Would I qualify for a mortgage refi?

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Linky

The average U.S. 30-year rate dropped to 4.87 percent from 4.94 percent last week. The 15-year rate was 4.33 percent, mortgage buyer Freddie Mac of McLean, Virginia, said today in a statement.

That is pretty darn low. I have no idea what's going on with various mortgage packages and deals and God knows what else these days, so can anybody here guess as to whether I could get a refi on my house? My credit is good, loan:value ratio is about 98% (woot), loan with countrywide, and I would cover closing costs but not interested in bringing much more than that to the table, certainly not enough to bring loan:value to 80%.

*UPDATE* 10/13/2009

Thanks so much for the comments about HARP. I called countrywide/bank of america this morning and a guy said that I do qualify for HARP. Apparently the only documentation needed is verbal over the phone as they update my info. App is $400 but refundable if I don't qualify. He said it was pretty much a slam dunk, though.

I can refi the 80% first mortgage into this but it will not take over my HELOC (20%), so that's stuck. Rate is 5.375 30 year fixed or I can pay 1.5 pts to bring it down to 5%. Pay back is about two years on the first or four on the second, so I'm not sure if I'll pay the points or not. Otherwise closing costs are $2400+ app if I don't do the points. Closing can be paid up front or built into the loan. Shameless bragging my credit score is now at 797 he said

*UPDATE 2*

Got pre-approved on the phone and locked in the rate today. the guy said underwriting is quite slow right now so it could take 30-60 days, but the rate lock in will go past that if they are the ones responsible for the delay. I did all the points I could so I'm at 5% once this kicks in, at least on the first mortgage.

 

[dullard]

I don't know if you qualify, but I'd like to throw a wrench into your picture. I just saw that ING is doing a 3.99% fixed 5-year refinance loan on houses with low closing costs. After 5-years the remaing 25 year balance is due in full. That may be difficult to swing, but with interest rates at 3.99%, you can make a whole lot of progress on your house principal in five years. Then you just need to refinance again at that point.

 

[BoberFett]

Originally posted by: dullard
I don't know if you qualify, but I'd like to throw a wrench into your picture. I just saw that ING is doing a 3.99% fixed 5-year refinance loan on houses with low closing costs. After 5-years the remaing 25 year balance is due in full. That may be difficult to swing, but with interest rates at 3.99%, you can make a whole lot of progress on your house principal in five years. Then you just need to refinance again at that point.

That's the ARM game all over again.

 

[StageLeft]

Originally posted by: dullard
I don't know if you qualify, but I'd like to throw a wrench into your picture. I just saw that ING is doing a 3.99% fixed 5-year refinance loan on houses with low closing costs. After 5-years the remaing 25 year balance is due in full. That may be difficult to swing, but with interest rates at 3.99%, you can make a whole lot of progress on your house principal in five years. Then you just need to refinance again at that point.

Without expecting a huge and almost guaranteed pay raise in five years I think I'd have a hell of a time sleeping at night with that one. It could work for some people, though...

 

[boomerang]

I truly don't know, but maybe others will. When the inflationary spiral starts kicking in, these rates will go through the roof. Get it done while the gettin' is good.

Ancient history, but I was paying 9.25% on the house I'm in on the original mortgage in 1987. I think we'll eclipse that rate.

 

[boomerang]

Originally posted by: BoberFett

Originally posted by: dullard
I don't know if you qualify, but I'd like to throw a wrench into your picture. I just saw that ING is doing a 3.99% fixed 5-year refinance loan on houses with low closing costs. After 5-years the remaing 25 year balance is due in full. That may be difficult to swing, but with interest rates at 3.99%, you can make a whole lot of progress on your house principal in five years. Then you just need to refinance again at that point.

That's the ARM game all over again.

No shit. Do not want.

 

[Thump553]

If you are stating it correctly, a 98% loan to value ratio means your house is worth juat a hair more than you owe (for example, you'd owe 196k on a 200k house). In the real world-with brokers commissions and closing costs-this means you are underwater. Sorry to rain on your parade. If that's your case, any refi is going to involve FHA, VA or private mortgage insurance, and PMI has heavy upfront closing costs (Note-if your current loan is FHA or VA definately pursue refinancing-it's a lot easier and cheaper).

If you want to refinance, the thing to do is ask a lender/loan broker what is available-and shop around. Bank of America (my lender) sends me solicitations seemly every other day despite me having never expressed the slightest intention.

