got any advice on a refi for a not-too-tragic 30-year-fixed mortgage?
April 7, 2010 7:52 PM Subscribe
Is there a way to refinance my mortgage under the Making Home Affordable Program (a.k.a. HARP), or should I just give up & save my energy?
I bought a house in 2008 with a 30-year-fixed mortgage. We paid $450,000 for the house, putting 10% down, and borrowed $405,000 from Bank of America with an interest rate of 6.375%. With rates last year and this intermittently in the 4% range, we'd love to take advantage of them & refinance.
We first called our lender last summer & asked about it. They said that, according to their computer data, our house was only worth $408k, and thus we only had $3000 in equity. Fair enough, though zillow has been telling me for the past 2 years that my house is worth anywhere from $490-$560k. I realize that may mean nothing, but hey. Judging from other sales in the neighborhood I don't think my house has lost value, but I recognize that I could be in denial. So if my house was appraised for higher, I could do the refinance, right? But how to get the house appraised if the bank has already made up its mind?
We let it go, kept paying the mortgage, and ignored the interest rates. Then came the Making Home Affordable program. I am new to all of this, so pardon my perhaps naive understanding of how it works. But under the guidelines of this program, I ought to qualify. I have a Freddie or Fannie loan, I've made all my payments on time, and I don't owe more than 125% of the value of the house.
It seems like there is this nebulous distinction between "Phase I" and "Phase II" of the program. I find lots of discussion from last year where people complained of being denied a refi because they had PMI, though supposedly "Phase II" was supposed to rectify that.
My loan DOES have PMI, though it's paid by my lender. I got the loan under B of A's No Fee Mortgage product. They touted it as not having PMI--because I don't have to pay it. But subsequent paperwork shows it does have PMI, so I assume it is just paid by my lender.
We tried again this week with B of A, and they told us that we didn't qualify for HARP because of the PMI. Even if we agreed to pay the PMI, they still said it was a no go. I didn't get enough info from them, so I really don't know all the technical details.
Online research has shown that lots of folks are completely frustrated with trying to refi, getting the runaround from their banks, dealing with long delays and bait-and-switch tactics.
Sorry for all the info/length. Here are my actual questions:
1. Is there any way to get my house appraised that will convince my lender to do a traditional refi?
2. If not, or if my house really is worth less than what I paid, do I have a shot at this HARP thing?
3. Are we in "Phase II" of the program? What is the real government-mandated rule about PMI?
4. Any advice about how to get the refi? Is it worth it? Should I call a different phone #, use different catch phrases, find an independent mortgage broker, etc.?
If it's fruitless, that's cool. I mean, I still got my house for a good price and am not having trouble making the payments. It's just...I already feel a little like a jackass for being that person who sat on the sidelines, saved my money, and waited to buy a home I could actually afford without "creative financing." And so because I didn't get way in over my head, I don't get help. Meanwhile banks are getting bailouts and they're corrupt as Satan's carburetor. What? Yeah, that's my rant.
thanks for your help. I've internet-searched all day & can't find the answers.
I bought a house in 2008 with a 30-year-fixed mortgage. We paid $450,000 for the house, putting 10% down, and borrowed $405,000 from Bank of America with an interest rate of 6.375%. With rates last year and this intermittently in the 4% range, we'd love to take advantage of them & refinance.
We first called our lender last summer & asked about it. They said that, according to their computer data, our house was only worth $408k, and thus we only had $3000 in equity. Fair enough, though zillow has been telling me for the past 2 years that my house is worth anywhere from $490-$560k. I realize that may mean nothing, but hey. Judging from other sales in the neighborhood I don't think my house has lost value, but I recognize that I could be in denial. So if my house was appraised for higher, I could do the refinance, right? But how to get the house appraised if the bank has already made up its mind?
We let it go, kept paying the mortgage, and ignored the interest rates. Then came the Making Home Affordable program. I am new to all of this, so pardon my perhaps naive understanding of how it works. But under the guidelines of this program, I ought to qualify. I have a Freddie or Fannie loan, I've made all my payments on time, and I don't owe more than 125% of the value of the house.
