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Household Finances

Mortgage Refi Question

12 years ago

So, a lot of people refinance their mortgage when the rates go down enough.

I called my bank and asked if they would just rewrite the note. Because, first of all, I'll be paying less per month, and also, the termination date will be the same. So, I'm not taking out a new 30 year loan. Just want lower rates on my remaining 20 years.

Does anybody know why banks don't do this, other than income from the extra fees?

BTW, they keep sending me letters telling me that "Now is a good time to refinance at a lower rate." Yep, it's all about the money.

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Comments (5)

LuAnn_in_PA
12 years ago
Gee.. banks are all about the money!
Imagine that!
maifleur01
12 years ago
If I were doing over, we switched from a 30 to 15 year, I would refinance for a 30 year for the lower rate and continue paying as for the original note. Either for a 20 or 30 year you will be paying all kinds of fees. Although the rate is lower than your current the re-fi interest rate is generally higher than the new purchase rate. If you would need to pay the lower amount you could but by paying off using the original payment amount you will be paying off sooner and saving interest. However you must be certain that wherever you are getting your re-fi does not charge any prepayment fee.
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Gasp! Sorry...I am a little credit card phobic... What are you buying for $15k? If you are buying the family estate worth $350K then it might pay to charge away. If someone is selling a bargain and might sell it in an hour then move fast. If not, you face lots of immediate interest (read the fine print and call for costs if you are thinking of writing a convenience check enclosed with your credit card). Cash advance? Higher interest for the life of the loan and then you would face the cost to get a home equity loan and they will notice you owe that $15,000. Better to have the property on it's own loan, preferably with a fixed interest. Good luck...
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looking for some opinions re refi and credit debt
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If you wanted to refi the entire amount, (325+42), that puts you at about 81% LTV. But, that's based on the assessment, not one an appraiser would give you. And, that doesn't include closing costs. So, while that's probably a good estimate, I'd find out what homes in your neighborhood are selling for. Foreclosures have killed so many refi's no matter what credit rating people have. It's sad but true. And, if you do have to end up with a full refi, you don't want to get stuck needing a few thousand dollars. I do think your best bet is to get the modification done first and hope you don't have to do the full refi. Once that's resolved, then you can get rid of those credit cards :) Good luck!
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Tell me how obligated I am to these refi. fees.........
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Comments (5)
Things may vary from state to state but potential borrowers back out of closings all the time. If you were not rediclosed to with a different rate & fees, that's a big problem. As far as the credit card payoff - this may have been a condition of loan approval then you don't have a choice other than not going thru with the loan. Seems like your loan officer/broker didn't do a very good job of figuring your loan amount to include loan payoffs and closing costs. Where I am, when a buyer walks, they are only responsible for the appraisal fee which is often collected from them up front for this reason. Good luck.
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While Dave's answer is basically correct, there's really more to this. 1. What would you like? Do you want to keep the HELOC in place? 2. If so, your lender will ask you about that and determine if your CLTV, or combined loan to value (1st and second mortgages added together), fit within their guidelines for the product you are applying for. Most products have specific LTV and CLTV requirements. 3. If your scenario is within the guidelines based upon your most recent appraised value, then you will be required to have your current HELOC Lender re-subordinate that loan. 4. If you do not want to keep it open, or that loan does not fit within the Lenders guidelines, you will either have to close the HELOC or renegotiate a smaller line to fit the guidelines. Only your lender can tell you what the guidelines are for their particular loan program.
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clg7067
Original Author
12 years ago
I decided not to refinance because I plan to pay it off in 6 years anyway. I really hate my bank. Can you tell? ;) They tricked me into an ARM saying I didn't qualify for a 30 year fixed, luckily for me my rates keep going down. So, I guess it worked out for me.
Billl
12 years ago
"Does anybody know why banks don't do this, other than income from the extra fees? "

Some lenders actually do what you are suggesting. They never used to, but many people have been getting unsolicited offers for zero cost refinancing with their current lenders.

And of course, that is about the money too. Since lots of people refinance before paying off the loan, some lenders have found it makes more sense to lower the rate than to lose the business completely. Of course, most lenders sell off the loans they make, so they don't care if you pay off early etc. They make all their money off of the up-front fees, not the 30 years of interest.
sherwoodva
12 years ago
clg, we paid ours off early and never regretted it. You will save so much in interest!

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