Mortgage Refinance Advice

Aevry

Aevry

Mobile Game Hunter
462
15
Hey Rerolled,

I'm looking into possibly getting a refinance on my home, but I don't have enough experience with the process. Any advice would be appreciated from you armchair bankers;

Home Info:

Purchase Date: 2009
Purchase Price: 197,500
Loan Type: 30-year Fixed FHA
Interest Rate: 4.5%
Estimated Value 2013: $215,000

Principal+interest: $982
Remaining Balance: $176,000
Monthly payment (insurance+taxes): $1341
Credit Rating: 740-800

Backstory:
Purchased home with wife in 2009, but we split in 2012. She did a Quit-Claim to me, but is still on the mortgage. There are no concerns of her causing problems with it but it would be nice to finally cut all ties. I make enough to afford it comfortably on my own, but would love to reduce the payments so I can put the money towards other things (credit card, miniature giraffe, etc).

The question is - should I bother? I ran a few "quotes" with my company USAA, and had a few 30 year fixed with a payment (with everything) of around 1230 or so. There was a 5-1 ARM that would save me around $400 a month, but I'm pretty leery of those.

Anyone have similar experiences, and what did you do?
 
Aevry

Aevry

Mobile Game Hunter
462
15
Oh, just realized the Business / Finance forum may be more appropriate for this... If so, can a mod migrate it over?
 
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Picasso3

Silver Baronet of the Realm
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5,322
I'm looking into a 5/5 arm from penfed with no closing costs but I only owe 50k and fully intend to have it paid off in 15 years.

To ask my own question: do arm loans reamortize at each of the rate change periods?
 
Brando

Asshat Brando

Potato del Grande
<Banned>
5,346
-478
Pricing can differ quite a bit by region so I can't tell you exactly what you should get as I don't do business in WA. With that said you have enough equity to get out of the FHA and into a conventional with minimal or no monthy MI payment. Even if you don't get a much lower rate that could be quite the money saver.

As far as the ARM's, you should wait until after January 10th when QM rolls out or look at Pentagon Federal Credit Union. The reason being is QM is making the ARM adjustment caps change to a FHA style 1/1/5 or 1/1/6 meaning after the initial fixed period your rate can only adjust 1% every year until the max is hit which would take 10 years, depending on the difference in rate between the ARM and Fixed you shouldn't realize the break even point of the Fixed being better for around 13-14 years making the ARM a better choice in a lot of cases. PenFed has already adjusted for QM and is using a 5/5 cap scheme where the rate will only adjust once every 5 years which is a great product, I've heard it's a bit hard to get but it blows away anything else in my opinion.
 
Brando

Asshat Brando

Potato del Grande
<Banned>
5,346
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Picasso_sl said:
I'm looking into a 5/5 arm from penfed with no closing costs but I only owe 50k and fully intend to have it paid off in 15 years.

To ask my own question: do arm loans reamortize at each of the rate change periods?
Click to expand...
Did you confirm the lender will even do a $50k loan? Most lenders won't even do a $50k home mortgage as they are money losers unless you charge like 5 points and even then it's still shit. My current company will only do HARP's below 100k, think when I was at Wells the cap was $75k.

To answer your question, the loan payment changes based on the amount of years left and the new rate along with your original principle balance. You can ask the lender to re-amortize based on accelerated principle reduction payments you have made but in most cases they are under no obligation to do so. If you do plan to aggressively pay principle I would look at an Interest Only ARM if you are fine with ARM's in general. Your interest payment changes whenever you make any principle reductions.
 
Joeboo

Joeboo

Molten Core Raider
8,157
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Brando_sl said:
Did you confirm the lender will even do a $50k loan? Most lenders won't even do a $50k home mortgage as they are money losers unless you charge like 5 points and even then it's still shit. My current company will only do HARP's below 100k, think when I was at Wells the cap was $75k.

To answer your question, the loan payment changes based on the amount of years left and the new rate along with your original principle balance. You can ask the lender to re-amortize based on accelerated principle reduction payments you have made but in most cases they are under no obligation to do so. If you do plan to aggressively pay principle I would look at an Interest Only ARM if you are fine with ARM's in general. Your interest payment changes whenever you make any principle reductions.
Click to expand...
Yeah, my wife works for Bank of America, and they won't bother with anything under 75K either, just like Wells Fargo
 
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Picasso3

Silver Baronet of the Realm
11,333
5,322
I was just looking into the pennfed loan because they pay for closing costs. Spending 3k on a 50k mortgage usually doesn't work itself off too fast but my current rate is 5.58 so I could save about 100 a month refinancing
 
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ubiquitrips

Golden Knight of the Realm
615
82
You should call the bank the owns the mortgage currently and ask if they will do an interest rate adjustment. I think they just called it a rate reduction, it was with US Bank at the time. Around 1.5 years ago that is an option I had on my FHA loan. Basically, they will just lower the interest rate on your loan in order to keep it. There was no out of pocket cost. I wasn't able to pursue this further as I found out about it when I was just finishing up a refi.

That being said, your current interest rate is about what the market is at right now. I am not sure what the interest difference would have to be in order to payoff the closing costs in a reasonable amount of time would be.

How likely are you to sell the house?
 
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Picasso3

Silver Baronet of the Realm
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5,322
Plan to keep it as a rental.. but if I paid off that 5/5 in 15 years which is pretty easily done even with max adjust of 2% each 5 I'd still be a lot better off. I called them about refiing a year ago when shit was at historic lows and they just ran the normal refi scenario
 
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