Still time to Refinance?

[vonniegirl]

Wondering since the market is changing if I still have time to refinance my mortgage.

Built a home in 1992 financed through Countrywide at 8.5%. Ran into a little trouble and they would not give an inch :x . Therefore, I refinanced with Fairbanks in 2001 at 9.0%.

:?: I have been in the house for 10 years and do not want to restart another 30-year mortgage :!: Can I get a 15 year mortgage at a decent rate?

Thanks in advance for your help :D

http://www.bankrate.com/brm/default.asp
http://www.bankrate.com/brm/search/story-mortgages.asp

Mortgage rates climb again, but experts see a plateau
By Holden Lewis • Bankrate.com

If you worry about rising mortgage rates, the most prominent economists in the industry have comforting words: The end is near.

Housing and mortgage economists believe that rates on 30-year mortgages won't get much higher than this for the rest of the year. This is little consolation to folks who didn't lock when rates plunged to modern-record lows a month ago, but that's the way the number crunches.

The benchmark 30-year fixed-rate mortgage rose 11 basis points to 5.61 percent, according to the Bankrate.com national survey of large lenders. A basis point is one-hundredth of 1 percentage point. The mortgages in this week's survey had an average total of 0.41 discount and origination points. One year ago, the mortgage index was 6.53 percent.

The benchmark 15-year fixed-rate mortgage rose 10 basis points to 4.97 percent. The benchmark 1-year adjustable-rate mortgage dropped 2 basis points to 3.77 percent. The 1-year ARM closely follows 1-year Treasury yields, which declined in response to the recent short-term rate cut by the Federal Reserve.

Long-term rates are still adjusting to that Fed rate cut of June 25. That day, the Fed reduced the overnight rate by one-quarter of a percentage point. But mortgage executives had expected a half-point rate cut. Like a toddler who expects two Oreos but gets only one, the mortgage market pitched a fit. Rates rocketed upward in the first few days -- the red-faced, spastic beginning of the tantrum -- and have subsided in the past few days as the outburst comes to its sniffling, pouty end.

Now, if the experts are right, comes the post-tantrum calm, that blissfully quiet period.

Economists from Fannie Mae, Freddie Mac, the National Association of Realtors, the National Association of Home Builders and the Independent Community Bankers of America huddled around a phone Wednesday morning to deliver, via conference call, their predictions for the rest of 2003 and the beginning of 2004.

"The rise in long-term rates will be far more muted than we've seen recently," says David Berson, chief economist for Fannie Mae. "There's not a lot of room for long-term rates to move up."

The others say ditto. Most of them expect rates to rise slightly in the last half of the year, but they expect the improving jobs situation to keep real estate agents, mortgage lenders and home remodelers busy.

A reporter puts the economists on the spot and asks their predictions for the average 30-year mortgage rate at the end of the year.

Berson says he expects rates to remain under 6 percent and adds: "Mortgage rates should remain relatively low next year, as well."

David Seiders of the Home Builders: an average of 5.6 percent in the fourth quarter and maybe 5.7 percent at year's end.

Lawrence Yun of the Realtors: 5.7 percent at the end of the year.

David Merski of the independent bankers: 5.65 percent.

Frank Nothaft of Freddie Mac: 5.5 percent.

All these economists are more knowledgeable about economics than I am, so just ignore my prediction that rates will be much closer to 6 percent than they think. I'll say 5.9 percent.

As rates rose during the last week, the number of mortgage applications declined. Jay Brinkmann, the Mortgage Bankers Association's vice president of research and economics, puts it in perspective: "The number of refinance applications fell back to the levels we saw at the beginning of May," he says. "So while there was a decline, it was a decline from unbelievably high levels to merely extraordinarily high levels."[/url]

15 year rates are lower than 30 year right now.

[vonniegirl]

cd,

Thanks for the reply..
When you said 15-yr lower than 30-yr were you referring to the rate or the payments?

I also wanted to know if there is any truth to cashing out if you have an appraisal higher than the balance owed :)

<When you said 15-yr lower than 30-yr were you referring to the rate or the payments?> Interest percentage rate.

<I also wanted to know if there is any truth to cashing out if you have an appraisal higher than the balance owed.> I don't know the details on this, but some people do get cash when they refinance.

If you go to the Bankrate site and check out the mortgage rates and calculators you can compare 15 and 30 year loan packages from a variety of lenders. If you visit the lender sites that are linked from the mortgage interest rate listings and check out the various loan packages, you will find some lenders that specificly state that they can give you cash when you refinance. (That way you don't have to get a home equity loan at a higher interest rate.)

