by Mr. T in DC
Question by poecilia.r.lvr: Mortgage/refinancing professionals: what are good ref options?
Mortgage: from 7.11% fixed for 2 yrs. and just went to 8.63% adjustable this month.
My sister has a mortage for $ 79,000.00. and this month she will need to pay approx. 100.00/month more!. if it is a good idea to refinance, please explain what the pros and cons of refinancing are, and what she should be looking for. I believe the value of the property is supposed to be $ 110,000.00 now. So, the LTV=79K/110; cred score=560; income=2,700/mo (32K/yr). What would be a good deal for her? What should she look for in the professional that offers to assist her? What should she watch out for? Should she expect some sort of “hidden” fees or ” a catch”?
Thanks, in advance – She will need to make a decision within the next day or so – PLEASE HELP!!!!
Answer by Joe L
It’s never a bad idea to refinance, especially if you’re rate is adjusting. But there are hundreds of reasons to refi and thousands of programs.
With a 560 credit score, it might not hurt her to tap some of the equity and payoff old debt or consolidate current debt to improve the credit score. Also, that credit score isn’t going to get a much better rate than she’s at now, but she can fix it again for another 2 years while she works on the credit.
Don’t get in to closing costs too much. Very few fees are hidden. Most people consider “pre paids” as “hidden fees.” These aren’t hidden fees, they are things that must be paid, such as per diem interest, any escrow reserve, and taxes, if due. The best thing to do is ask the L.O. for a Good Faith Estimate, keep it, then prior to your closing, ask for the HUD Settlement Statment. If it is more than what is disclosed on the GFE, make your loan officer explain why. A good L.O. will never have the HUD be more than GFE. And if it’s going to be, a good L.O. will redisclose (revise) the GFE and forward you a copy with explanation.
Lastly, make sure your sister concentrates on improving her credit. You need an L.O. that is good at what they do and can reconcile her credit and recommend steps to take to clean it up.
Good luck and happy hunting!!
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Yes, you do need to refinance. The rate and payment are only going to up in the future. The bad thing is that with her credit score, she will be unable to get a better rate or program than she had last time. She will get a two year fixed loan at a higher rate than todays 30yr fixed loans. She could take out about 10k to pay off bills. Anymore than that and she is going to get an even worse rate. Just make sure she improves her credit over the next two years, you do not want to be in the same situation again. Depending on where you live, I may be able to help. Reply through answers, or call Ron @ 619-379-2063