Refinance - The Mortgage Porter

Get Ready, Get Set: Refi!

September 9, 2008 by Rhonda Porter Leave a Comment

Mortgage interest rates are back at attractive level ranging in the mid-5s for a 30 year fixed with only one point (high5’s with zero points). Our last refinance opportunity was an exercise in frustration for many. Home owners were contacting their loan originators with "what’s the rate now?" and calling later that day or next with the same question. Mortgage interest rates are a moving target. In our present market, I’m receiving on average 2-3 rate sheets per day. Mortgage interest rates can move just as quickly up as they have down. In addition, there are fewer and fewer loan originators remaining in the market to help those who are ready to refinance.

If you are serious about refinancing, I suggest the following:

Contact your local Mortgage Professional (sorry, I can only help those who have property in the State of Washington) to find out what the current rates are and to see if refinancing makes sense for you.
Have a recent mortgage statement or your Note to provide detailed information.
Complete a loan application and be prepared to have your credit report ran (interest rates are very credit score sensitive).
Have your most recent paystubs and last W2 ready. Your LO may also want your last bank statements and copies of your drivers license.

Refinances take approximately 30 days in this market, assuming there are no issues with your appraisal (a second appraisal or additional comps may cause extra time). Make sure that your Mortgage Professional is allowing plenty of time for your lock in order to avoid needing an extension.

If rates stay low and enough people take advantage and jump on the refi bandwagon, be prepared for the process to take longer than it seems it should. It’s a simple fact in this market there are fewer people doing the same amount of work. Every aspect of the transaction may become bogged down.

If you have a mortgage with a higher rate with a loan amount of $522,100 – $567,500, you may really want to act soon with your refinance as conforming jumbo and FHA jumbo loan limits are being reduced at the first of the year to $522,100.

Have a little patience, cooperate with your Mortgage Professional and get your lower mortgage interest rate.

Filed Under: Refinance

Recently Listed Homes Cause Challenges for Refinancing

April 6, 2008 by Rhonda Porter Leave a Comment

UPDATE 5/2/17: Fannie Mae has changed guidelines for refinances of recently listed homes.

So you tried selling your home in this market and were not able to find a buyer. Now, you want to take advantage of our current low mortgage rates and refinance to reduce your payments or perhaps take some equity out to improve your home now that you’re not moving anywhere. Not so fast! Most lenders will not refinance a recently listed property. [Read more…]

Filed Under: Refinance

Not a Friend of this Family: Part 2

March 31, 2008 by Rhonda Porter Leave a Comment

In part one of this story about Michael and Pam investigating a refinance with Woo Who, we uncovered how the bank Loan Officer was not willing to provide a copy of the Federal Truth in Lending to Michael and Pam. It was not until after Michael insisted that it was his right to receive this document, that it appeared disclosing a prepayment penalty that he was not informed of.

The story gets better. As I mentioned, Michael and Pam’s existing adjustable rate mortgage is scheduled to adjust this June. I reviewed the Note with Michael showing him that the index his mortgage rate is tied to is the Monthly Treasury Average (MTA). The Monthly Treasury Average is just that: a 12 month average of the monthly average yields of the US Treasury securities. The 12 month average is determined by adding together the Monthly Yields for the most recently available twelve months and dividing by 12. As it is based on a 12 month average, the rate does not move drastically. This could act as a benefit when rates are moving upwards and is less beneficially when rates are dropping. Here is the 411 on Michael and Pam’s current loan:

5/1 Adjustable Rate Mortgage current rate 5.125%. Principal and interest payment of $1154.31.
1st adjustment on June 1, 2008. Adjusting annually thereafter.
Index: Monthly Treasury Average – projected value on June 2008: 2.948%
Margin: 2.600%
Lifetime Cap: 11.950%

Based on this information, their new rate is estimated at 5.548%. The new rate is rounded up to the nearest 0.125% = 5.625%. The new mortgage would reamortize at their balance at that time (estimated at $196,000) based on the remaining term providing Michael and Pam a principal and interest payment of $1218.29. This is without refinancing–no closing costs–no loan approval. Simple.

Woo Whoo’s proposal is a 5/1 ARM with a prepayment penalty at 5.375% with a principal and interest payment of $1108.74 and closing costs of $2283.74 (not calculating how many years and what the penalty is for the prepay).

