Tried to REFI...but...

Strong Bad

I have an FHA mortgage and just tried to refi to take advantage of the low rates. I qualify for (and did it back 2 years ago) an FHA Streamline which essentially takes your current balance and adjusts the rate. No appraisal needed. 2 years back I went from 6.25% to my current rate of 4.875%. They were locking me into a rate of 3.75% and essentially coming to the table with about $3k. Golden I figured...until...

Well it seems our wonderful Gov't decided to jack up the Mortgage Insurance rates due to all the defaults and to no doubt, give them some extra loot to blow on whatever. Essentially, my PMI would go from $80/month to $180/month if I did it. With the FHA Streamline, you have to have at least a 5% savings on your monthly mortgage to be able to do it. The jump in PMI squashed this!

The guy did say to keep trying back every 3 months cause there's a chance they could alter things again with the PMI. People who financed or re-fied BEFORE 2009 are exempt from the big jump in PMI.

I guess the only saving grace is if I start hammering away at a lot of extra principle payments, i'm not too too far away from the magical spot at which I can say bye bye to PMI altogether.

1 last thing...throwing up a big middle finger to all the knuckleheads who defaulted and walked away from their mortgages due to their irresponsibility. I realize there are folks that fell on hard times, so no foul there. To the irresponsible ones...big middle finger to y'all!

72RR

PMI = Private Mortgage Insurance
Has nothing to do with the government

Jstas

72RR wrote: »

PMI = Private Mortgage Insurance
Has nothing to do with the government

You must have missed the part where he said he has an FHA loan which has everything to do with the gubment.

teekay0007

72RR wrote: »

PMI = Private Mortgage Insurance
Has nothing to do with the government

PMIs are high because the mortgage default rates are so high.

Mortgage default rates are high because of the laws put in place by Barney Frank and his minions - ie. the gov't. :evil: Yes, everyone should be able to get their own house - even if their gross income is $40k and the house costs $600k!! The problem of them not being able to qualify for financing was erased by simply making it so applicants didn't have to have any proof of income, or could simply state what their income was (or maybe what they thought it should be! :rolleyes:). Well, and if that wasn't help enough, then we could just have them pay interest only for the first few years. Never mind that there's a payment lurking out there, just around the corner, that is five times what the borrower could ever afford - well, 'cuz the property values are gonna keep goin' up every year at between 10-30%. Then, just before that first real payment is due we'll just refinance again...nuthin' too it! 'Cuz we'll have that added inflationary equity in the home too. Heck, we can probably walk away from the re-fi table with cash in hand!! Yeah! This is gonna be great! This could go on forever! :eek:

No, I can't imagine how anyone could get the impression how the gov't has anything to do with the skyrocketing PMI rates...

goofyGAguy

teekay0007, make sure you take your blood pressure meds before reading this...

http://www.latimes.com/business/money/la-fi-mo-eminent-domain-20120620,0,4970444.story

teekay0007

goofyGAguy wrote: »

teekay0007, make sure you take your blood pressure meds before reading this...

http://www.latimes.com/business/money/la-fi-mo-eminent-domain-20120620,0,4970444.story

Yes, that's a heartwarming story the whole family can enjoy! I'd be willing to bet that Nancy Pelosi is backing that plan. :idea: She's pretty special.....

tonyb

goofyGAguy wrote: »

teekay0007, make sure you take your blood pressure meds before reading this...

http://www.latimes.com/business/money/la-fi-mo-eminent-domain-20120620,0,4970444.story

Interesting......not sure how legal it is. The story claims you have to be current on your mortgage to participate. Well, if your current, then why do you need the help to begin with ? What it doesn't say is.....those that are not current, will they still lose their homes to eminent domain ?

A stretch of eminent domain powers if you ask me. Nothing rings more true than a government big enough to do everything for you, is big enough to do anything to you.

The story also claims of using private investor money for this program. So you have government using it's power to take mortgages, while their cronies benefit from it ? Is that the jist ? My question is, if your going to use private investor monies, why not entice them to open a factory or something that will employee the people so they can afford their homes ? That seems to be a more common sense idea, no ?

Strong Bad

goofyGAguy wrote: »

teekay0007, make sure you take your blood pressure meds before reading this...

http://www.latimes.com/business/money/la-fi-mo-eminent-domain-20120620,0,4970444.story

Almost punched my monitor when I read this!

