Mortgage Refinance - Advice?

Discussion in 'Budget Board' started by DisFan22, Jun 14, 2018.

  1. DisFan22

    DisFan22 Earning My Ears

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    Posting Under a throwaway account because I don't want to be known.

    Like so many others... we were burned pretty badly by the housing downturn. Me & DH decided to purchase a vacation condo literally at the height of the bubble (May 2006) and unbegntost to us at the time, we were pushed into a Loan that was considered "Subprime". We put down 15% and were given a really decent rate (6.5% at the time) and I thought everything was pretty much honky-dory. The broker had told us we would have to refinance down the road, but I didn't quite understand that it was a "Balloon" payment that would be due in 2011. Needless to say, when the time came to pay peter, the condo had actually plummeted in value. We purchased for $286k, and comparable foreclosures in same development were selling for $65-75k. I wasn't quite sure what to do... and spent months asking for some sort of extension or refinance program from our lender... which they didn't offer. Instead... I was told we either had to accept a loan modification, or they would simply foreclose for the payment not being made in full. We wanted to be responsible and not walk away, so we accepted the loan modification.

    Before that... we had & still never have missed or made a single payment, never had any credit card debt, nor had we overextended ourselves buying a car we could not afford. Our Credit was in the 800's, however, the loan modification program, dropped us both into the low 700s. I now have a 714, while DH has a 709.

    Despite the tarnished credit scores, everything kinda has been okay up until this point. We were able to finance two new vehicle (even offered - no money down) and I was even able to open up two credit cards for the reward points & bonus, last year.

    However... my real problem now is our mortgage on our Primary. DH's friend was a broker at the time, and pushed us into a Option Loan. Basically, it adjusts every single month based on some sort of rate in London. For the longest while, it's been a great deal (we started out below market) and after 2009, it's stayed below 3%, and only recently has it adjusted upward in the past year. But now our rate is over 5% and I just kind of want out and into something more permeant for peace of mind.


    So... we approached our credit union, and submitted everything. Despite having what I would consider a perfect payment history, as well as a good income, and significant savings & retirement accounts... we were turned down. They said to us... that they do not approve mortgage applications for borrowers with previous loan modifications, or foreclosures in the past seven years. I explained over & over the circumstances, and how we were forced into the modification, and it just didn't matter at all to the Loan Officer.

    I was just really taken back, and surprised with it all. The house has appreciated greatly the past five years, and we barely owe 50% of it's market value according to Zillow. I've banked with the CU for over two decades, and just couldn't understand why no consideration could be made -- considering the circumstances.

    So... now, I'm asking for help & recommendations towards a good mortgage company. I was able to get Quicken Loans to approve us, but they came back at 5.3%, which I thought was really high, especially considering our Loan to Value.

    I keep seeing ads online for Amerisave, and wondered if anyone had used them, or had any review on them?? I was also thinking about just going to Wells Fargo and seeing what they come back with.

    And I'm sorry for ranting a bit --- I just really am sick & tired of this whole thing.
     
  2. DVCcurious

    DVCcurious DIS Veteran

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    Dave Ramsey recommends a mortgage company (churchill mortgage) His philosophy is to have a 0 FICO score and the only way he’d endorse them is if they’d agree to do manual underwriting which doesn’t use a FICO.

    I’d call them and say you’re a Dave Ramsey listener and see what they can do.

    No mainstream bank or credit union will touch you for 7 years after a short sale/ loan mod/ foreclosure.
     
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  4. barkley

    barkley DIS Veteran<br><font color=orange>If I ever have a

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    if all of this went down in 2011/2012 you're close to the 7 years most lenders feel you need to wait so i would check with another credit union. even if it's not one you currently belong to. give them a call and speak to someone LOCAL in the loan department and explain the situation. if it's possible offer to sweeten the deal by opening an account that your payrolls checks direct deposit into and agree to automatic payments from that account for the monthly mortgage payment.

    5% isn't bad but if it could go up i can see why you want to lock a rate. my credit union is currently offering 4.25 for a 15/4.5 for a 20 and 4.75 for a 30.
     
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  5. cwoww

    cwoww Earning My Ears

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    i agree with DVCcurious. Find a mortgage company that will do manual underwriting. It will take a bit longer, but it can be done. Good Luck!
     
