Mortgage refinancing?

[rahl]

First, I'm quite ignorant when it comes to most things finance related.

I currently have a mortgage on my home I purchased 5 years ago. I needed a co-signer at the time and my grandfather was kind enough to do so. I have recently gotten married and would like to refinance, both to get a better rate and also to remove my grandfather and have the loan in mine and my wifes name.

Is this something that can be done? If so how do I approach it?
I don't want to seem like a fool when I go to my bank, any help would be greatly appreciated.

[ASU2003]

I would think that these are questions a mortgage officer would be happy to answer.

It isn't that hard to refinance, but you do get stuck with a lot of fees. You get to claim them on your taxes next year though.

[The_Jazz]

Yes, this can be done easily.

You approach it by either going to your bank and telling them you want to do it or going to a mortgage broker and telling them the same.

You're making this a whole lot more complex than it needs to be.

By the way, you want to refinance to get a better rate, not necessarily add your wife. That can be done without refinancing, and honestly doesn't need to be done at all. In the absense of a prenuptual agreement, courts usually assign co-ownership to the spouses automatically.

[rahl]

I guess I was mainly asking how big a deal it is to take off a co-signer.

[The_Jazz]

I believe you have to notify them, but that's about it. Hopefully NoSoup will stop by to lend some professional expertise in case I'm overstating things.

[Cynthetiq]

It isn't a big deal to change who's on a loan. Since you're basically paying off the old loan and all it's considerations, the new loan is exactly that, it is a new loan. If grandpa is also on the property deed, it will also be a little more paperwork. If your grandfather is still married, the bank may require a quitclaim deed from grandma. I believe this is to protect them from your grandma from filing a claim against the bank that she still has a fiscal interest in the property.

[Redlemon]

Originally Posted by The_Jazz

By the way, you want to refinance to get a better rate, not necessarily add your wife.

If you do refinance, don't just look at the rate, look at the duration of the loan. When we were 6 years into our mortgage, we refinanced. The monthly payment remained about the same, but we switched from a 30 year to a 15 year. That shaved 9 years off the loan length, which will end a couple of years before our son is ready for college.

[rahl]

Originally Posted by Redlemon

If you do refinance, don't just look at the rate, look at the duration of the loan. When we were 6 years into our mortgage, we refinanced. The monthly payment remained about the same, but we switched from a 30 year to a 15 year. That shaved 9 years off the loan length, which will end a couple of years before our son is ready for college.

I plan on being in this house for a max of ten more years so I'm gonna stick with another 30 yr fixed rate. I want it a bit cheaper, but I mainly want to take off my grandpa. I have about 40k in equity so I was thinking of tacking on about 8 grand on top of what I owe now to finish my basement and build a deck.

[Lindy]

Originally Posted by ASU2003

....It isn't that hard to refinance, but you do get stuck with a lot of fees....

I refinanced with the same lender (Wells Fargo) with no fees at all. They did that so that they wouldn't lose me to another lender.

Lindy

[rahl]

Originally Posted by Lindy

I refinanced with the same lender (Wells Fargo) with no fees at all. They did that so that they wouldn't lose me to another lender.

Lindy

I like this idea. Should I try to start a bidding war then between multiple lenders? Did you ask them to waive the fee's or you would look elsewhere?

I really don't know if it's worth refinancing if I have to pay thousands of dollars in closing costs all over again.

[Xazy]

It all matters on a number of variables whether you should refinance. The questions come down to how much you will really save a month versus the closing costs. If you are in NY I can probably help you much more since the fees all vary from state to state a bit. Also it is harder now to refinance since banks are very very thorough on all documentation and credit scores, but if your ducks are all in a line and you can reduce your monthly costs you should go for it.

[rahl]

Originally Posted by Xazy

. Also it is harder now to refinance since banks are very very thorough on all documentation and credit scores, but if your ducks are all in a line and you can reduce your monthly costs you should go for it.

This is what I don't understand. Wasn't the bailout bill supposed to make it super easy for people to now refinance mortgages?

[Baraka_Guru]

Originally Posted by rahl

This is what I don't understand. Wasn't the bailout bill supposed to make it super easy for people to now refinance mortgages?

The important thing to remember is that by refinancing you are essentially telling the bank you are now a lower risk than you were previously; otherwise, a lower rate is probably out of the question. But the good thing is, by virtue of having built some equity and having a history of payments, you are automatically a lower risk, but the problem is that most banks are now more averse to risk than they were a few years ago. It might be a bit of a trade off. Either way, it's probably worth refinancing, especially with the current rates so low.

