I am required to use my builder's mortgage company b/c they are giving me incentives but the rates are 0.5% higher than other lendes on both the 1st and 2nd mortgages.
I am wondering if I would be able to refinance both mortgages immediately after I close? What do I need to consider? What questions do I need to ask?
Sale Price: $960k
New House in California
Interest Rates for 1st/2nd mortgages: 6.75%/8.675%
Excellent FICO scores - high 700s to low 800s
Is it possible to refinance 1st %26amp; 2nd mortgages for a brand new house immediately after I close?
6.75% is average for 30 years fix loan.
8.675 is high of course, but you don't have down payment, lender wants high rates to compensate.
It is hard to find another lender to give you better rate.
I would stay away from adjustable loans or interests-only, because housing market continues to slump. Adjustable loan is "toxic", which means if rates go up while housing price stays, you will in bad spot.
As for interests-only, mortgage payment consists of two parts: interests and principal. Interests are like rent, which doesn't add to the equity to your house. It simply disappear as your pay it. If you want to use interests only loans, might as well rent, especially during market downturn, because housing price won't appreciate.
Would you consider delaying your plan? As housing market continues to slump, it might save you 10% simply by waiting for a few months. Another way to look at it, you can increase profit by 10% when you are ready to sell it.
http://money.cnn.com/2006/09/08/real_est...
http://money.cnn.com/2006/09/05/real_est...
If you want to go ahead with your plan, threaten to back out, they probably will give you incentives without asking you to use their lender.
Good luck!
Would you consider dela
Reply:it can be done but i would take a serious look at the builders morgage contract, you will have to pay the closing cost again an the penalty for refienancing that early alot of morgages has a 5 year penalty. you might be better off keeping the builder morgage see what the long term cost will be on both morgages but add in the cost on the new morgage closing an penalites, an see which is cheaper in the long run
Reply:Assuming you have done 100% financing on this property it might be best for you to keep the current loans. Lenders will charge higher rates for 100% or (80/20) financing options. Also you would only be allowed to use the purchase price as the value so if you did 100% financing you would have to pay the closing costs out of pocket since you would not be able to realize any appreciation on the property. Which for the combined loan amounts you have could be a good deal of money.
However it doesn't hurt to inquire about a refinance. Find out what the new rates and payments could be and compare them to your current situation. If you can recoup the out of pocket closing costs with the monthly savings within 2-3 years then it is worth it. Outside of that you need to ask yourself how long you will have either the house or the current loans because if you plan on selling of refinancing within the next 3-4 years then stay with the current situation you would be spending additional money that you wouldn't need to.
Reply:You can refinance any time you like. Do make sure there are no pre-pay penalties on your builder mortgage.
Reply:yes this is possible if theres no prepayment penalty.
.5% can add up to quite a bit for such a high price home.
it would be best to shop around.
try http://www.savingslife.com
for some basic info, you can get a few different perspectives from local lenders.
Reply:Yes you can and I highly recommend it as it will save you thousands and thousands of money over time. It's called a rate and term refinance and is done all the time. Keep in mind you will pay closing costs again but over a 30 year term will save you much much more than the closing costs. I would also guess that during the time it took to build you have gained some equity as well. With your credit scores you would have no problem refinancing. I hope this helps you but if you need any help or have any further questions please feel free to email me or visit my website www.dantadgerson.com.
Reply:If you'd like I can take a look at your situation for you. I am a loan consultant and do business in 15 states. The company I work for is called equity consultants. We do business in CA. Our toll-free number is 800-546-9080 Ext 199 ask for me Rob Snodgrass
I'm in the office from 9am-7pm every day. Just remember that we are three hours ahead of you. I can do it for you. Hope to hear from you. here is our website www.equityconsultants.com
Thanks
rob
Reply:Hello,
You absolutely can refinance immediately after you close, but you have to use the right lender..
Mos tlenders out ther erequire that you live in the house for at least 6 months prior to doing a refinance transaction... Others require a full 12 months...
I work with Providential Bancorp, a company that has well over 50 inve3stors we have partnered with to have a home for all borrowers in need...
I have plenty of investors that DO NOT require "seasoning"(being in house for 6-12 months)
These investors WILL allow you to refinance in order to get the mortgage rates down...
With your credit scores, you should easily be able to qualify for lower rates then what you have been given, and i think it makes complete sense to do the refinance...
Mortgage companies will be willing to lower your rate in order to get your business...
What you need to BE 100% SURE OF is that you DON NOT have a pre payment penalty...
You also NEED to work with a lender that has LOW closing costs...
You do not want to use a brokerage firm.. Brokers need to charge costs in order to make a profit from a loan...
My company is a bank, and correspondent lendER... We do not rely on origination fee's, or broker fee's in order to make proifit...
Being we are partnered with many investors, we are paid by our partners to simply add another loan to their portfolio... Our philosiphy is that we know there are hundreds of mortgage companies out there... In order to get your business, we need to give you the lowest rates, and lowest fee's...
Being we dont get paid base don how much fee's we charge, we are sure to offer you the lowest closing cost loan possible...
Its easy for any mortgage company to say this, but let the numbers speak for themselves... If you would like to know more, i would be happy to present you with a Goof Faith Estimate, and you yourself can see exactly what you qualify for, and what it costs in order to get it...
I look forward to speaking with you!
Jason Fry
Licensed Mortgaeg Banker
Providential Bancorp
jasonf@providential.com
312-264-6448
1-800-264-7283 ext. 448
Reply:Yes, YEs, YES! I see this happen all the time and help correct it just as often. You need to make sure that neither of your mortgages carry a prepayment penalty. Most likely the 2nd mortgage has an early closure fee of some kind, but these are often under $500 and thus should not be a deal breaker on your size mortgage. I am nationwide mortgage broker in No. California with 20 years experience and would be happy to run some figures for you. There are many things to consider when choosing your new replacement loans like if the property has appreciated since you signed your purchase contract. You may even be able to combine both of your loans into one mortgage! Please contact me: Steve@SLarson.com or via www.SLarson.com/Contact
Regards,
Steve Larson
florist delivery
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