Property Value/Appraisals RANT

[dmccarty]

We tried to refi last summer but the comparables were horrid, and for us to refi, we would have to give up the equity line of credit and pay PMI. :shocked: The appraisal was 750 %^&*() dollars that we lost. This was with the CU that I should know by now to avoid like the plaque for loans. We called up the loan officer of the bank that holds our mortgage and she said don't try to refi because of the poor comparables. Grrrrr....

Last week the bank called me about doing a refi. Long story short, we talked to our loan officer this week and she can get us .75 less than our current loan amount. Sounds like this is because of the HARP program. We have been getting junk mail about getting a HARP refi for months. My quick reading about HARP is that if your home is in certain areas, ours must be, you have not missed a payment, the house has lost value, etc., you can get a HARP refi. Apparently this does not require PMI or effect equity loans. We have an equity line of credit but nothing is on it but we want to keep that credit open in case we need it for some reason.

Sooooo, maybe you can get a HARP refi to lower your payments. The saved money should help finance the expansion. If you do not have an equity line, maybe you can get one and use that to do the expansion.

Later,
Dan

 

[two_bit_score]

Is .75 going to make a big enough difference to matter? Or is the tax payer picking up all the fees and costs?

 

[dmccarty]

Is .75 going to make a big enough difference to matter? Or is the tax payer picking up all the fees and costs?

Yes it makes a difference, a decrease of 3/4 of a point is a car payment. We have to pay closing costs and the initial numbers we were told over the phone would have the closing costs recovered in less than a year with the lower payment. It sounds like the only thing that HARP is doing is changing rules so that you can refi if the house has lost money, is in certain areas( I assume they know those areas have lost value.), and there are no missed payments. Seems like a win win. The bank gets the closing costs, we get a lower payment, and the bank might actually be making more on the loan.

Banks are having historically high margins on the difference between the interest they pay for the loan vs what they then sell the loan. I doubt they would be loosing money on the refi and might actually make more.

Later,
Dan

 

[two_bit_score]

Yes it makes a difference, a decrease of 3/4 of a point is a car payment. We have to pay closing costs and the initial numbers we were told over the phone would have the closing costs recovered in less than a year with the lower payment. It sounds like the only thing that HARP is doing is changing rules so that you can refi if the house has lost money, is in certain areas( I assume they know those areas have lost value.), and there are no missed payments. Seems like a win win. The bank gets the closing costs, we get a lower payment, and the bank might actually be making more on the loan.

Banks are having historically high margins on the difference between the interest they pay for the loan vs what they then sell the loan. I doubt they would be loosing money on the refi and might actually make more.

Later,
Dan

How high is your interest rate now? Rates have been so low for so long. If your balance is big enough .75 would make a difference if the fees were low. I thought the taxpayers might be on the hook for all or some in order to make it worthwhile at .75 reduction.

Good on you if it works out.

 

[KTurner]

Is .75 going to make a big enough difference to matter? Or is the tax payer picking up all the fees and costs?

It's going to be misleading. Because - say you have a 3 year old $200k mortgage at 4% (monthly = $955). You go to refi at 3.25% and your new bill is $130 dollars less ($820). But, if you wanted to get a $200k loan at 3.25%, your bill would only by $75 less ($870) than the original one. The difference is, you've already paid 3 years worth of premium so you are refinancing less money. By Refi'ing, you are spreading the remaining balance over 30 years again.

Keith

 

[two_bit_score]

Good point, Keith.

 

[sdkubota]

How high is your interest rate now? Rates have been so low for so long. If your balance is big enough .75 would make a difference if the fees were low. I thought the taxpayers might be on the hook for all or some in order to make it worthwhile at .75 reduction.

Good on you if it works out.

I would be EXTREMELY CAUTIOUS about getting into any special program with the government. There are usually clauses where the recover the money at time of sale etc. The government does not make anything better, cheaper, or faster.

 

[sdkubota]

It's going to be misleading. Because - say you have a 3 year old $200k mortgage at 4% (monthly = $955). You go to refi at 3.25% and your new bill is $130 dollars less ($820). But, if you wanted to get a $200k loan at 3.25%, your bill would only by $75 less ($870) than the original one. The difference is, you've already paid 3 years worth of premium so you are refinancing less money. By Refi'ing, you are spreading the remaining balance over 30 years again.

Keith

Plus the beginning of any loan is primarily interest payments. Your principal is gradually increasing with every payment. When you refi you start the process all over again. That said I have refinanced 2 times in the last 2 years. Went from 5% to 4% then recently went from 4% to 2.5% on a 15 year loan. In 1980 when we first got married we paid 9 points to get an 11% home loan and that was a special first time home buyers government loan. I believe the standard mortgage rate was around 16%. Do a quick check what your current home payment would be at 16%...

 

[two_bit_score]

I would be EXTREMELY CAUTIOUS about getting into any special program with the government. There are usually clauses where the recover the money at time of sale etc. The government does not make anything better, cheaper, or faster.

:thumbsup:

 

[newbury]

As of this time Navy Federal is quoting 3.125 Navy . I've had EXCELLENT service with them and am thinking of refinancing even though my loans are only 3 yrs and 1.5 yrs old.

They seem very well versed on handling "problems". When I was buying the house in Mississippi I was on almost constant travel and I was getting stuff faxed to hotels all over the US, including Alaska. They are used to working FOR the vets, and I think many of them are veterans. I've refinanced with them 3 times on my main house in DC.

 

[dmccarty]

How high is your interest rate now? Rates have been so low for so long. If your balance is big enough .75 would make a difference if the fees were low. I thought the taxpayers might be on the hook for all or some in order to make it worthwhile at .75 reduction.

Good on you if it works out.

A drop of .75 is a big drop over the current rate and like I said, it works out to a car payment. A small car payment these days but still a car payment. The costs the bank gave the wife were what other refi's have cost us, and in 10-12 months the closing costs will be recovered.

Taxpayers are not on the hook on this as best I can tell. This is a win win for us and the bank.

Later,
Dan

 

[dmccarty]

I would be EXTREMELY CAUTIOUS about getting into any special program with the government. There are usually clauses where the recover the money at time of sale etc. The government does not make anything better, cheaper, or faster.

HARP is not giving money to anyone. Much less taxpayer money to the homeowner or the banks. HARP changes the rules to allow people to refi who would not be able too because of the current rules. We are in an area that allows us to use an automated appraisal which saves a bunch of money. We lost $750 last summer to a "real" appraisal. The automated appraisal used by HARP costs nothing and it sure can't be any worse than what we paid for last year.

For HARP you cannot have missed a payment in the last six months, and only one in the last 12 months, so they are going after home owners that are paying the bills. People who refi and save money should be less likely to loose the home.

Late,
Dan

 

[ultrarunner]

When I contacted my existing lender to refi my adjustable rate loan... lender still wanted an appraisal fee and said Harp would be my best option.

I bought in 2003 and my zip code has a ton of foreclosures... my neighborhood doesn't.

Turned out to be academic anyway... they really dropped the ball over the holidays and then wanted $3,000 extra after the rate lock expired.

I'm in process with my credit union now and the appraiser is scheduled for Tuesday...

At this point... it would be great to get the 2.75% 15 year rate... not holding my breath like I was in December...