---------- Post added at 09:18 AM ---------- Previous post was at 09:15 AM ----------

Originally Posted by rahl

I really don't know if it's worth refinancing if I have to pay thousands of dollars in closing costs all over again.

You should really do the math. Sometimes spending a few thousands dollars is worth it if you are to save far more than that down the road.

[Cynthetiq]

Originally Posted by rahl

This is what I don't understand. Wasn't the bailout bill supposed to make it super easy for people to now refinance mortgages?

The bailout was supposed to do a lot of things, but the banks had no reason to comply with the desired result since there was no penalty for them not complying.

So thus even people with >700 FICO scores have been turned down for refinancing or even new mortgages.

As far as closing costs, the last refi I did required me to roll up my closing costs into the loan. This is something to consider if you are going to pull out equity in order to do upgrades and renovations. You may be better off getting a HELOC but that also may be difficult to get a this point in time.

The real person you should be asking these questions is a mortgage officer or a mortgage broker. Start that process now since it will take a considerable amount of time and effort to accomplish this process. You aren't locked into using that bank or broker until you actually fill out the paperwork and sign on the line, here, here and here.

Let the officer know what your goals are, and they will see how they can get your business. If they can't do anything for you, go to the next bank. Rinse and repeat until you can find yourself a refi.

[rahl]

Thanks for all the help. I'm out of town on business but will talk to my bank I currently have the loan through when I get home. I'll be honest with them and tell them I'll be shopping around to find the best deal, hopefully that will cause them to sweetin the deal a bit for me. But I doubt they will, my bank(national city) was just bought by(PNC Bank) so they are now even bigger and I doubt they really care about helping out little ol me, specially since they already have my current mortgage.

[Cynthetiq]

Originally Posted by rahl

Thanks for all the help. I'm out of town on business but will talk to my bank I currently have the loan through when I get home. I'll be honest with them and tell them I'll be shopping around to find the best deal, hopefully that will cause them to sweetin the deal a bit for me. But I doubt they will, my bank(national city) was just bought by(PNC Bank) so they are now even bigger and I doubt they really care about helping out little ol me, specially since they already have my current mortgage.

Actually they should be quite interested to at least make the attempt at keeping your business. If they aren't able to compete with fair terms for your business they will lose your mortgage once you refi with another lender.

good luck!

[Lindy]

Originally Posted by rahl

I like this idea. Should I try to start a bidding war then between multiple lenders?

There can't be much of a bidding war when the spread between highest and lowest rate is only a few tenths of a percent.

Originally Posted by rahl

Did you ask them to waive the fee's or you would look elsewhere?

I responded to a mailing, told the loan officer that I was shopping around, and they offered to waive the fees. When I bought the house in 2004 (as a distressed property--it was a wreck) I took over an existing 6.x% 30 year mortgage that was verging on foreclosure. In 2009 I refinanced a pay off balance of about 130K on an appraised value of 360K, and went from a 30 year mortgage to a 15 year, so Wells Fargo was definitely reducing their exposure. I had a perfect payment record with them, and my credit score was 823.

Originally Posted by rahl

I really don't know if it's worth refinancing if I have to pay thousands of dollars in closing costs all over again.

No, it's not. Especially if you're only going to be in the house for ten years AT THE MOST. The real difference in cost to you will most likely be the difference in up front costs. And it depends on the size of your mortgage. The smaller the mortgage, the more the fees matter. The larger the mortgage, the more the % rate matters.

I wouldn't try to take the 8,000 cash out. It would reduce your apparent equity and generally muddy the water, especially with trying to take your cosigner off the loan. Between the 8,000 and losing the cosigner, the bank might look at this as an increase in their risk.

Lindy

[Xazy]

It is possible your bank has the best deal for you, but the truth is unless you are a millionaire or have some special business relationship with them, they do not care about you being a long time customer when it comes to a mortgage anymore. The truth is a bank rate may change a lot in one day since they cannot stop taking mortgages but some banks will say we reached a quota and increase their rate so no one buys from them.

You have to figure out how much you really are savings versus how much your cash flow savings are. If you are 5 years in to a mortgage but you refinance back to a 30 year, even if you save $100 a month in cash flow, you have to keep in all the extra interest you will be paying to the bank. Of course some people it is currently essential the cash flow problem, but you do have to remember all the extra payments you will be paying, as well as the cost of closing cost (and if you take out more money to cover closing costs it just means you will pay the interest on top of that as well).

