FHA Streamline Refinance Roseville - Asking The "Worth It" Question

My wife and I have a $338,000 loan (30yr fixed FHA) at 5% interest rate and we acquired it last May of 2009 at a beginning balance of $343,000. We have the option to do a "streamline FHA refinance" at
4.5% interest rate and having $4,000 in closing costs added onto our current loan of $338,00 taking it back up to $342,000.

We would basically lose about a year's worth of payments but we would be saving $108.00 per month for 30 years which equals $38,880.00

My wife and I are not seeing eye to eye on doing the streamline and getting our loan moved down from 5% to 4 1/2%. She says "it's not worth it" because we would only be saving $100 per month and losing a whole year's worth of payments and basically starting over. I told her it's nothing to worry about because we still have 29 years to go at 5% and locking in 4 1/2% and starting over is a GOOD THING.

I need some professional advice on this subject so that my wife and I can sit down and make a smart decision.

Thanks!

I forgot to mention that YES we plan to live in this house for the full 30 years and then rent it out thereafter.

Breaking even after 40 months does not seem like a bad situation to me considering I plan to live here for 30 years. Answers

Ghost of Zeuz : (23 hours ago)

Listen to your wife. The payback is 40 months.

Ryan M : (23 hours ago)

If you actually plan on being there for those 29 years, this is a great idea. You basically need to do a break-even calculation to figure out if you plan on being in the house long enough to get to that point. It is like buying a point on your mortgage. Most of the time, if you plan on living in the house more than 7 years..buying the point upfront makes sense. MVD34 : (22 hours ago)

She's actually correct in the big financial picture.

(sorry)

Part of the problem is in the hype surrounding home financing in general. Most of the information is incomplete and some of it is down right wrong.

Old school said you should only refinance once or twice in your LIFETIME. Once if you could cut your interest rate by at least 1% and pay the closing costs in CASH. Once again if you could convert to a 15 year mortgage, lower your interest rate by at least 1% and pay the closing costs in cash.

Short version: refi at 4% or lower APR or a net payback of less than 18 months.

Long version:

(1) Your gut should tell you why paying cash for your closing costs proves it is a good deal for you and rolling it into the mortgage balance is a good thing for the mortgage company (and not you). If it doesn't, think about it seriously right before you go to bed tonight and sleep on it.

(2) You aren't loosing 1 year, you are loosing 4.5 years. Your math needs to be double checked:

29 years minus 30 years equals -1 year.

$4,000 divided by $100 equals 40 months divided by 12 months equals -3.3 years.

Is (1) above becoming clearer yet?

(3) The time value of money isn't constant (this is a professional answer, brace yourself). Ask yourself this question: is a dollar right now the same thing as a promise of a dollar in a year? No, right?

Finance theory says that the value of money received in the future is worth less than money received today. The further out in the future money is received, the less it is worth. 30 years is a long time. I'll spare you the nasty math, but the real value of your $38,800, $100 a month over 30 years is about $18,500.

One way to think about that $18k is to ask yourself how often you think banks are going to do something that doesn't make real money for them (from you). If you think the answer is "not very," then you are correct. Who started this ball rolling? The bank. Who does it benefit? The bank. Why are closing costs $4000? That's about the same as any old ordinary refi. Why isn't it $500? That's a streamline (Answer: because the bank doesn't make money that way. If they are making it, from whom are they making it?)

Another way of thinking about that $18,000 is to consider the 4.3 years you are loosing in the deal. $18,500 divided by 4.3 years equals $4,300. How much is this deal costing you? $4000. How much are you really netting from the deal? $300.

That last bit isn't really "real finance" (The other bits are), but it's a geometric way of perceiving the idea that the bank is offering you this deal primarily for their benefit. They are splitting the benefits in a way that is extremely unfair to you. They get all the profits upfront, you have to wait a long time for yours. The real benefit to you is much, much smaller than it looks on the surface. Blake Dowson : (19 hours ago)

If you need our help with a Streamline Refinance Just let us know by contacting us at our office 916-788-1088

 

Lowest FHA Mortgage Refinance Rates in History Reported by Lenders Refinance Activity Set to Pick Up in August

The lowest FHA mortgage refinance rates in history have been reported by many lenders and websites including Zillow.com and BankRate.com.  With FHA refinance rates at these historical lows below 5% it comes as no surprise to see refinance activity pick up throughout the month of July.

At the beginning of August there could be quite the interest in refinancing as many Americans look at their expenses and finances at the beginning of the month.  When many of these homeowners see that FHA mortgage rates are under 5% it may spur a refi boom that the country has not seen in some time.


When homeowners are looking to refinance it is generally the case that they must save at least one full percentage point to cover closing costs.  With closing costs being a big part of any mortgage application process it is important to realize that these expenses can add up and ultimately outweigh the benefit of refinancing in some instances.  Most mortgage lenders provide the information needed when it comes to closing costs and how much needs to be saved on a mortgage interest rate to cover these costs.

Author: Mike Garner
http://subprimeblogger.com

Getting Denied For Loan Modification

Just received this comment today!

It's worth making some additional comments about.

Getting Denied for your Loan Modification-

Just saw this site and the comments about CitiMortgage today.

We are in the same boat as Jennifer & Maranda in that we were denied a permanent modification after a trial period of 7 months. But what I haven't seen mentioned is our experience of never being told we were denied! (no denial letter...still don't have this). What happened was the collections department sent a letter saying we were in default for two months and threatening a foreclosure. Of course we freaked out. After raising all kinds of hell about the circumstances and giving them additional information about our income, we're now being considered for a 'traditional modification' (I believe this is a Fannie Mae program) and this is pending (this just came up yesterday).

What were most confused about is the collections dept and the mitigation dept are on different planets! Anyway, now that some time has passed, can you tell me whats happened in your cases??? Thanks.