I wouldn't dismiss the ING plan out of hand. What are the chances you will still be in that house in five years? Nationwide the average is something like seven years the last time I looked (and that includes a lot of grandmas who have been in the same house 60+ years).

I'm at a much higher rate than you despite having perfect credit because I'm self employed. Last time I refinanced the only thing I could get was a "liars' loan" at a rate about one percent higher than market rates. Very galling. Personally I'm focused on paying off the present mortgage than refinancing it until I'm ninety.

BTW, if you refinance now, be prepared to go through the wringer as far as the lender nitpicking goes. I just did a closing (purchase) that had to be delayed four times-over a month total-because of the lender's dot the i's and cross the t's underwriting standards. They have gone 180 degrees in the opposite direction from where they were in the Bush days, and many (including me) think the lenders have gone overboard being overly cautious now. And I'm talking BS items now, not judgment call matters.

 

[TheSlamma]

Originally posted by: BoberFett

Originally posted by: dullard
I don't know if you qualify, but I'd like to throw a wrench into your picture. I just saw that ING is doing a 3.99% fixed 5-year refinance loan on houses with low closing costs. After 5-years the remaing 25 year balance is due in full. That may be difficult to swing, but with interest rates at 3.99%, you can make a whole lot of progress on your house principal in five years. Then you just need to refinance again at that point.

That's the ARM game all over again.

It's not an ARM exactly. It's more of a Balloon, but you can do whats called a rate lock every 5 years and it's fixed at the lock every 5 years.

I have this loan (Easy Orange) but I'll tell you now it's not for everyone and ING will tell you the exact same thing. You must own at least 20% equity in your house and have a credit score over 720. It's meant for people like myself who make massive principal payments and either plan to have it paid off in the 5 years or for people who plan to do the rate lock (which is basically a 15 minute phone call and you are locked in again for the next 5 years) or refi at that 5 year point with another bank, or of course move.

It's purpose is a mortgage accelerator through low interest rates and bi-weekly payments. I owe'd 94,000 on my house in September of 2008 I currently have a balance on my ING of 24,665.36. For what I wanted to do it's been an awesome loan.

 

[StageLeft]

Probably we'll be in this house in five years unless we either upgrade (highly unlikely) downgrade (dito) or have to move to another country (also unlikely).

My current rate is 6.375 for 80% of the total borrowed, but if I had to get PMI PMI would eat up most of the savings here. In previous times PMI could be taken care of with a 20% heloc, which we have also, but I don't believe those are doable at the moment for what amounts to a combined 100% or so LTV. Our heloc at least is under 3% now but it's surely going to spike if inflation gets going. I have not run any kind of numbers on what payments would be with 100% mortgage + PMI vs the current mortgage plus a HELOC if the prime rate go up to 10% or something.

 

[TheSlamma]

I agree with thump then.. I think you are stuck for now

 

[classy]

Originally posted by: BoberFett

Originally posted by: dullard
I don't know if you qualify, but I'd like to throw a wrench into your picture. I just saw that ING is doing a 3.99% fixed 5-year refinance loan on houses with low closing costs. After 5-years the remaing 25 year balance is due in full. That may be difficult to swing, but with interest rates at 3.99%, you can make a whole lot of progress on your house principal in five years. Then you just need to refinance again at that point.

That's the ARM game all over again.

Yep that would be correct

 

[cubeless]

Originally posted by: dullard
I don't know if you qualify, but I'd like to throw a wrench into your picture. I just saw that ING is doing a 3.99% fixed 5-year refinance loan on houses with low closing costs. After 5-years the remaing 25 year balance is due in full. That may be difficult to swing, but with interest rates at 3.99%, you can make a whole lot of progress on your house principal in five years. Then you just need to refinance again at that point.

i think u got the program wrong... that one is their 'really good prospect' loan that you have to have huge down and such... it's a 5+1, i don't think it's a balloon...

i have a loan currently @ 4.7 with them... called yesterday to see if it would make sense to refi again (i redid the loan 5 months ago to go from 5.7 to 4.7...) and the gal said "there was an asterisk" in the file and they won't refi me again (even tho it wasn't worth doing with the cost of the refi vs. the $$$ less payment)... upon questioning it seems that the house isn't worth the loan + 30% so they aren't redoing loans...

it's a little annoying, i'm already in a loan with them, for them to redo me at the current loan amount wouldn't hurt them... ing is certainly not the good guys they used to be...