This housing crisis is not even close to being over, not by a long shot.

Someone explain this scenario, which actually is my situation...

Bought my home back in Oct '08 for **** number of dollars. If I were to get an appraisal today, i'd no doubt be underwater. My latest property tax bill that came in, the assessed value of the home is FAR FAR FAR below what I paid. I realize the assessed value alot of times is below what market value is, still, I'm below. I'm planning on staying in this house for quite a long time. No plans to move at all. The previously mentioned property tax bill that came in much lower than last year, has effectively cut $300 a year off my bill. My mortgage goes down. I can afford my mortgage easily and always have been able to. I did not try to outspend the rest of the world when I bought. Also, my employment is very stable.

Question is...why do I care at this point if i'm "Underwater" with my loan? I hear so many people screaming and bitching that they're underwater and just don't get it...except for the fact if they're trying to refi or sell (I get that part). If you're not trying to sell or refi...why do you care?

Some of the stories i've heard recently get me furious!!! Had a friend tell me about his brother and sister-in-law. Bought a house probably 10 years back. These spend thrifts love to...spend. Lavish vacations, fancy cars and trucks, you name it! Fast forward 10 years from purchase. The appraised value of the home is now in half. They try to refi and can't. So whats the responsible thing to do...sure...just walk away from it, then take you're huge tax refund and put down payments on fully loaded vehicles for each of them. Problem is, when ya walk away and the house is sold at market value, you're still liable for the rest of your mortgage (or so i'm told, correct me if i'm wrong).

Simply amazing the level of irresponsibility out there and the level thats encouraged by the bankers and Gov't.

tonyb

Because basically, it was all a scam. Free money, skyrocketing values, it was ALL paper profits. The smart ones cashed out early while the majority were left holding the bag. Bubbles were created, much like the stock market, dot com industry, and now some financials again. Thing is, only those with liquidity can cash out before the bubble bursts, how many have that liquidity ? Buying a home is not a short term deal.

FHA had it's place, it's purpose, but was quickly distorted to get more who really couldn't afford a home on the tax rolls. Good idea on the surface but was so over done another bubble was created and really still exists with all the forclosures on the market. Never underestimate mans need to take more and sell it to you as pie in the sky. Much like Mr. Hainly from that old TV series, Green Acres.

Why not just go conventional when looking for a mortgage ? Lots of other programs too, other than FHA our government has provided to lower your mortgage or convert to a fixed rate.

Incidently, the assesed value of your home should be about one third of the market price. Here in my state, as values sunk they didn't sink the assesed values to keep those higher tax dollars rolling in. Don't ask how they get away with it, but challenging your tax bill is one pain in the arse where I live.

steveinaz

tonyb wrote: »

Why not just go conventional when looking for a mortgage ? Lots of other programs too, other than FHA our government has provided to lower your mortgage or convert to a fixed rate.

Exactly, you may need more money to close however--but usually the gap for payments comes close to making this up.

Strong Bad

Realistically, i'm in a very good position, despite my bitching. I can't complain about a 4.875% rate on my mortgage. I own a modestly priced home and my monthly utilities are low. It's an older brick home, but with all the upgrades i've done (3 sets of doors and all the windows), it's pretty efficient, energy wise. Still, would have liked to lower it to 3.75%. The guy did say to keep checking back as they could very well alter the requirements on this mortgage insurance thing.

Tony, you hit it though. I know someone that got caught up in all that mess. Emptied a chunk of his 401k to buy a second home in this new community that he just bought in. Then the bottom fell out of it and it was ugly!

cfrizz

The housing market is in the state it's in because of greed & stupidity of both people and banks. All anyone cares about is how much their home is worth and being able to sell it for more than they paid for it. This is the most backwards thinking I have ever heard.

When I was looking at condos back in 2008, I would have loved a two bedroom unit, but I didn't have the money, knew I couldn't afford both a mortgage & condo payments, so I used my common sense and got a nice roomy 1 bedroom unit that I paid cash for and now own outright. This is all that saved me from being homeless when I got laid off in 2010!

Knowing that I have a roof over my head at all times is far more important than the fact that my condo is worth over $10,000 less now than when I bought it back then. My biggest asset is my 401k and my mutual funds that I can easily turn into cash if I needed to.