[firstsource]

It is hard to tell if you will need to go with sub-prime again, but probably not if you have had 2 years of good history. So, assuming that you have the assets/credit score/job history etc needed to qualify for a prime lender then:

Yes, the 15 year interest rates are lower than 30 year rates. This is due to less risk for the lender. Of course the payments will be higher, but not by much.

Yes, you can get cash out. You can borrow up to 80% of the appraised value of your home for sure, and possibly up to 95%. There are additional fees incurred if you go over 80%, but that is a decision that you can make when you finalize the loan details.

When you get an appraisal, have the loan officer order a "full" appraisal (Ten-Oh-Four [1004]), I always order these. It costs about 50.00 more than the standard one, but normally will come in higher value. There is a reason for that which I can explain to you, but it seems to always happen.

Rates have been going up for the past 2 weeks for the prime market. Seemed to ease up Friday. Still as historically low rates. Even sub-prime loans are lower than prime was several years ago.

Thanks for coming to the site to ask questions.

[vonniegirl]

It is hard to tell if you will need to go with sub-prime again, but probably not if you have had 2 years of good history. So, assuming that you have the assets/credit score/job history etc needed to qualify for a prime lender then:

Yes, the 15 year interest rates are lower than 30 year rates. This is due to less risk for the lender. Of course the payments will be higher, but not by much.

Yes, you can get cash out. You can borrow up to 80% of the appraised value of your home for sure, and possibly up to 95%. There are additional fees incurred if you go over 80%, but that is a decision that you can make when you finalize the loan details.

When you get an appraisal, have the loan officer order a "full" appraisal (Ten-Oh-Four [1004]), I always order these. It costs about 50.00 more than the standard one, but normally will come in higher value. There is a reason for that which I can explain to you, but it seems to always happen.

Rates have been going up for the past 2 weeks for the prime market. Seemed to ease up Friday. Still as historically low rates. Even sub-prime loans are lower than prime was several years ago.

Thanks for coming to the site to ask questions.


Thanks for the reply cd and First Source. How old can an appraisal be...I just had one in 2001 when I refinance.

What I did not fully understand when I refinanced was after you pull the equity where does the cash-out $ come from? Is it from the difference of the balance minus the appraisal of the property? :?

When I refinanced in 2001, the company decided to pay off taxes, car loan and several other accounts to create as little balance as possible, I only received $2,000.00 in hand.. the remainder of the $18,000.00 was paid to creditors...is this normal? I don't know if I want to deal with teh same people :(
One more question...Is it feasible to have equity again after you refinance...is it necessary?
Do I order the appraisal or the company I choose and what is "sub-prime"?
Thanks again for your help :)

[TylerDurden]

Vonnie,

Just wanted to share with you what I know on this subject...


What I did not fully understand when I refinanced was after you pull the equity where does the cash-out $ come from? Is it from the difference of the balance minus the appraisal of the property? :?


Your equity would be the difference between how much you still owe on the house (first and second mortgages, such as home equity loan, if any) and the market value of the house (i.e. the value at which it is appraised).

Let's say you have a house that's appraised at 200K and you still owe 100K on the mortgage, the equity on the house would be 100K. This means that if you want to refinance and get cash out, you can get a new mortgage in the amount of up to 160K (80% of the value of the house). You then pay off your old mortgage 100K, which leaves you a cash out of 60K.

However, if let's say your house is worth 200K and you still owe 160K (80% of the value of the house), then you can still refinance to get lower rate, but you may not be able to get cash out. Charles did say that you can possibly borrow up to 95% of the value of the house, but I believe you'll need to pay PMI (Private Mortgage Insurance) if you do. I would suggest that you don't get PMI if you can avoid it. If you need the money, you can probably just refinance your house first, and then use the equity of your house to get a home equity loan or line of credit.


When I refinanced in 2001, the company decided to pay off taxes, car loan and several other accounts to create as little balance as possible, I only received $2,000.00 in hand.. the remainder of the $18,000.00 was paid to creditors...is this normal? I don't know if I want to deal with teh same people :(


It sounds as if you refinanced in 2001 in order to consolidate your debts. Yeah, this is common. I'm about to do this myself. However, it should have been your decision though, not the company. Were the accounts that were paid off not in good standing? If they were, lenders sometimes do require that you payoff certain debts when they extend a loan.