It seems like there is this nebulous distinction between "Phase I" and "Phase II" of the program. I find lots of discussion from last year where people complained of being denied a refi because they had PMI, though supposedly "Phase II" was supposed to rectify that.
My loan DOES have PMI, though it's paid by my lender. I got the loan under B of A's No Fee Mortgage product. They touted it as not having PMI--because I don't have to pay it. But subsequent paperwork shows it does have PMI, so I assume it is just paid by my lender.
We tried again this week with B of A, and they told us that we didn't qualify for HARP because of the PMI. Even if we agreed to pay the PMI, they still said it was a no go. I didn't get enough info from them, so I really don't know all the technical details.
Online research has shown that lots of folks are completely frustrated with trying to refi, getting the runaround from their banks, dealing with long delays and bait-and-switch tactics.
Sorry for all the info/length. Here are my actual questions:
1. Is there any way to get my house appraised that will convince my lender to do a traditional refi?
2. If not, or if my house really is worth less than what I paid, do I have a shot at this HARP thing?
3. Are we in "Phase II" of the program? What is the real government-mandated rule about PMI?
4. Any advice about how to get the refi? Is it worth it? Should I call a different phone #, use different catch phrases, find an independent mortgage broker, etc.?
If it's fruitless, that's cool. I mean, I still got my house for a good price and am not having trouble making the payments. It's just...I already feel a little like a jackass for being that person who sat on the sidelines, saved my money, and waited to buy a home I could actually afford without "creative financing." And so because I didn't get way in over my head, I don't get help. Meanwhile banks are getting bailouts and they're corrupt as Satan's carburetor. What? Yeah, that's my rant.
thanks for your help. I've internet-searched all day & can't find the answers.
The whole American residential "appraisal" industry is in turmoil, at present. For very good reason, banks are very much in the driver's seat in terms of deciding which appraisers will get business, and whether the appraisals they offer will be accepted as a basis for loans. Even reputable "independent" appraisers in areas less hard hit by the housing crisis are finding it hard to make solid appraisals in this market.
Moreover, only about 1/3 of "trial modifications" being offered under HAMP are actually converting to "permanent modifications." Unfortunately for you, it looks like almost all of Bank of America's HAMP modifications are going towards severely underwater borrowers.
Good luck in your on-going efforts to re-finance.
posted by paulsc at 3:12 AM on April 8, 2010
Moreover, only about 1/3 of "trial modifications" being offered under HAMP are actually converting to "permanent modifications." Unfortunately for you, it looks like almost all of Bank of America's HAMP modifications are going towards severely underwater borrowers.
Good luck in your on-going efforts to re-finance.
posted by paulsc at 3:12 AM on April 8, 2010
Best answer: This appears to be far from a lost cause, speaking as someone who works in the lending industry.
Making Home Affordable is a catchy name for a number of programs lenders can accept to provide their customers. Phase II has not yet been rolled out; the hubbub two weeks or so ago about Obama's new "help" for homeowners didn't come with any details, and it'll likely be fall before they're hammered out and lenders can actually start implementing the programs.
Phase I, however, is in full swing. Much of the help is indeed going to underwater borrowers, and the program most relevant to you is one known in the industry as "DU Refi Plus." If you have a loan owned by Fannie Mae (and there's a lookup tool on the internet), you qualify for a loan that's 125% of your appraised value. (If you have a Freddie loan, it's 105%, and again, there's a lookup tool on the internet.) For qualification purposes, it makes no difference if you pay PMI or not, although I have no idea how a lender besides Bank of America would see your PMI situation (my gut is that you'll be paying it if a refi goes through.)
All of this doesn't matter if your house doesn't appraise, although depending on your market (are prices declining? are there lots of foreclosures?), you may qualify for a DU Refi Plus loan without an appraisal. But, assuming you need to have one (a decent assumption), you really do need to find out what comparables in your area are selling for. (Take off the blinders! I've seen thousands of people burned because they really believe their house is superior to everyone else's.)