 

[TheSlamma]

Originally posted by: cubeless

Originally posted by: dullard
I don't know if you qualify, but I'd like to throw a wrench into your picture. I just saw that ING is doing a 3.99% fixed 5-year refinance loan on houses with low closing costs. After 5-years the remaing 25 year balance is due in full. That may be difficult to swing, but with interest rates at 3.99%, you can make a whole lot of progress on your house principal in five years. Then you just need to refinance again at that point.

i think u got the program wrong... that one is their 'really good prospect' loan that you have to have huge down and such... it's a 5+1, i don't think it's a balloon...

i have a loan currently @ 4.7 with them... called yesterday to see if it would make sense to refi again (i redid the loan 5 months ago to go from 5.7 to 4.7...) and the gal said "there was an asterisk" in the file and they won't refi me again (even tho it wasn't worth doing with the cost of the refi vs. the $$$ less payment)... upon questioning it seems that the house isn't worth the loan + 30% so they aren't redoing loans...

it's a little annoying, i'm already in a loan with them, for them to redo me at the current loan amount wouldn't hurt them... ing is certainly not the good guys they used to be...

Did you do the Orange Mortgage or the Easy Orange? if you did the easy you just need to pay the $700 and do a "Rate Renewal" if thats what you are looking for.

 

[TheSlamma]

Originally posted by: classy

Originally posted by: BoberFett

Originally posted by: dullard
I don't know if you qualify, but I'd like to throw a wrench into your picture. I just saw that ING is doing a 3.99% fixed 5-year refinance loan on houses with low closing costs. After 5-years the remaing 25 year balance is due in full. That may be difficult to swing, but with interest rates at 3.99%, you can make a whole lot of progress on your house principal in five years. Then you just need to refinance again at that point.

That's the ARM game all over again.

Yep that would be correct

No it's not. It's called a balloon. And no it's not for most Americans, it's for people who are good with their money.

 

[EagleKeeper]

Your 5 + 25 is what they call a balloon. The payments are setup as a 30 year; but after 5 years, (or earlier) you need to get a new loan. The old one becomes due.
If you have no $$ to pay off the balance - you default and lose the property.

 

[BlahBlahYouToo]

Originally posted by: Skoorb
Linky

The average U.S. 30-year rate dropped to 4.87 percent from 4.94 percent last week. The 15-year rate was 4.33 percent, mortgage buyer Freddie Mac of McLean, Virginia, said today in a statement.

That is pretty darn low. I have no idea what's going on with various mortgage packages and deals and God knows what else these days, so can anybody here guess as to whether I could get a refi on my house? My credit is good, loan:value ratio is about 98% (woot), loan with countrywide, and I would cover closing costs but not interested in bringing much more than that to the table, certainly not enough to bring loan:value to 80%.

these are probly with points.

 

[TheSlamma]

Originally posted by: Common Courtesy
Your 5 + 25 is what they call a balloon. The payments are setup as a 30 year; but after 5 years, (or earlier) you need to get a new loan. The old one becomes due.
If you have no $$ to pay off the balance - you default and lose the property.

From the ING site:
How many years do I have to pay off Easy Orange?

Easy Orange is a 5-year fixed-rate mortgage with payments (principal & interest) based on a 30-year payback period. At the end of the fixed-rate period, your remaining balance will be due
Sounds exactly like what you explained

 

[OCGuy]

If your loan is currently a Fannie Mae backed loan, you can go to 125% with no MI on the HARP program with some lenders.

That program is putting my future kid through college right now.


I am slammed because of that program and low rates. We are doing 4.5% at par all day.


@Dullard: That is a horrible way to go. You can get a standard ARM with a 9% ceiling in the 3s right now, no need for a balloon.

 

[dullard]

Originally posted by: OCguy
@Dullard: That is a horrible way to go. You can get a standard ARM with a 9% ceiling in the 3s right now, no need for a balloon.

It certainly can be horrible for some people - people who can barely afford the house they are in, or people who will blow any savings. For others, with interest that low, many people can pay off the house in full in 5 years for not too much more than they are paying now. That latter case can't be described as horrible.

 

[OCGuy]

Originally posted by: dullard

Originally posted by: OCguy
@Dullard: That is a horrible way to go. You can get a standard ARM with a 9% ceiling in the 3s right now, no need for a balloon.

It certainly can be horrible for some people. For others, with interest that low, many people can pay off the house in full in 5 years for not too much more than they are paying now. That latter case can't be described as horrible.

