Profile picture for ZenicaNJ

Mortgage refi question...giving it one more try

Our current rate is 6.875% with 30 year fixed. The loan total was $260,000 & the current balance is $243,000, the loan payment is $1,708.01  with $125 in PMI.The property is valued between $240,000 & $260,000. I have considered a 401k loan to secure a deposit to avoid PMI. The original loan is in my wife's name & we'll leave it that way. Her current credit score is 665 Experian & 705 TransUnion. Annual salary is $92,000.00 + a 3.85 bonus paid annually.What are our odds of a favorable refi without HARP? I fear it may be an FHA loan, how can I verify this?
  • April 25 2012 - Hillsborough
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Answers (10)

First question:  When did you get your current mortgage? Before May 2009?

Lookup tools for HARP

Fannie Mae

Freddie Mac

If your loan was financed before May 2009 and owned by either, there may be a relatively decent chance.
  • April 25 2012
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Profile picture for Joseph F Moore
You should talk to a one of the great zillow lenders directly and see what they say.  I did a quick calculation for you and depending on what your looking to do a 15 year FHA refi wouldn't be that bad.  (assuming lowering your term is more important that your payment)

You would have some PMI, either.006 or .003 annually depending on your equity determined by appraisal.  Your payment would be almost identical and you would eliminate PMI in about 3-4 years assuming you had a little equity in the home.

Best of luck!
  • April 25 2012
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Unfortunately, to be considered for the best rates your wife wouldneed to have credit in about the 740 range or above.  Also, to not pay PMI, you would have to have at least 20% equity in the home.  So unless you really want to pay close to $50,000 from the 401K or from another source, you won't be able to get rid of the PMI anyway.  So FHA rates are actually better anyway and won't require as hgh a credit rating or as high a dowpayment and may be your best and only true option.  But obviously, the best way to begin is to use a really trusted and honest lender and start the conversation there.  If you belong to a well regarded credit union, that may be a place to start though service is usually poor. But ask your friends or coworkers -- almost everyone has had a recent experience and will love to give you a lender recommendation.  Then check them out if you can before signing or paying anything.
  • April 25 2012
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Profile picture for ZenicaNJ
Thank you to Chris, Joseph and Hal. I appreciate your replies. This is the third time we are visiting this topic and in each instance prior, the banks employed people with very little knowledge and no ability to instill confidence in the consumer.

Our loan was signed 9-6-2006 and the loan type just states "conventional". I used the Fannie Mae & Freddie Mac look up tools, according to them, our loan is neither. I have read all of the documents and see no mention of the letters "FHA".

Our loan originated with American Home Mortgage, then was sold to Countrywide and now Green Tree. When BofA took Countrywide, they insisted they could not see if it was FHA and Green Tree tells me the same thing. Does FHA have a look up tool?
  • April 25 2012
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You have a conventional loan. You only need 2.25% equity to convert to an FHA loan, you will save about $400/month even with the higher MI payments or as already suggested you can also get a 15 Year for about the same payment that you have now. Are the credit scores listed above from a lender or scores you  pulled yourself?  
  • April 25 2012
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Profile picture for ZenicaNJ
Hi Clay,

If I err on the side of caution and say our home appraises for the low end, $240,000, are you saying we'd need only 2.25% equity to convert to FHA? I trust the equity can come in the form of cash? If my math is correct, would that cash be $5,400?

To answer your question, my wife has a paid membership to a credit monitoring service that culls data and scores from all three bureaus. I will add that we have a dual objective, to lower the payment while reducing the interest. Right now, we'll pay over 330,000 in interest on the loan as it is written but if push comes to shove, I'll take the shorter term.


  • April 25 2012
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Correct, $5400 cash in takes it to $234,600 which would be your base loan amount, then the UFMIP is added to that for the total loan amount. At that point you have closing costs, prepaids, and interest in arrears to pay. The good news is FHA loans pay a high premium so you can probably get a 4.25% 30 Year rate ( maybe lower ) which should give a lender credit high enough to pay both the closing costs and prepaids. You can do a 30 Yr,
20 Yr, or 15 Yr as long as you income/credit qualify.  
  • April 25 2012
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Profile picture for Joseph F Moore

If you end up bringing money to the table to convert to FHA you could always have your closing costs built in to the rate.  I had your payment for an FHA 15 year within about $50 of what your current payment is.  That was based on a 3.5% rate.  I had a client lock today for 3.25.  That extra .25 could be used to potentially offset some of the closings costs if your forced to bring a little cash to the table.

If you had no equity at all you would drop mortgage insurance at about month 49.  That saves you about $125 a month.

I hope you got the answers you were looking for.  I wish you the best of luck!

  • April 25 2012
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Profile picture for ZenicaNJ
Clay, Joseph...many thanks.

Now I need to find someone local that is knowledgeable and capable.
We don't belong to any Credit Unions although I did many years ago
but that was another time and place.

Trust me when I say, there are more banks near me than McDonalds and the quality of employees among them is the same.

I'll update this thread as we undertake this process.

If there are any questions, laws or rules we should be aware of to help guide ourselves through this....please, don't hesitate to mentioned them.

Thanks again...
  • April 26 2012
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There are several lenders on Zillow in your area.  Go to Professionals tab above and contact one or more loan officers and discuss scenarios of 15 yr programs.
The  665 credit score will not impact rate adversely on a 15 yr program.
  • April 26 2012
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