Question by daisymae: Can you refinance your mortgage after living in a condo for only two years?
I suspect my son has an ARM and has one more year to refinance before the interest rate changes. Is there normally a penalty involved if he refinances before the adjustable rates kick in?
Answer by Joey Bagadonuts
Daisy….I refinanced my mortgage (a fixed rate mortgage) twice in the first 4 years….and yes…get a fixed rate ASAP.
I’m not sure about any penalties for early refinancing of ARM’s. I’ve heard that some do and some don’t. He has to check his mortgage paperwork.
What do you think? Answer below!
Nope, not at all as long as didn’t get some ripoff subprime loan with a prepayment penalty.
There COULD be a penalty, you need to call your lender. Also, DON’T go to a broker. Go to a BANK! Their fees are much lower and so are their rates.
The only problem is that condo’s do not appreciate in value like homes. Adding in the fees, you could owe more than the condo is currently worth.
yes you can refi at any time you want…
there will only be a penalty if he has a pre-pay on the mortgage…if he were to refi with the same bank they might wave some of it too, if not all. they want your business. especially at this time in the market.
other wise if he goes with a different lender they might work the fees into his new loan.
this is only if he has a prepay, otherwise he is free and clear
Yes your son can refinance his mortgage even before the rate kicks after 2 years.
However, if your son has PRE-PAYMENT PENALTY for two years, He needs to pay the penalty if his going to refy w/ in less than 2 years,
If your son doesnt have PPPenalty, well its good, the lender wont charge him of any penalty. But as per my experience most ARM’s now has pre payment penalty, and usually its 10% of the loan amount, but still depends on the contract if how much the prepayment penalty is. Just read the contract just to make sure about the prepay.
Be carefull when refinancing because there’s a lot of Brokers who are not licensed and they all say they can help you get a lower rate and lower your payment drastically but in the end, you will noticed that there’s a big difference in the rates that they’ve promised, sometimes they will quote you lower rates but the TRUTH was its really high. So be carefull.
FYI. Make sure that your son will not permit anybody to run his credit, because everytime you run your credit, it loses FICO SCORE.
Only give permissions to run the credit to LICENSED LOAN OFFICERS OR TO DIRECT LENDERS ONLY not to BROKERS. Or he can run his credit himself, go online, but im not sure about the site, run his credit there and make sure he has a printed copy afterwards, so when your son will go on shopping for the rates, at least he has black and white copy or his credit reports(fico) the lenders/LO doesn’t need to run his credit over and over again.
He needs to read the fine print. Some lenders have prepayment penalties that make it costly to refinance.
penalty? no always. check his Adjustable Rate Note or call the lender. then figure out how much penalty vs how much add’l interest you’d have to pay if you miss good rates (going up, up..). pls. feel free to contact me with details – I’ll give you opinion supported by numbers.
There shouldn’t be. Just talk to the bank, or another one. Most are happy to do business with someone with good credit. Laws are different in different states. In IL, they used to require a new appraisal. But if you kept the same bank, maybe not. I looked into refinancing one time, but it wouldn’t pay to do the paper work, as I was far enough into the mortgage to be paying more principle. So, it wouldn’t pay with the savings compared to the refinancing costs. Some banks will do it for free on larger mortgages.
only if he has a prepay penalty which should have been disclosed to him at signing the paanpers. However he can refinance the more equity he has in the property will be in his favor. It all depends on who he goes with. If he does not know if he has a prepay or not tell him to contact a broker and have them look into it for him and what kind of rate they can get him right now if he does not have a prepay.
You can refinance at any time. You need to pull his copies of the loan to see if his lender placed a prepayment penalty on the loan; this would have to be disclosed on the paperwork he signed. Some loans have them while other loan programs do not. If he does have one then you need to find out how much it is and then have a lender to work up a quote that he qualifies for to see if paying off the loan now is cost efficient.
You can refinance, as long as there is enough equity in the property. The fixed rates are good now too. As far as the prepay penalty, you’ll have to check the initial document your son signed at closing. It should be on the note. Just call up the bank that holds the note. They may even offer to do it for him at a reasonable cost. Good borrowers are really in the driver’s seat right now. A bank would certainly rather give someone a lower fixed rate as opposed to raising it and hoping they are able to make the payments. Call them up and check it out.