 Thanks for leaving your comments.

It is pretty unbelievable how this stuff happens in the banking world.  Now failing to mention the pressure the government's putting on the banks to give a resolution to consumers in a timely fashion would not be good.  The Government has set things back with this pressure by forcing psuedo resolutions to keep a quick response timeline in tact only to have these resolutions fail more times then not.

What I have seen is many of these come across my desk over the past few months.  Ultimately you will be asked to bring in the difference between the trial period payment and the previous payment you once had.

Example:
Let say your trail payment was $1000.  Your normal payment was $2000.  The thousand dollar difference is the amount in question and in almost all cases they will ask you to repay the difference immediately for all months the trial payment was made.  In the example above it was $7,000 difference which you could see being a problem for many families.

Funny how they just think that there is money laying around to be paid to the mortgage company.  I bet they made the consumers sign a form stating that this is a trial and that the money would be due at the end if the modification wasn't approved. After 7 months you get a little comfortable and think there are no problems.  Then again, you wouldn't be asking for a modification unless you had a financial need to address.

Solutions:
Well in this case you are left with very few options.

Paying the lender back what is owed is one of the most important options because if you don't they will start the foreclosure process.  Additionally, if you get lucky, like the commenter apparently did, you get a second shot at a loan modification.  I do have to say that from my experience the commenter is not looking good at this point.  I do know that those who work at the modification the hardest are those who succeed at them.  Giving up will only lead you down the path of a negative solution.

Short Refinancing can be a choice for you.  Failing at a modification is a requirement for a short refinance but on the other hand if you can't afford to make up the differences on those payments then you could be in real trouble in qualifying for almost any type of program.  Most programs require a clear payment history so missing a payment could put a huge flaw in your plans.

Short Sale is a possibility as well.  There have been several changes to the short sale rules especially surrounding buying a new home.  Buy and Bail was once a hot topic but this helps solve even that problem. New rules now allow for those looking to get out from under their mortgage will let them short sell their home and then turn around and buy a new property hopefully at a lower payment.  Again the key to pulling this off is not missing any of your payments, well according to your credit report and the report needs to be current (of course!).  Also, you need to sell your home without issue regarding future payments.

I hope that helps you all figure things out post Loan modification denial.  I can help in a few areas personally.
1. If you need help looking into a short refinance then go HERE!
2. If you want to sell your home and then buy a new one go HERE!  (California ONLY!)
3. If you want help with a loan modification then go HERE!

HAFA and FHA Condo Guideline Q & A

HAFA and FHA Condo Guidelines

Questions and Answers

Short Refinancing Company -Let Us Help Part 2

Short Refinancing Company

Short Refinance Paperwork LINK

We have been working long and hard getting our test cases push through the banks systems.  Now you are in luck we have figured out which banks take Short Refinances and which banks won't work with you at all. 

On top of that we figured out how to handle those banks that won't entertain a short refinance by simply working out what they will accept.  

All of this has led us to relaunch our initial offer where we walk you through a short refinance, taking control of the communication with the bank and pushing the short refinance through. 

Get that paperwork stated and give us a call to set up your appointment.

Fax number 916-773-7793

FHA Condo Guideline Changes 2010

FHA CONDO GUIDELINE CHANGES 2010

In this episode of On The Money Radio they discuss FHA condo guideline changes that could influence more homebuyers to buy.  This little area will move lots of inventory allowing for more investing and more FHA loans to be made available in any given condo project.

There is a great example provided by a local Sacramento Short Sale Realtor who had to sell his listing for $35K less thanks to the previous FHA guidelines.  These changes should really help out.

Stay tuned for more On The Money Radio

Short Refinancing and HAFA Appraisal Issues

Short Refinancing and HAFA Appraisal Issues

In this episode Shellie and Brent discuss Short Refinancing Efforts in their office along with HAFA appraisal issues surrounding FHA loans and other horror stories.  

Shellie's client spent over $1200 on appraisals just to buy a house, is the system working?

It's an argument to determine if HAFA was the best course of action as separating appraisers and loan officers may not be the best thing to do since it really messes up the timing of the transaction.

How to Repair My Credit in 60 Days

How To Repair Your Credit in 60 Days

We cover in this video session of our radio show how to repair your credit in 60 days.  The topic of improving your credit is very common when looking to buy a house.  Most people don't realize how fast you can make substantial improvement to your credit if you have a little cash and some know how.

Bank of America Short Refinance for Underwater Mortgages

Bank of America

Short Refinance for Underwater Mortgages

Bank of America was one of the first banks to step in and talk about short refinancing a certain segment of their portfolio. What they have done is take their highest risk loans and offered those homeowners the opportunity to short refinance their mortgage if they met certain criteria.

Take note the specific loan types that will qualify for the Bank of America Short Refinance program.

1. Option ARM - Negative amortization loans

2. Subprime mortgage- 2 year ARM or Hybrid ARMs

If you fit into that little tiny box then you are in luck. If you have a Fannie Mae or Freddie Mac mortgage then you are no longer in luck for THIS program. Contact Shellie or Brent for more information on other Short Refinance Programs.

Creating the Family Budget

How To Create a Family Budget

Let me email the paperwork to you! Fill in the form below and it will automatically send your the budgeting paperwork.

To Contact us to let us help you with your budget call 916-788-1088

Upside Down Mortgage 2010 - Short Refinance - Short Sale

Play The Video and I Will Explain a

Short Refinance and Short Sale in 2010

And Why This is Different!

NOTE - THIS IS AVAILABLE IN ALL 50 STATES! FILL IN THE FORM BELOW TO HAVE US CONTACT YOU TO SHOW YOU HOW TO GET STARTED.

Norm Schriever - Unity Financial Solutions

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