Home Equity Lending's Uptick: Why It's Good News for Homeowners and Economy
Fewer homeowners qualified because of financial setbacks such as lost jobs, what is ed site and many "underwater" homeowners, site owing more on their mortgages than their homes were worth, this had no equity to support a home equity loan. Also, in a default, the home equity …
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HARP 2.0: No Income, No Equity, No Problem
This year, 2012, has brought several changes to the HARP (Home Affordable Refinance Program), all of which were for the better. Basically, today's borrowers can refinance with no income and no equity. Provided the guidelines are followed, there should …
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On the edge
Any equity an owner may have in a home is at risk – as is the ability to occupy the place, as well as the emotional investment that many people have in their homes. Many have found they have no equity in the home. They're "upside down," as falling real …
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Question by AColling74: Making Homes Affordable Refinance Program?
I need some clarification on this program. I am not in any hardship, generic but I do have a Fannie Mae loan. Currently, I am in a 5-year ARM and it is up in May of 2010. My rate is 5.375% and it would go down to approximately 5.1%.
Today I finally got somewhere with my lender CitiMortgage. We started to look at the refinance option and I would have $ 4,600 rolled over into my existing loan for closing costs and $ 460 out of my pocket for an application fee which includes an appraisal. My payment would be only be $ 12 lower per month, but my rate would be locked.
For some reason the numbers don’t add up to me. The closing costs and fees seem to high. Am I missing something with this program?
Best answer:
Answer by J.J.
First, I can’t tell if $ 4,600 is high without knowing how much your mortgage is worth. On a refinance there are still significant transaction costs.
You need to get a “good faith estimate” from the lender. When you look at it, figure out which costs are “fixed” – i.e. charges by your state for recording a mortgage, costs for pre-paid taxes and insurance (should be low on a re-fi as most of that stuff is already escrowed hopefully).
Then, figure out how much of the “cost” is fees and/or padding. A “fair” fee is somplace between 1% and 3% of the total amount of your loan. So if your loan is for $ 100,000 then the lender might charge you between 1,000 and 3,000 as a “fee” – sometimes they say their fee is lower or non-existent – but, trust me, they are getting their fee some way – they may be calling a discount point or service release premium or something – but they are getting it.
Short story made long – pour over that settlement statement (also known as a HUD-1) and ask questions questions questions about ANYTHING you don’t understand. If your lender balks at your questions, walk away.
Second, I would shop around before settling on CitiMortgage – just because they are your current lender does not mean that they will necessarily give you the best rate.
One thing to try is to go with an up-front lender like Amerisave that shows you guaranteed costs and fees breakdown long before the actual refinance.
Finally, the Making Homes Affordable Refinance Program has nothing to do with closing costs. It is all about negotiating with lenders over principal and interest. There are lenders out there making a KILLING off the fees in these things. That is why you need to GRILL your loan officer.
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