Refinance / Appraisal questions

B

BOSS

100+ Posts
I'm starting to look at refinancing my mortgage on my house and I have a few questions.

I've got a 30 year fixed No Fee Plus Mortgage from Bank of America. I borrowed 100% in August 2007 and have an interest rate of 7%, with no 2nd lien and no PMI. The original principal amount of the loan was 153,000 and I now owe about 151k.

I know you can't refinance 100% of the value of your house, which leads me to wonder how to get a pretty firm idea of what your house would appraise for if you went to refinance. A home sale two doors down in August 2008 gave me a price per square foot that would make my house worth 165k.

My second question is what kind of rate would I be looking at if I got involved in doing that right now.

Thanks in advance and I'll hang up and listen
 
The highest Loan to Value you are looking at is offered by FHA at 98.75%.

Now on a refinance, take into account setting up escrows, title fees, lender fees, and FHA's Mortgage Insurance Premium, etc. This could push your new loan amount around $158-159K...

If you are going to do a Conventional Loan (like the Bank of America loan). You are going to be capped at 95% and your loan amount will be around $155-156K.

Now a lot depends on what interest rate you qualify for. For example, your Loan to Value, Credit Score, Debt to Income, etc..

Also, another question to ask yourself is how long you plan to stay in the house?

Let me know if you want a quote on whether you'll benefit from doing the refinance, happy to help!

Brendan Frey
Loan Officer #77001
210-288-0706
 
I'm going through this right now. I've talked to several mortgage brokers as well as Wells Fargo (who ended up buying my current mortgage shortly after we bought this house). The mortgage brokers can get you a lower rate, but the closing costs were all in the 5k range for us on a rate of anywhere between 4.625 and 4.875 on a 30 year fixed refi. Wells Fargo could offer a "free" refi with no closing costs at all. Their rate was 5.375, but by not adding the additional 5k in principal, the Wells Fargo option was roughly the same monthly cost.

The way I see it, if I'm going to be paying the same amount every month, I'd rather have a lower balance and be paying more in interest than the alternative. Call BOA and see if they have anything similar.
 
Bfrey,

Is it worth the refi if you are going to be in a house for no more than approx 5 more years? Also on a 5.675, at what rate does it justify getting a refi?
 
Boss - let me answer about the appraisal question, being an appraiser here in Houston.

We don't appraise using price per square foot. It's a no-no in appraising and no good appraiser following proper methods would use it. Real estate agents/brokers will use price per square foot in their conversations and comparisons, but that's what they're taught. Even so, it's a faulty method for valuing a home.

Generally speaking, the smaller the house the higher the price per sf. The larger the house, the smaller the price per sf. If price per sf is a dynamic number simply based on size - then it's not a valid function for determining value.

Market value is a combination of land value, depreciation, function, utility, condition, amenities, etc. as compared to similar homes in your market that would be considered a viable substitute for your home. None of that equates to price per square foot.

If you refi - the bank most likely will order an appraisal. Could be a full interior/exterior appraisal, could be a "drive-by" appraisal, or they could even run an automated computer model on yours. Very very rare that some sort of appraisal is not done on any mortgage transaction nowadays in this climate.

Good luck -
 
I too just went through this entire refinance ordeal the past couple weeks and ultimately came to the conclusion it wasn't worth it for me to add 4-5k in principal if I'm only planning on being in this home less than 5 years. Like Bfrey said above, even though I work for JPMorgan and get about 80% of my closing costs waived thru Chase, you still have to take into account escrow, title fees, and a few other things that added up to almost 5k. I'd rather not add any principal and get the bit higher interest rate that's a greater tax write-off the next 3-4 years we plan on being in this house. Oh and my only option was the FHA route since I didn't have but more than 5-10% equity in the house since I did a 80/20 loan to start with.
 
I am also looking into refinancing. I bought my house this summer. Put 20% down, the mortgage was $204k, and the rate was 6.25,

I have a good faith estimate for 5%, with $5100 in closing costs. This would increase my principal to 209K. Part of the closing costs is a 1% ($2090) origination fee. Also have a $600 "processing fee" and $500 escrow waiver fee. I want to handle taxes/insurance myself. I plan to be in the home for a while, so that part is in my favor. Is this a decent deal? Are closings costs generally $5k for a transaction of this amount/type? Appreciate any feedback.
 
I am going thru the same thing..right now have a rate of 4.875 quoted thru BOA and 4700 in closing fees....it will save me 130 a month and break even point is about 3 years
 
i'm going through the refi fun right now as well. last week an appraiser came by. he walked though the house making some drawings and then walked around the outside. all in all, he was here about 30 minutes. i talked to him for a bit when he first got here and he said he'll look at comps and other info, but basically told me "you know what you have here and with the area, you can probably take a good guess".

i was able to lock in 4.75% a couple weeks ago (currently have a 5.875 for almost 2 yrs). closing is around 4200 and i'm saving $325 a month
 
Kmac,

Is the 4.75 on 30 yrs on a refi? Can I ask, what bank did you go through or can you PM me your lender?
 