  6. Anthony1971

    Anthony1971 DIS Veteran

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    sorry of any of this sounds mean it is not meant to be...
    First your back story does not matter to a person giving you a loan only your history and your history shows a risk. You say your house is worth X and you owe Y but what if you take a loan and your house is worth 50% less then your loan? according to your past.......
    Mortgage companies don't know you don't want to know you and even if they did know you it would not matter.. the only thing that matter is your reported past period.
    If one could predict interest rates..... which we can not but by looking at long term CD's it seems banks are unsure... but short term rates are high and sometimes a better rate can be had for a 1 year or about CD than a 5 year... but also 5 year CD's are not low either...
    In another 3 months you may kick yourself for not locking into the 5.3 or it may fall?? or maybe you wait get approved by another company 3 months from now and they are now 5.3????? You need to make a decision you are comfortable with.
    In the end you enjoyed a lower rate for years and now a higher rate.... maybe it will go higher maybe not??? it is an average you need to look at If the rate on a fixed when you signed was 3.5 and you have been paying 3 and now the average is 4.75 and you are paying 5... you end up even in the end it is a chance you took.
    You need to be comfortable with the end rate you lock into if you so choose to do so or keep what you have but in doing so you must keep in mind you no longer have a perfect credit score and will not receive the best rate and for that fact most people do not.... the advertised rate is only for the those who have a perfect credit score...
    My personal thoughts are interest rates will rise rather fast over the next years or so, it will likely level off at some point when house values start dropping again by a few percent... Real estate values always adjust to mortgage rates as a million dollar house with a 3% interest rate will cost about the same as a five hundred thousand house with a 9.5% rate both with a 20% down payment.
     
  7. DisFan22

    DisFan22 Earning My Ears

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    I'm going to check with another CU and see what is possible. The main problem, is the other two local ones I saw -- didn't consider us eligible for membership. I'm going to call the 3rd and see if we can do something with them.

    I would be happy with the 5% Mortgage Rate, if it would stick. The problem is... it adjusts every single month. It's completely unpredictable :confused3 .

    I gave them a phone call. The broker I spoke with -- wasn't quite sure if they could do it, but is supposed to get back with me next week.

    My history matches everyone else's history. Anyone else could buy a home today, and have the market drop in their area. It's not something, someone can fully foresee or predict, and I don't feel like it's a legitimate risk characteristic. We did the responsible thing and fulfilled all of our obligations, we didn't walk away on a Condo that was deeply underwater. All we did is take a forced modification, which ended up converting us to "Good" Credit - from Excellent. All I need now - is to find a decent lender.

    I'm honestly tempted to just take Quicken Loans up on their offer - and call it a day. The rate is almost a full percentage point above what I think we should be approved at, but... it honestly seems a little moot.
     
    Last edited: Jun 15, 2018
  8. DisFan22

    DisFan22 Earning My Ears

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    Does anyone by chance have any reviews or experiences with Quicken by the way?
     
  9. msmayor

    msmayor Finding my beach...

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    You need to step back from being 'tempted' to take Quicken's loan offer and first make sure you truly understand the type of mortgage you want for your primary.

    You said you didn't understand the mortgage for the vacation condo had a balloon payment. You said you were 'pushed' into an Option Loan. What I read from this is that your vision was clouded by a lower payment...and you didn't carefully consider what the future might bring.

    Read...and understand...all the terms. Do 'what if' scenarios five years and ten years down the road. Understand what the risks are...BEFORE you sign for any more mortgages.
     
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  10. QueenIsabella

    QueenIsabella DIS Veteran

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    I would "like" this more than once if I could.

    OP, your post reads like you were forced/cajoled/tricked into these complicated mortgage vehicles. Maybe you're just naive, maybe you got stars in your eyes over the good rates, I don't know. But hopefully you've learned your lesson that you need to understand every aspect of your loan. I'm sympathetic--I don't think you were trying to scam or anything, I think you just got caught up. But from a lender's perspective, you don't look like a good risk. Please educate yourself before you potentially make yet another mortgage mistake.
     
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  11. disneymagicgirl

    disneymagicgirl Been there, Done that, Going back!

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    We live in Nashville, Ramsey Headquarters, and our builder required we get prequalified through Churchill before they'd even start building. I guess they know financing won't fall through if you go through Churchill? Anyways, we ended up closing the loan with them too. They were fine to work with. No better or worse than any other mortgage we've gotten, so I can vouch for them.
     
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  12. disneymagicgirl

    disneymagicgirl Been there, Done that, Going back!

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    OP, my parents were forced into a similar situation. They had purchased a lot to build on in the future. Balloon payment came due and market was terrible so no refinancing possible. Like you they have worked hard, are very frugal, excellent payment history, etc. They didn't modify, but are now still paying on the deficit for a lot they no longer own. This story doesn't help you at all, but at least you know you aren't alone. :grouphug: I'm sure there are other people in similar situations. Good news is has been long enough now that most people credit scores/creditworthiness is restored to close to what it was before the debacle.
     
