Plunging into the refi ocean.

May 12, 2010 5:44 AM

Tell me your refinance success stories.

I'm guessing that refinancing a mortgate has changed somewhat in the past five years, thanks to the implosion of the real estate bubble, the tightening of lending terms by banks, and government efforts to reregulate the finance industry.

In 2010, what's the easiest, most time (and cost) effective way of refinancing a mortgage, especially a mortgage for rental real estate? Is it useful to take on a mortgage broker? Are there any mortgage brokers with a national presence? Or is it better to cold-call lenders directly, then compare financing packages to find the best deal?

Although I'm interested primarily in mortgages for rental real estate, tips--or success stories--relating to any type of refi would be useful.

Horror stories welcome as well.

posted by Gordion Knott to Work & Money (4 answers total)

Well, we settle on our refi tomorrow, so I can give you a fresh perspective. When we bought our house in 2007, interest rates were low, but they're now significantly lower. The company that holds our mortgage called to see if we wanted to consider refinancing, but we wouldn't have saved much. I called our original mortgage broker, and she's able to get us a significantly better rate (still a 30-year fixed), with a payback time of ~7 months. Basically, it's a no-brainer.

I'm not sure how rental-property would be different, and our mortgage broker is local, but I would ask friends who have bought real-estate lately if they have a broker they'd recommend and check with your bank.
posted by JMOZ at 6:18 AM on May 12, 2010

We just (as in literally days ago) completed a refinance of our mortgage. It was not substantially simpler or more complicated than the first time around, before the bubble burst; the only noticeable difference was that they didn't try to sell us an ARM.

The lawyer handling the paperwork complained that the new government regulations had made the paperwork more confusing than it used to be, but to my untrained eye it seemed about the same.

(In our case the holder of our existing mortgage offered us a pretty decent deal rather than lose our business -- so just the opposite of JMOZ's experience.)
posted by ook at 6:26 AM on May 12, 2010

I have refinanced my house twice, both times through our original mortgage company. Originally we had a 30 year fixed at around 6+%. Three years later we refinanced to a 20 year fixed a 5+%. Two years later we refinanced again to a 15 year fixed at 4.3%. My main motivation is to get the house paid off as quickly as possible which is easier to do when #1 we have a shorter term (instead of saying "if I get extra money I will pay more on the principle" which never happens unless forced to do so by the payment book), and #2 pay as little interest as possible which allows more money to go towards the prinicple.
posted by MsKim at 7:27 AM on May 12, 2010

It took forever for my ex to refinance the house out of my name, and there was very little I could do to move it along faster.

He refused to sell it and split the money after the divorce - this would have given us $45k each to start anew with, but he insisted on keeping it and my lawyer said there wasn't anything I could do to force him to sell. So he had until a certain time (far too long!) to refinance or he had to sell.

He left things until the last minute, in fact he went past the deadline and my lawyer set a new deadline. The housing bubble had burst while he delayed and the house was now worth below what we had paid.

When he started making serious attempts to refinance he was getting immediately turned down by lenders because he didn't show up with a the Quit Claim deed from me, and instead of asking for it they just declined him.

Once he figured this out and turned up with the right paperwork then he found out that he would have to pay in a huge amount to refinance, I think it was about $75k. Did I mention he was freshly unemployed with no savings and was just hoping banks wouldn't check up too closely on this?

Thank goodness for his new fiancee with wealthy family and trust fund! They loaned him a huge bundle of cash and I had to loan him a small bundle of cash (amazingly he has not missed a payment yet) and now the house is no longer in my name.

So it was a minor horror story, but with a happy ending. I hate to think of what a spouse can do to you in a non-amicable split if your name is on a house.
posted by meepmeow at 9:21 AM on May 12, 2010