I am a broker who has worked with several both from this board and /orangebloods's.

I am quoting 4.75% on a 30 year.


feel free to email me at [email protected]

I am happy to answer any questions you have.


good luck to everyone.


hookem.gif
 
Do these low rates include buying any points? What kind of fees should I expect to see for a 30 yr fixed to 15yr fixed with a balance of about 175k? Would rolling a second mortgage into the loan change the fees?
 
maybe the loan officers/brokers here can correct me or add to this, but I believe that all RESPA closing costs or at least the origination and discount points are tax deductible. so that reduces some of the cost of refinance.

also, is it safe to assume that the 4.75 rate was for less than 80% LTV, or was it for any normal fannie/freddie conventional loan? and is there still a .25 rate adjustment for waiving escrows?

BTW, for those unfamiliar, loan officers get paid two ways. origination, and yield spread. they get what they charge you directly, and what the bank pays them for a loan at a certain rate, size, and type. so if you don't like the origination, you can ask to have it lowered and pay more in origination. you can also get rates low enough that the bank charges for the rates instead of paying out, but obviously you would have to pay enough in origination and discount points to cover the bank and pay the loan officer. or you can select a much higher rate and have the LO use the yield spread to cover closing costs. The possibilities are just about endless and you just need to work with an LO that you trust, tell him what's most important to you in what order, and let them work out a few scenarios to show you. from there, you can ask to massage any of them a little (lower rate, higher fees, vice versa, other things).

hopefully this little downturn in the industry has eliminated much of the 75% or more of the idiots out there trying to sell mortgages for a living.

appraisals are an interesting game. your house value will be determined by the sales price of recent sales in your neighborhood of similar age, condition, room count, and amenities. if you have the biggest house in the neighborhood, it will be undervalued. same with amenities. its a very dynamic situation and if there are no comparable sales in your immediate area in the past year, it becomes somewhat of a crapshoot. what if an appraiser has to cross a highway to find a comp and those homes are 10 years newer? now there's an adjustment that devalues your home. etc, etc. rules are different for rural properties, but for most people value depends on how similar their home is to others around them, and how many homes around them are selling at any given time.
 
The origination an any points are deductible.

The rate mentioned is for a Fannie/Freddie conventional loan.

The Escrow waiver is still charged by lenders.

I agree about eliminating a number of people from the mortgage business. Hope is also occurs with some real estate agents.



hookem.gif
 
hollis, i understand what you mean. but as a former loan processor, my idea of a good appraisal is one that the underwriter would accept, while yours would be one that is accurate and within guidelines. obviously the goal would be for both to be true. and they don't like things like crossing major intersections or changing zip codes even if its only a half mile distance.

niner, agree about realtors as well. i worked with more than my fair share of incompetent realtors and loan officers that really made life hell for their borrowers. most that i worked with had little knowledge of their industry, just told people what they wanted to hear and demanded that others fulfill their promises for them. most of my LOs could not understand an appraisal, a survey, or a title commitment if their job depended on it. I suspect the same could be said for most realtors. still not sure how realtors can get away with the flat 6% deal no matter what, while lenders have to underbid each other. realtors should have to compete with each other on price as well.
 
Vince,

If you can get that, good for you. I will say anyone offering that is going to lose money doing your loan for you.





hookem.gif
 
madscientist,

Ya know, it's obvious that a loan officer wants an appraisal that the underwriter will accept without question. Otherwise the loan officer doesn't get his commission. It's further that inflated appraisals are the core of the financial mess we're in. So ya, I get it on the underwriter. I have underwriters ask many times to have "damaging" information taken out of my appraisal because they won't be able to make the loan and re-package it to some fool on Wall Street.

You're right on the highway issue with underwriters. They truly believe that the highway is some sort of dividing line between rich and poor people, or people of different races. We have some 100 year old neighborhoods here in Houston that were built before anyone ever thought of building a freeway through it.
 
I'm a former loan officer with no ties to ninerhorn whatsoever but in reading his posts he seems like he knows exactly what he's doing and he won't bs you to get your business and then change the story at closing. JMHO
 
Chango,

I appreciate the kind words.

I respect everyone's right to get the best deal possible as I hope they respect my right to earn a living to support my family.

This is a referral driven business and I don't get referral's by taking advantage of people.

Good luck to everyone.


hookem.gif
 
Any updates on 30 yr. refi rates out there? Anyone see anyting in the low 4's yet? I think that is where I have to be to justify a refi.
 
What is the best resource to use to get your credit score and to understand what can be done to improve it - cheaply?
 
You must log in or register to reply here.

Weekly Prediction Contest

* Predict HORNS-AGGIES *
Sat, Nov 30 • 6:30 PM on ABC

Recent Threads

Prediction Results Threads

2024 Schedules

Back
Top