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  13. dreamit

    dreamit Mouseketeer

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    As you research various mortgage companies DO NOT keep letting them pull your credit score. The inquiries will impact your score. To an extent, these inquiries will be lumped together, but it's dependent on how close in time they're pulled. I suggest you review your credit report and score to get an understanding of dates and how everything is factored in to the score. If you're close to seven years since the modification, it may be better to wait it out a few months. Educate yourself on mortgages, so you're in control of the conversation with loan officers. There is so much helpful information out there, even online. If you know a trusted realtor, ask that person for recommendations for a local lender. I hope it all works out well for you, so you can soon refinance.
     
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  14. DisFan22

    DisFan22 Earning My Ears

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    Well... I just got a call back about the mortgage application I submitted online for Wells Fargo. We got approved at 4.750% for a 30yr Fixed. I told her I wanted something a little shorter and she was able to offer a 20yr Fixed Loan @ 4.625, so I took her up on that. We still have to submit a bunch of paperwork, but the rate is locked and looks good to go. She said our credit was more than acceptable and shouldn't be a problem. Needless to say, I'm happy.
     
  15. DisFan22

    DisFan22 Earning My Ears

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    I just want to point out. Things were very different a decade ago. Call me Naive, Stupid or Reckless. Most of our neighbors had used Interest-Only loans to purchase in our neighborhood. Prices were rising rapidly, the economy was great, and the general consensus was everything would continue and it was easy to get financed. We started out with a Fixed Rate Loan... that didn't fully serve our needs. DH is an Investment Banker and makes almost all of his money in his year-end bonus. We didn't want to pay down principal every single month and wanted an Interest-Only Mortgage. Instead - we decided it was better to make a huge principle payment at the end of the year, and keep more money going into Retirement Accounts & Savings.

    I did do my research for the refinance on our primary. I called around and asked for a Fixed Rate loan with Interest Only and no one was offering them. DH's friend - the Mtg Broker showed me this Option ARM that's rate had historically trended slightly below a Fixed Rate loan - so I thought it was a great choice for us. We had been planning to sell within two years of refinancing into a bigger home, since our family was growing. We never imagined we would still be in the same house, same neighborhood, or have the same loan.

    We were not responsible at all when we purchased the Condo. I'll give you that. We trusted a realtors recommendation for a broker, and didn't fully read through the paperwork so we could rush through a closing. I'll certainly not make that mistake again. But... I will say - times were different, and I thought we did have a Fixed Rate - Traditional Loan. We both were very naive.

    I'll also point out - I did come to a forum to ask for advice on Mortgage Companies. I was attempting to complete due diligence before we signed for another loan.
     
    Last edited: Jun 16, 2018
  16. SouloTravlr

    SouloTravlr Mouseketeer

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    The economy was not “great” in 2008, but since Wells Fargo has solved your problem, it’s a moot point.
     
  17. pfp258

    pfp258 Mouseketeer

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    Attention all people: If you are buying a house, car or any other large financed purchase you must educate yourself. Nobody should “push” or “talk”you into anything...your money should matter enough to know what you are getting yourself into.
     
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  18. DisFan22

    DisFan22 Earning My Ears

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    I was talking about 2005. I'll agree 2008 - was pretty bad, everything was in full-on meltdown. But -- 2007 was entirely different, in fact it was our best year ever financially.
     
  19. DisFan22

    DisFan22 Earning My Ears

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    Damn. Thank You so much for that advice. I've never thought of it like that before!
     
  20. QueenIsabella

    QueenIsabella DIS Veteran

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    You need to back off on the defensiveness. I don't care if it's good times, bad times, somewhere in between--YOU NEED TO KNOW WHAT YOU'RE SIGNING UP FOR. As it happens we moved in the summer of 2008. We were looking at the mortgage industry, and we didn't trust it, because there was just so much "easy money" flowing around. we weren't trying to get rich quick, just moving for DH's work, but an awful lot of people were flipping condos, etc., and it looked like a bubble if you were paying attention. We bought and sold our primary residence, but otherwise, stayed far away from the real estate market. We knew it couldn't continue, it was just a matter of time. It still stuns me that financial people weren't raising alarms, when it was obvious to us (we're financially savvy, but we're amateurs).

    I'm glad you got a decent rate with Wells Fargo. Our mortgage is with them, and we've been happy. One weird little quirk--they tend to send out mortgage statements very early. So early, in fact, that you might get, say, the one due 6/1, before 5/1. When we first moved to our current house, this confused DH so much, he made an extra mortgage payment. Hardly the end of the world, but, just a quirk of how they bill.
     
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  21. msmayor

    msmayor Finding my beach...

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    That "things were very different" a decade ago doesn't change the process of due diligence necessary when committing yourself to significant debt. In all honesty, hearing that your husband is an investment banker who makes almost all of his money in a year-end bonus means you should have been even MORE careful...because the size and payment of a bonus is almost never guaranteed. As an investment banker, he should know that past performance of the markets and economy is no guarantee of the future...and quite honestly, should have known and understood exactly what mortgage products you signed on the dotted line for.
     
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