One more question...Is it feasible to have equity again after you refinance...is it necessary?


It depends on how much time has passed and how well the real estate market in your area has performed. Chances are very good that your house may have increased in value in the past 2 years. My house gained 50K in 6 months! Again, your equity would be the difference between how much your house is worth and how much you still owe on the house.


Do I order the appraisal or the company I choose and what is "sub-prime"?
Thanks again for your help :)

The lender usually orders the appraisal. I don't know what FICO scores would be considered prime or sub-prime. Charles can probably help you there. Generally, prime will get you better rates than sub-prime.

Hope this helps. Good luck! :)

[firstsource]

Lenders have their own rules as far as how old an appraisal is, but never more than 12 months old, and most want less than 6 months when the loan funds. You should have the lender order the appraisal, but get in writing that if you decide to switch brokers, they will "turn over the appraisal" to whomever you choose. This will cost anywhere from 75-100, to switch.

You will need a middle FICO score (from the scores that the lender will pull) of 640-680 for prime. Less than that is Alt-A and Sub-prime.

Prime lenders will not let you borrow more than 95% of the equity of your home. You will have to pay Mortgage Insurance for the amount over 80% of the value of your home, if you so choose.

Yes, they take the appraised value, and multiply that by the percentage that you qualify for-if sub prime up to 100% or even higher sometimes, then you get the balance, after the existing loan/s are paid off. So if the house appraises for 100K, you qualify for 90%, you would get a loan for 90,000. The new lender pays off the old lender and you get what is left over, after the closing costs are taken out.

The lender that you dealt with before may have had a "DTI" problem with your situation - where your Debt To Income ratio was too high, so by paying off these bills, your payments fit the lenders requirements.

Hope that helps.
Charles

[vonniegirl]

Businessdebt and First Source...you're the best!!! I really appreciate your time and expertise :D

I have a much better understanding and idea of how to proceed now.

The 15-yr mortgage will be the way to go because I am close to retiring and really don't want to see another 30-year mortgage :) .

The lender did ask me what I wanted to do with the $ and I agreed to reduce the debt by paying off past taxes and auto loan which increased my income and gave me a few dollars to spend on the grand children :lol:

I guess I'll visit Bankrate site at the suggestion of cd and get the ball rolling before rates start to climb again. I probably can put my hands on the documents I had two years ago so that I can begin gathering the much needed information for this to be a go.http://smilies.sofrayt.com/1/r/girlie.gif[Automated by GetSmile]

[vonniegirl]

Hey Charles, need your help :(

I spoke to the mortgage company today because I noticed the inquiries on my creditwatch.

Here is what happened: The mortgage company pulled a tri-merge real estate credit report. Some items that showed up on the tri-merge have been updated to all three cra's.

She told me my FICO scores were good but the app gets kicked back because of the derogs(6). The dates she quoted were all wrong and some have been deleted. I'm waiting for her to send a "consumer copy" to begin removing, deleting, or correcting my cr.

What happened here? I had some of the documentation ready to fax to her to show JC Penney had removed all derogatory information...yet the 30-day late pay was on the tri-merge account but listed as 2/03 :roll: She said she was looking right at the tri-merge report.

Should I stay with this person or look for another fish in the sea?

I am so disappointed because she said the rates are slowly climbing back up.

[kb9tbq]

Would ask if she will provide you with the exact copy of the credit report she is viewing, see if she will give it over.

You can still forward your documentation proving what is correct with the CRAs, one question though: How much is the loan that you are applying for, there are some special reports out there that are capable of pulling in about everything contained on your credit report - with no 7 year limitation. This is for loans exceeding $150,000 - that might be why she seen what you knew to be removed, I am not totally sure on this, just know it is possible.

Did she say if she would accept proof from you, or did she require your credit report to be corrected & re-scored?

I will drop Charles an e-mail - he was missing in action - but back today on his other board. So will most likely be tomorrow that you see him around.

[firstsource]

I guess I don't understand what happened here. I thought from your earlier post that she had you qualified for a loan, but this post indicates that 1) she had not checked credit or 2) that she had checked the credit, but had not qualified you. If #2, then this gets complicated, but I will try to explain. For prime clients, we run one of two types of "special" automated underwriting reports. One is for Freddie Mac, the other is for Fannie Mae. They are called DU and LP, and look for different things. If DU does not work then we run LP. It is more of an asset based approval, ie. if the scores are not the greatest, but high assets and lower LTV, it will get an approval-or an approval with maybe a level lower than regular, so your rate goes up .625.