A good mortgage broker who is truly honest can do this math for you very quickly as well find you a good bank, and tell you whether it currently is worth it for you. If you were in NY I can recommend a broker or two who can do this for you and would gladly talk to you (and they talk with no charge and are the type who will send you away and say it is not worth it since they believe they get more customers being honest).

On a slight side all mortgage people now are required to pass a federal and state exam to get a license, they have I believe until April (maybe May) to complete the exams.

[rahl]

So, I spoke with the mortgage guy today at my bank. We both had full schedules, so he really only took my information and said he would get back to me in greater detail. But the rate he quoted me today he called the par rate, which is 5.25%. My current rate is 5.85%. I was under the impression that interest rates were much lower than that, should I be looking elsewhere?

---------- Post added at 04:02 PM ---------- Previous post was at 02:44 PM ----------

Mortgage guy called me back. My wifes credit isn't very good. The guy told me she has 3 items she's been turned into collections for, and she has no idea what they are for. The total of the three is $140ish so that's not a big deal. But we would like to find out what the hell these are for so we can dispute them if necessary. We've tried looking for her report but all we can find are pay sites and I was under the impression we could do this for free.

He told me that our best bet might be an FHA loan, but he said something about a PMI(?) that is basically mortgage insurance the govn't requires. I have no idea what that is or how much it would be, but I'm starting to think that this just isn't worth it.

Looks like the banks completely ignored the stimulus which I assumed was supposed to help folks like me wanting to refinance.

[braisler]

You can check bankrate.com for the latest regional, local, and national mortgage rates. It can be a good place to start.

I have had 2 different mortgages through INGDirect and I can say that they offer very good rates, and quite minimal closing costs. I think my last mortgage closed for $799 including everything. I don't know whether they offer 30 year mortgages. Mine was an adjustable rate 3/1. It started at 5.25% a few years ago and has now adjusted DOWN twice to my current rate of 2.875%. Yeah, I'm pretty happy with them.

[dogzilla]

Originally Posted by rahl

Mortgage guy called me back. My wifes credit isn't very good. The guy told me she has 3 items she's been turned into collections for, and she has no idea what they are for. The total of the three is $140ish so that's not a big deal. But we would like to find out what the hell these are for so we can dispute them if necessary. We've tried looking for her report but all we can find are pay sites and I was under the impression we could do this for free.

This link should get you to the free credit reports. The Federal Trade Commission's Information on Free Annual Credit Reports which takes you to https://www.annualcreditreport.com/cra/index.jsp
. I have used those links in the past to get free reports, but haven't done so for the last couple years

[rahl]

Thanks, the rate quoted me is pretty close to the one on bankrate.com.
I may go the FHA route, but it seems like there are a hell of alot more fees involved.

Dogzilla, thanks frot the site. I'll have my wife check it tonight whenshe gets home.

[rahl]

So I'm looking at the credit report I got from my bank, and the adverse reports on my wife we just can't figure out. The report shows she is in collections from 3 different companies. The total of all three is aprox $130. This has impacted her score negatively since she doesn't have a very long credit history. She swears she has no idea what these are for. The credit report shows her SS# but it has the wrong name on it. Wrong spelling of her first name, and incorrect middle initial. Could this be the reason these faulty collections are on there? If so what should I do?

Based on her low score, the only option we have for refinancing is an FHA. Which only lowers my monthly payment by about $30.00. I need to refinance in order to remove my original cosigner, but I don't particularly like the FHA route, which at this time is the only option the bank is willing to go. This is so frustrating!

[rahl]

So, the final numbers came in today. 30yr fixed rate at 5.25%. The rate isn't too bad but the closing costs are over $6k. That takes the principal to only $2k less than my original loan 5 years ago. My payments would only go down $28.00 a month. To me it's just not worth it.

[Cynthetiq]

Yes, that sounds not worth it. You're better off taking hat $6k in closing costs and paying an extra payment every year (13th month going directly towards principal) and it will take years off your loan making it more than $2k less over the years.

You should still however find out what the mistakes are on the credit report and fix them. Once they are fixed, you can then take a look again and see if it changes the rates and total payout.

One thing that I did not consider is that if you're grandfather is going to get coverage via Medicare, he should not be on any title of property. If he's just on the loan you should be fine, but if he's also on the deed it may be more imperative to remove him even with this low amount.

[rahl]

I'll do that. 2 of the three were legite, but theres one from an auto insurance company that we are disputing. She has never been a policy owner with that company.

[Lindy]

A lot of good advice and practical help on the FICO forums website.

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Lindy