When Michael and Pam understood their options, they elected to stick it through with their existing ARM. Their rate should drop lower when it adjusts again next June. Michael was puzzled (to put it mildly) as to why the representative from Woo Whoo Bank didn’t explain this to them. Especially since the loan that would be refinanced was with Woo Whoo.

It’s painfully simple. The Loan Originator would not be paid for giving free advice. It’s real easy for LO’s and mortgage companies to target those with adjustable rate mortgages and plant fear of the adjustment. Or perhaps the Whoo Who Loan Originator didn’t even consider how Michael and Pam would fair not refinancing.

This is why it’s so important to review your mortgage Note and understand how and when it adjusts (if you have an ARM). If it all seems like too much to figure out, contact your Mortgage Professional to help you. If your loan originator is neglecting you (perhaps they’ve left the industry or do not care for clients after the transaction is closed), I’m happy to adopt your Washington State mortgage…no refinance required.

It’s all about understanding all of your options and sometimes, that option is: do nothing.

Filed Under: Mortgage Programs, Mortgage, Refinance

New Conforming Loan Limits

March 6, 2008 by Rhonda Porter Leave a Comment

OFHEO just released the temporary conforming loan limits (through 2008). It does not appear as though that every county that received an increase in FHA limits received one with conforming. Here is what I show for Washington State:

King, Pierce and Snohomish Counties

1 Family – $567,500

2 Family – $726,500

3 Family – $878,150

4 Family – $1,091,350

Kitsap County

1 Family – $475,000

2 Family – $608,100

3 Family – $735,050

4 Family – $913,450

Clark and Skamania Counties

1 Family – $418,750

2 Family – $536,050

3 Family – $648,000

4 Family – $805,300

San Juan County

1 Family – $593,750

2 Family – $760,100

3 Family – $918,800

4 Family – $1,141,850

Jefferson County

1 Family – $437,500

2 Family – $560,050

3 Family – $677,000

4 Family – $841,350

This data is still very new and I’m just making it available to you as soon as I receive it. More information will follow.

Filed Under: Mortgage, Refinance, Residential Purchase

Review Your ARM Before You Refi

February 20, 2008 by Rhonda Porter 1 Comment

There is a lot of media and mortgage hype about getting out of your dangerous adjustable rate mortgages. Mortgage companies stand to benefit every time you refinance and the media thrives on drama. I’m contacted often by consumers who are horrified of their adjustable rate mortgage–depending on your terms (margin and index) your ARM may be fine!

One of my clients, Scott, who I helped with a refinance almost five years ago just contacted me curious about refinancing out of his current ARM into a fixed rate. He heard on the news that mortgage rates are low right now.

Scott obtained a 5/1 ARM with a start rate of 3.75%. His fixed period is over around July of this year and his caps are 5/2/5 with a 2.25 margin and the index is the 12 Month LIBOR. His current balance is about $121,500.

Scott expressed an interest in doing another 5/1 ARM. He’s not sure how long he will retain this property. Currently, I can offer the following (both refi’s have closing costs of $1900):

5.25% at 1 point (APR 6.965%) with principal and interest of $717. Should Scott decide to pay the point, it will take 3 years to break even on the cost.
5.625% at 0 points (APR 7.018%) with principal and interest of $748.

He can also elect to not refinance his ARM and wait to see what the payment will adjust to in July. He still has a few months to wait this this out, however, if his ARM were adjusting today, here is what his payment would look like:

1 Year LIBOR = 2.85% plus the margin of 2.25% = 5.10%. Rounded to the nearest rate, the new rate for the next 12 months would be 5.125%. Taking his current balance of $121,500 at 5.125% for 25 years (the remaining term) would create a principal payment of $719.15. This is without refinancing or additional cost (out of pocket or equity) to Scott.

If Scott is comfortable allowing his ARM to adjust and making his payment of $719.15 for the next 12 months, he should not refinance. Some home owners are "up in arms" over their adjustable rate mortgages and if it’s something that’s going to cause to lose sleep, you may want to check out what your options are for refinancing out of the ARM. Regardless of what you do, it’s crucial that you understand your mortgage, the terms and how it operates and what your options are.

If you need help, ask your Mortgage Professional to review your Note with you. If you need a new Mortgage Professional because they’ve either left the business or have forgotten about you, I’m happy to adopt your Washington State mortgage.

Filed Under: Mortgage Programs, Refinance