I'm not thinking of selling my unit, it will most likely be my estates problem when I'm gone, so long as I have it while I need it, I don't care what it's worth.

If you are stupid enough to always want more than you can truly afford and it comes back to bite you in the butt, that's your problem & you end up getting what you deserve.

tommyt21

I feel the OP's pain I would love to REFI but even with the drop in the rate the higher PMI almost negates much of the benefit. We bought our townhouse when prices were at the peak. My wife and I didn't know any better we were just some snotty nose kids, however the thing we did do right was not listen to the Lender who approved us for a Home that was around 6 times our annual salaries combined. Instead we said we need to find a home that we can afford if one of us ever looses our job. We now have a mortgage payment that is around 16.5% of our income after taxes with no car payments. (buy used its just as good). 1 credit card that always has a balance of zero and 1 student loan. Even though both of us have very secure employeement (Nurse & Clinical Applications Manager), life has taught me that nothing is for certain and everything is too good to be true. When we do our finaces we treat everything like we could loose it all tommorrow so we hope to always be prepared.

Now I can come here and have you guys help me blow some of my cash....J/K. In all seriousness I know the frustration of those who were responsible now paying the price of those who were not, but that seems to be the culture in this country now. Instant gratification.

heiney9

Strong Bad wrote: »

Problem is, when ya walk away and the house is sold at market value, you're still liable for the rest of your mortgage (or so i'm told, correct me if i'm wrong).

Yep, it's called a deficiency judgment and it follows you the rest of your life. Short sales typically eliminate (by negotiating with the bank) having a deficiency judgment brought against the seller as part of the "short sale". Hence the name.

H9

tonyb

Only problem with a short sale, is there's nothin' short about the process.

The FHA insurance premium is only applicable untill you reach x amount of equity, which in todays market can be a long time. Once you sell the home, or reach x amount of equity, you can apply to get a good chunk of that premium back. I've done it in the past, unless things have changed.

Strong Bad

heiney9 wrote: »

Yep, it's called a deficiency judgment and it follows you the rest of your life. Short sales typically eliminate (by negotiating with the bank) having a deficiency judgment brought against the seller as part of the "short sale". Hence the name.

H9

I do believe they just walked away from it and didn't go the short sale route. They were always very careless financially, so this is par for the course.

tonyb wrote: »

Only problem with a short sale, is there's nothin' short about the process.

The FHA insurance premium is only applicable untill you reach x amount of equity, which in todays market can be a long time. Once you sell the home, or reach x amount of equity, you can apply to get a good chunk of that premium back. I've done it in the past, unless things have changed.

I talked to my mortgage company yesterday and found out where I need to be to get rid of the mortgage insurance. I'd have to seriously pound out some extra principle payments, but it could be done within 4-5 years. HOWEVER, I have to ask myself if throwing that much money at my mortgage to get rid of $80/month is worth it when I could be taken a sizable amount of money and investing it for long term growth.

Decisions decisions!

wallstreet

4.875% is too high. Current rates for 30 yr are around 3.6%. I just refi'd to 15 year at 3%. 3 freakin %! Unbelievable how low rates are these days. It was a total pain in the arse though. They went through everything with a fine tooth comb. Fortunately for us Texans, the real estate market never went crazy like California, Las Vegas, or Florida. I just finished up a gig with a sub prime servicing company. I'd browse through some of the properties that were on the foreclosure list. It really is a shame when all the hard working stiffs, through no fault of their own, end up with a house that's worth 100K less than what they owe.

cstmar01

heiney9 wrote: »

Yep, it's called a deficiency judgment and it follows you the rest of your life. Short sales typically eliminate (by negotiating with the bank) having a deficiency judgment brought against the seller as part of the "short sale". Hence the name.

H9

Well you could just file BK and be just fine. We can't touch you then.

Also depending on the bank etc some won't file for deficiency. Some investors request to not have deficiency filed for in the foreclosure action as it takes so much longer to foreclose in some states when you file for it. WI being one of them. For us to do it on a owner occupied we are looking at a 12 month redemption. Add into the mix the full process and it takes me 2 years to foreclose on a property.

PMI companies suck. Trust me, they fight all day long on claims. Oh its past this time frame, this was wrong blah blah blah. They will do anything to get out of paying a claim and its a fight to the end. Also they are loosing money left and right and it makes sense. PMI does help the bank in the case of a default, true, but getting them to pay is another story. 5 years ago it wasn't a problem, now it is.

