of America and using HARP I think it was (not HAMP, or maybe the other way around, but I think the HARP one).

To my understanding it was and is effectively impossible to get a NEW loan right now if you're underwater. I was able to do mine only because of some gov-backed program and only through my original lender. Closing costs were still quite substantial, however.

Whether a refi makes sense you can figure out yourself. With the extra I rolled into it in the form of points to lower the rate I figured about 30 months break even; if I leave before then it was a net cost. I also figured that if I didn't do those points I could have broken even in about two years and only at the six year or so mark did the more expensive-point option make itself superior to the no-point option, but I'll probably be here in six years and almost certainly still in three, so it was an easy decision.

Payments don't drop quite as much as you may expect, though, since you're now paying principal on a slightly flatter curve, so you end up paying more principal at the front, thus payments don't drop equal to the reduction in interest.