Refinancing our home, please help

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Travel Bug
Posts: 21
Joined: Sat Mar 12, 2011 5:22 pm

Refinancing our home, please help

Post by Travel Bug » Thu Mar 01, 2012 9:50 pm

Thanks in advance for any advice given…

My wife and I would like to take advantage of the current low interest rates and I thought I would check with the group here before calling the bank.

We originally purchased our home for $500,000 in Sept. 2008. Our original loan amount was $491,000 with a 6.375% interest rate on a 30-year fixed FHA loan.

Almost two years later, we refinanced with Bank of America, in June 2010. Our new loan amount was $488,000 with a 4.875% interest rate on a 30-year fixed FHA loan.

We currently have a balance of $477,000 and 28 years left on the loan. We are also currently paying PMI. We plan on living in the house for at least 10 more years. And, in case it matters, we live in California.

When we refinanced in 2010, the house appraised at $500,000.

Given this info, do we qualify for a refi?

Is everything dependent on what the house appraises for once we start the refi process?

Would it be worthwhile to look into refinancing to something shorter than a 30-year loan?

I’ve looked into the HARP program but the websites don’t show that either Freddie Mac or Fannie Mae own the loan.

I also looked at the other options available through Bank of America but our mortgage payments are not more than 31% of our income, which would qualify us for their modification program.

Should we start off by calling Bank of America to see about our ability to refinance through them? Or should we go about this another way?

Is there anything else that we should take into consideration?

Thanks again for any help.

cheesepep
Posts: 787
Joined: Wed Feb 17, 2010 10:58 pm

Re: Refinancing our home, please help

Post by cheesepep » Thu Mar 01, 2012 9:58 pm

I don't know anything about refinancing as I don't even own a house, but you need to start making more principle payments. 3.5 years later, your loan amount is almost the same as before!

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damjam
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Joined: Thu Mar 25, 2010 7:46 am

Re: Refinancing our home, please help

Post by damjam » Thu Mar 01, 2012 10:06 pm

Travel Bug wrote:Is everything dependent on what the house appraises for once we start the refi process?
Yes.
Travel Bug wrote:Would it be worthwhile to look into refinancing to something shorter than a 30-year loan?
Sure.
Travel Bug wrote:Should we start off by calling Bank of America to see about our ability to refinance through them? Or should we go about this another way?
You could call BofA but keep in mind it's not really in their interest to do the refinance for you. I would shop around for the best rate and take it from there.

dad2000
Posts: 642
Joined: Fri Feb 03, 2012 7:04 pm

Re: Refinancing our home, please help

Post by dad2000 » Thu Mar 01, 2012 10:15 pm

IMHO, the big retail banks are the worst places to go for mortgages. I just refinanced both my houses into fixed rates in the low 3s. I did it online with aimloan.com, but some credit unions are competitive as well.

You are paying less than 31% of your income on a sizable mortgage, which means you probably make decent money. If you can't refi due to a lack of equity, stop all discretionary spending and pay down the principal to get rid of PMI. PMI is an awful waste of money.

Mortgage rates won't be low forever. A little pain this year might save you many years of pain down the road.

Is there an option to borrow against a 401K, to pay down the house and get the mortgage? I don't love borrowing from retirement, but if doing so allows you to cut 2.5% off your mortgage, it might pay off rather quickly.

dad2000
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Joined: Fri Feb 03, 2012 7:04 pm

Re: Refinancing our home, please help

Post by dad2000 » Thu Mar 01, 2012 10:17 pm

Sorry, missed the fact that the new rate was 4.875%. But 3% is readily available, and 1.875% would still be huge.

jpark1982
Posts: 185
Joined: Fri Dec 31, 2010 9:43 am

Re: Refinancing our home, please help

Post by jpark1982 » Thu Mar 01, 2012 10:39 pm

dad2000 wrote:Sorry, missed the fact that the new rate was 4.875%. But 3% is readily available, and 1.875% would still be huge.
3% is definitely not available is this case of a 30 yr FHA loan, the OP is probably looking around 3.75-4.25 ish. You're not eligible for HARP since it looks like your loan was written in 2010 so at best you'd have to do a full doc refi. I'd run your situation with your lender and others and see if the costs associated would make sense for you.

ilmartello
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Joined: Sun Nov 06, 2011 6:59 pm

Re: Refinancing our home, please help

Post by ilmartello » Fri Mar 02, 2012 12:35 am

Read this website.

http://www.mtgprofessor.com/

And you may want to use their free services. If you have extra cash and can get rid of pmi, may not be the worst thing you can do before you refi, perhaps maybe getting an appraised 20 percent equity if you have $100,000 lying around :happy

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