If you believe you aren't a mile underwater (I saw a file yesterday where a woman estimated her value at $220,000, and it came in at $90,000), you have to ask: Is it worth the cost of an appraisal ($350 or so, again, depending on your market) to lower the interest rate?
As long as you don't have a second mortgage or home equity line on the home (they screw everything up), any competent loan officer should be willing to assess your situation, and ideally, put you in a better spot. Echoing the previous poster: A local lender is a good start, as they will often be able to assess your market better than someone in a call center in Memphis (for example); the drawback, of course, is that the little guy may not offer the key program you need.
Good luck, and message me if you'd like more info.
posted by st starseed at 5:11 AM on April 8, 2010 [1 favorite]
Making Home Affordable is a catchy name for a number of programs lenders can accept to provide their customers. Phase II has not yet been rolled out; the hubbub two weeks or so ago about Obama's new "help" for homeowners didn't come with any details, and it'll likely be fall before they're hammered out and lenders can actually start implementing the programs.
Phase I, however, is in full swing. Much of the help is indeed going to underwater borrowers, and the program most relevant to you is one known in the industry as "DU Refi Plus." If you have a loan owned by Fannie Mae (and there's a lookup tool on the internet), you qualify for a loan that's 125% of your appraised value. (If you have a Freddie loan, it's 105%, and again, there's a lookup tool on the internet.) For qualification purposes, it makes no difference if you pay PMI or not, although I have no idea how a lender besides Bank of America would see your PMI situation (my gut is that you'll be paying it if a refi goes through.)
All of this doesn't matter if your house doesn't appraise, although depending on your market (are prices declining? are there lots of foreclosures?), you may qualify for a DU Refi Plus loan without an appraisal. But, assuming you need to have one (a decent assumption), you really do need to find out what comparables in your area are selling for. (Take off the blinders! I've seen thousands of people burned because they really believe their house is superior to everyone else's.)
If you believe you aren't a mile underwater (I saw a file yesterday where a woman estimated her value at $220,000, and it came in at $90,000), you have to ask: Is it worth the cost of an appraisal ($350 or so, again, depending on your market) to lower the interest rate?
As long as you don't have a second mortgage or home equity line on the home (they screw everything up), any competent loan officer should be willing to assess your situation, and ideally, put you in a better spot. Echoing the previous poster: A local lender is a good start, as they will often be able to assess your market better than someone in a call center in Memphis (for example); the drawback, of course, is that the little guy may not offer the key program you need.
Good luck, and message me if you'd like more info.
posted by st starseed at 5:11 AM on April 8, 2010 [1 favorite]
Response by poster: thanks guys. I will try to find a good local loan officer to talk to about it. Regarding the value of the house, I realize that most people overestimate their house's worth, & I could absolutely be wrong. But even B of A didn't think I was underwater--just that I had hardly any equity--so it's probably worth the appraisal fee. I live in what's called an "up & coming" neighborhood in the SF Bay Area (Oakland/Temescal-ish). There are houses being foreclosed on (that's how we bought ours) that usually have lots of "issues" and are sold for cheap. And then there are also houses that have been remodeled/fixed-up going for much more than what we paid. It's very block-by-block. Zillow's estimate always seemed inflated to me, but I have friends in neighboring cities whose houses are shown as seriously underwater on Zillow, so I figured it's not always lying. I don't have a 2nd mortgage or an eloc, so hopefully the "DU Refi Plus" could work out.
posted by apostrophe at 7:52 AM on April 8, 2010
posted by apostrophe at 7:52 AM on April 8, 2010
This thread is closed to new comments.
A lot depends on your region and your neighborhood. Do you personally know a good realtor? A realtor who works your neighborhood can give you very specific advice about how your area's comps look from a bank's point of view. You might also look for a competent loan officer at a local lender (local banks, local small lenders/brokers, credit unions if you have access to one) who again might be more informative about your personal situation and your area than a multinational sales droid. I would hope a good realtor or loan officer would know some specifics about the HARP stuff.
posted by mindsound at 9:31 PM on April 7, 2010