Now, both of these reports do show things that the regular credit reports don't. On the other hand, there is no "consumer" versions available on them. If you will do the following, I will be glad to help you.
1) ask her to send you a *.pdf of the credit report that she ran, with the credit scores of the 3 bureaus on it. (Why- a) your ability to get faxes is limited, so by email is better b) so you can have a reference point to the scores vs what you are able to get as a consumer.
2) then send that to me, and let me look at that.

Then you can make a decision as to if you want to spend a lot of money and have a "rapid" re-scoring done on the accounts in question or wait or...

Rates: Yes, for prime rate loans (which I don't do that many of-but following now for a client) the key rate to look at is the 10 Year Treasury Bond, and it has gone up from yielding 3.11 a month ago to closing at about 4.1 last night. It dropped 9 basis points after steadily going down all day. That does not answer your implied question of "should I rush to get the lowest rates or is there no sense of urgency now" I wish I knew.

If this reply brought up more questions, I will be back later this am to clear them up.

Charles

[kb9tbq]

:roll: ok, now I definitely feel stupid, lol

I knew of them Fannie Mae and Freddie Mac reports (it just did not sink in that these were the reports). Of course we are not up and selling these here. Been shopping though; but did not understand what the difference is between these and the ones we now have, plus set up is a nightmare (when your a re-seller).

That is funny, I kept thinking these reports were something else. Boy you are definitely getting fast!!!

Ok, have a good day Vonnie & Charles :-)

[firstsource]

I think that I said it wrong. Fannie Mae uses something called DU (Desktop Underwriting) and Freddie Mac uses something like it called LP (loan Prospector) for their automated underwriting. Part of the report you get is an in depth credit report and part of it is the underwriting. So, it is not really a credit report that you can get, except when you run those underwriting programs.

Charles

[kb9tbq]

I know what underwriting is, have a pretty good guide here on the subject of what steps are to be taken on given circumstances (at least I belive so by the manual I stumbled across). The prospecter part is a bit confusing.

From what we had learned so far, was that fannie mae and freddie mac are somehow insured where regular merged & RMCRs are not.

Each time we have checked on this, we know that the creditor will still pull through our vender, then if they want like fannie may then they have to go to desk underwriter (where it lists the various companies linking access to fannie mae). After that point I am lost... just know that they incure a lot of fees between our report and the finish product.

I kept thinking that fannie may somehow checked our report and graded the risk level for the creditor.

This is very important for me to understand, being that soon we will be setting up to provide access. I am almost of the mind that their just has to be some class or something for me to get sent to so that I understand this eventually. Was looking at NCRA; boy they don't come cheap though, and it is so hard stepping into something which you can hardly understand.

[vonniegirl]

Ok guys,

Sorry I was MIA but was pretty disappointed in not getting approved right off :( .

I received a copy that broker sent. It is a Consumer Copy of a Residential Merged Credit Report. This is as detailed as when I had my 1st mortgage application :shock: !

It includes many tradelines that were removed or corrected on my individual CR's. Some I have been trying to have deleted because the company is no longer in business :roll: .

first source: There are no scores listed at the end of the report. However, she said my scores were okay... it was the derogs that kicked the app back to her. When I looked at the negs she was referring to, some have gone out of business, others have been updated or removed. She said she was concerned about the DOLA(Date of Last Activity) and the 30, 60, & 90 day late payments :( . I explained it was the date I requested an investigation :x

kb asked if she would take the documentation from me and I think she wants me to repair it myself and try again. This really sucks :x I hope I don't miss out on the rates. Isn't there some way to have the CRA's held responsible for still reporting inaccurate information and because they are damaging my chance for refinancing can't I sue them or something :? :x

[firstsource]

All lenders are different. Some of the ones that I work with will take the corrections to problems that the client includes with the loan information, and some won't.
If this is a broker, then ask the loan officer to submit to other lenders, even if it needs to go to a lender that has "alt-a" programs (between prime and sub-prime) you should still be able to get a great rate.

Ask her for the scores, by bureau. Tell her that you want to compare with what you have.

If this is a lender that you have been dealing with, maybe find a broker that has access to many programs.

Charles

[vonniegirl]

Thanks for your help. I will pm them to you but she told me to dispute with teh CRA's and then get back to her when I have updated my account