Also people will complain about anything. Some people will just outright not pay because they are upside down and their "financial advisors" told them it was best to walk away, your house is an investment so just walk away from a bad deal. Its annoying as crap but there isn't much we can do.

Good luck, there are always changes happening here or there. Its not done yet, as there are still a lot more things to come and happen and it doesn't make our jobs on the default side of things any easier.

Its fun to see the crap that happens to houses on my end. People taking everything out of them like a stair case or counter tops the electrical, houses that get looted by people just wanting the cooper. Or people that leave pets behind because they just don't want to deal with them so we get to. :frown: Its sad what some of them will do.

tonyb

Strong Bad wrote: »

I do believe they just walked away from it and didn't go the short sale route. They were always very careless financially, so this is par for the course.



I talked to my mortgage company yesterday and found out where I need to be to get rid of the mortgage insurance. I'd have to seriously pound out some extra principle payments, but it could be done within 4-5 years. HOWEVER, I have to ask myself if throwing that much money at my mortgage to get rid of $80/month is worth it when I could be taken a sizable amount of money and investing it for long term growth.

Decisions decisions!

In my opinion, the 80 bucks is worth it then. You can always add aditional coin to your monthly mortgage payment when you have it to pay down the principle faster. Also consider if your house is one that you will be in for a very long time. Doesn't make sense to pay down the principle if house values are going to continue to sink and all that extra principle money vanishes into thin air. May be better to sink that extra coin into another financial instrument that will make your coin work for you.

Strong Bad

wallstreet wrote: »

4.875% is too high. Current rates for 30 yr are around 3.6%. I just refi'd to 15 year at 3%. 3 freakin %! Unbelievable how low rates are these days. It was a total pain in the arse though. They went through everything with a fine tooth comb. Fortunately for us Texans, the real estate market never went crazy like California, Las Vegas, or Florida. I just finished up a gig with a sub prime servicing company. I'd browse through some of the properties that were on the foreclosure list. It really is a shame when all the hard working stiffs, through no fault of their own, end up with a house that's worth 100K less than what they owe.

Funny how just two years ago when I REFIed, 4.875% was a great rate. I remember back in the '80's when rates were 12 - 14%. Compared to what you have, sure it's high, but in reality 4.875% is pretty darn good when looking at the big picture.

tonyb wrote: »

In my opinion, the 80 bucks is worth it then. You can always add aditional coin to your monthly mortgage payment when you have it to pay down the principle faster. Also consider if your house is one that you will be in for a very long time. Doesn't make sense to pay down the principle if house values are going to continue to sink and all that extra principle money vanishes into thin air. May be better to sink that extra coin into another financial instrument that will make your coin work for you.

This is also something i've been considering. I do plan to be in this house for quite a long time, based on where I am in life right now. Making an extra principle payment every month to drop me to 15yrs is very doable and wise based on overall interest savings, while still allowing me to sink funds into other investments.

I look long term at these things. This was / is one of the problems with the whole real estate mess. Before people had their stuff unboxed into their new home, they were already looking at what it was appraising for and planning to sell. Have another friend who bought into what was a very affluent neighborhood. Bought their home for $580k, then before they were unboxing he was touting how other homes were selling for $30 - $40k above that. When their 5yr ARM came due to adjust, the bottom had fallen out and they were (at the time) appraised at $90k below what they bought. They could not qualify to refi and had to take the adjusted rate (which was UGLY). About 4 months ago, a home next door to them sold for $400k. Do the math!

72RR

Yes, FHA is a government program. It has allowed millions of Americans to buy houses over the years.
But each of those Americans are personally responsible for accumulating the necessary down payments.
When they haven't, PMI has allowed them to purchase a home to offset the difference in available funds and the required 20% of loan value.
How can you blame the government here?

madmax

Strong Bad wrote: »

This is also something i've been considering. I do plan to be in this house for quite a long time, based on where I am in life right now. Making an extra principle payment every month to drop me to 15yrs is very doable and wise based on overall interest savings, while still allowing me to sink funds into other investments.

You are a very wise man. I think it will be quite a bit shorter than 15yrs. Remember, it is better to pay extra as soon as you can because later it won't make much of a dent.