I am saying you can get that same interest rate or better on a loan that wont balloon, it will just adjust.

 

[dullard]

Originally posted by: OCguy
I am saying you can get that same interest rate or better on a loan that wont balloon, it will just adjust.

I just briefly looked at standard ARMs. Nothing even approached the 3s unless you paid thousands of dollars in points. And paying thousands of dollars is the exact opposite of the intent for people who can save with that program.

Edit: stupid time warp.

 

[OCGuy]

Originally posted by: dullard

Originally posted by: OCguy
I am saying you can get that same interest rate or better on a loan that wont balloon, it will just adjust.

I just briefly looked at standard ARMs. Nothing even approached the 3s unless you paid thousands of dollars in points. And paying thousands of dollars is the exact opposite of the intent for people who can save with that program.

Edit: stupid time warp.

Maybe for them.

My main investor is at 3.625% today PAYING ME (Actually paying the loan officer) rebate on a 5/1 ARM with no risk adjustments.

 

[BoberFett]

Originally posted by: TheSlamma

Originally posted by: classy

Originally posted by: BoberFett

Originally posted by: dullard
I don't know if you qualify, but I'd like to throw a wrench into your picture. I just saw that ING is doing a 3.99% fixed 5-year refinance loan on houses with low closing costs. After 5-years the remaing 25 year balance is due in full. That may be difficult to swing, but with interest rates at 3.99%, you can make a whole lot of progress on your house principal in five years. Then you just need to refinance again at that point.

That's the ARM game all over again.

Yep that would be correct

No it's not. It's called a balloon. And no it's not for most Americans, it's for people who are good with their money.

It has nothing to do with good with money. Even people who are good with money might not be up for paying 50% of their gross income toward their mortgage to get it paid off in 5 years. And if you can't pay it off in 5 year? Then you get to refinance. And do you really want to gamble that you'll be able to refinance in 5 years? What will rates be? Aren't you better off locking in a standard 30 year mortgage at 5% and paying additional to principle than getting a mortgage at 4% and then having to refinance at a completely unknown rate in a few years? What happens if inflation kicks in like some suggest? 10? Back up to 15-20% like in the 80s?

Your 5 year mortgage is a terrible idea unless you're talking to someone who already has the cash in hand and simply wants to remain liquid rather than tying up their cash in property.

 

[BoberFett]

Originally posted by: Common Courtesy
Your 5 + 25 is what they call a balloon. The payments are setup as a 30 year; but after 5 years, (or earlier) you need to get a new loan. The old one becomes due.
If you have no $$ to pay off the balance - you default and lose the property.

An ARM by any other name...

 

[dullard]

Originally posted by: BoberFett
It has nothing to do with good with money. Even people who are good with money might not be up for paying 50% of their gross income toward their mortgage to get it paid off in 5 years. And if you can't pay it off in 5 year? Then you get to refinance. And do you really want to gamble that you'll be able to refinance in 5 years? What will rates be? Aren't you better off locking in a standard 30 year mortgage at 5% and paying additional to principle than getting a mortgage at 4% and then having to refinance at a completely unknown rate in a few years? What happens if inflation kicks in like some suggest? 10? Back up to 15-20% like in the 80s?

Your 5 year mortgage is a terrible idea unless you're talking to someone who already has the cash in hand and simply wants to remain liquid rather than tying up their cash in property.

I just crunched a few numbers for my home town (Lincoln, NE). The typical house is $130k. Someone who wants to refinance probably has a ~6% interest rate. Lets just assume that buyer put 20% down and has paid for a while bringing them up to 25% equity. Thus, the payments are $623.53/month and about $900/month once taxes and insurance are included (taxes are high here).

If that homebuyer just barely qualified for the ING refinance (25% equity), then that same buyer could pay off the house in full in five years with $2075/month payments with that ING product. Two grand a month (and that includes interest, principal, taxes, and insurance) is affordable to MANY families, even where I live. True, many families can't afford it and this is a bad product for them. But, two grand a month isn't that pricey to pay off your house nearly 25 years sooner.

Yes, they'd have to pay just over a grand more a month. That is why the product clearly says only for those who are savers. Even if you don't pay off the loan in full, you can get so much headway that a rate reset to even 20% interest won't be very costly (they let you go on in as many 5-year intervals as you need). If instead of paying $2075/month, the person paid $1500/month, the balance after 5 years will be $37,747. 20% interest at $37.7k is $629/month which is almost the same that they are paying right now with 6% interest rates.