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Profile picture for weightpit

Can I refinance a 5.5% ARM when I owe only $38K?

I am 61 and semi-retired.  I've had a mortgage for 22 years.  For the first several years, I paid two payments per month.  As a result, my payment is only $440 a month, and I have only $38K left to pay. When I inquire about refinancing, I'm told my balance is too low.  My own bank (Chase) says that they would have to add insurance to my loan, and that would make my payments go UP!!  I'd like to take advantage of the lower rates and lower my monthly payment.  My credit is only fair.  What advice would you give?
  • March 20 2014 - Los Angeles
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Answers (7)

Profile picture for weightpit
Brookstone Mortgage -- I didn't say Chase wouldn't give me a loan.  I said that when I spoke to them (two levels up in Escalation) about my overdue payments, we talked about refinancing.  The Chase rep said she would need to add insurance to my loan and that would cause my payment to go up.  This is after they've sent me about 50 letters in the past 3 years about how much they want to help me.

I said my credit was fair.  I don't know my exact score.  When I got in over my head with credit card debt about 9 years ago, I cut them all up, paid them all off, and so I have no debt other than my mortgage.  However, my credit report has so little info on it now that the last time I was turned down for credit the reason given was that my credit history was too short, despite my 22-year-old mortgage being on it.

Thank you, though, for suggesting I go into a credit union.  I joined a local credit union a few months ago, so that seems like a good option.  I hAve enjoyed every interaction I've had with them, and I changed my automatic 401K annual distribution from Chase to them.  I dislike Chase intensely for many reasons.  Their policy of charging $34 fees on $5 and $6 overdrafts, charging $120/year just to have a checking account, and calling 3 times a day when you miss a mortgage payment, makes them the most annoying business entity I've dealt with in my 61 years on this earth.

Garth Cook -- By saying "you could refinance" you seem to be skipping over my problem.  And saying "you can choose to escrow or not to escrow" just throws another unknown into the equation.  I don't even know what that means; I thought escrow was always a step in any financing or refinancing.  I don't see how I can choose whether or not to escrow, and what effect choosing either option would have.
  • March 22 2014
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Profile picture for Brookstone Mortgage
I'm not sure why Chase won't give you a loan, you didn't mention your credit score so that may be the issue. Assuming you truly do have an "average" score, you should be able to walk into a credit union and get the 38K for 15 years without impounds and drop your payment considerably if that is your goal.
  • March 21 2014
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Profile picture for Primary Louisiana
You could refinance and you can choose to escrow or not to escrow.  Should be able to get into the mid 3% range.  Good Luck!
  • March 21 2014
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Profile picture for weightpit
How do I find an honest broker?  Any recommendations in Los Angeles (San Fernando Valley 91401)?

I Googled "borrower-paid compensation plan" and read a few articles.  I still have no idea of what it means  exactly, other than that my lack of understanding would make me a prime target to be taken advantage of by unscrupulous people in the mortgage industry.  My master's degree is in public health, not business economics.  After reading a few articles, it seems even the experts can't quite figure it out because the rules are constantly changing.

I'm planning on a reverse mortgage at some point, but I'd rather wait for my home's value to increase.  At the peak of the market, it was valued at $438K, and now is more like $220K.  I believe the L.A. market bottomed out last year and is just beginning to rise.

How do I find out which local banks hold their mortgages in-house?

I have responded to a few seemingly legitimate internet sites where they claim to be able to review my situation and compare many lenders to see who would be best for me.  I answer a dozen or so questions which seem to detail out my situation very clearly.  In response I'll get a phone call from someone who sounds 18 years old and he asks, "So what's going on with your mortgage?  Are you behind on payments, or what?"

The reason I've been reticent to apply all over the place is that I hate the idea of spending hours filling out reams of paperwork for each one, only to be told "no" for whatever reason (balance too low, credit score too low, income too low, etc., etc.).  Would it be possible for me to prepare a package that has the answers to all the typical questions and just present that to lenders, rather than having to fill out their own paperwork?

 
  • March 21 2014
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Profile picture for Marshall Stewart
The reason no one wants to work with you is part of the new rules congress has passed. Based on your loan amount the compensation for the work involved would be minimal. You should be able to get a broker to work with you on a borrower paid compensation plan. Based on quick calculation you could save close to $200 a month. You could also look into a reverse mortgage. That could be your best solution.
  • March 21 2014
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Profile picture for pknott
Sometimes local banks that hold their mortgages "in house" will lend $50,000 or less.  I think this will be your best bet.
  • March 20 2014
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Profile picture for daveskow
Contact a few other lenders ... Should be possible
  • March 20 2014
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