Question by spoonylarue: Is it true that I have to keep my Adjustable Rate Mortgage for 2 years?
That’s what the mortgage guy said but I’ve heard other people say I should try and refinance now. I’ve only lived in the home for 8 months. The interest rate is 8.625. Yes, I did (do) have less than desirable credit.
Best answer:
Answer by ☼Head Brainiac☼
You have to do whatever you agreed upon when you signed the papers.
Add your own answer in the comments!
You have to read the terms and conditions of your mortgage. There may be penalties involved. You may be able to refinance in a year, or maybe two years. It depends on what your mortgage reads.
Every mortgage can be different. Read the papers that you signed.
If you have money and time you can overcome the credit situation. You may ask another lender if they will re-fi for you. Talk to your ‘mortgage guy’ and see if you can lock in a fixed rate by paying points up front. You may have to come up with 1,2 or 3 % of the loan to make it happen (that is the points)
Be sure there is no penalty for early payoff on the loan you have, or if there is, be sure it isn’t too big to erase any savings you get with your new loan.
Normally yes but it depends on the contract you signed with your mortgage company. Look it up, you will see if says 24 months or 12. Please tell me you have your mortgage contract put away in a safe somewhere and not laying on your kitchen counter with your junk mail on top of it.
Also, you normally have to wait atleast a year or 12+ months of steady (not late) mortgage payments to qualify for a Re-Fi.
If you’ve been late at all, even once….you’re jacked!
you can refinance but you may need to build more equity in the home as well as make payments for a year to help your credit out more. that’s what I’m doing, The more I can show I can make my payments the more likely they will be able to give me a better rate.
If you have 2 year prepay, it could cost you a bunch.
8.625 is not a bad rate it your credit is a bit shallow.
Get you credit score increased over the 16 months and refinance.
If you are not planning to live in that home long term, look for an interest only loan. You can still pay on the principal and save 10%-25% on your mortgage payment.
Email me if you have any questions on that. (I am not a mortgage person)
Why would you have to keep any mortgage?
You have three choices:
1. Keep the existing mortgage.
2. Refinance the existing mortgage.
3. Sell the house and payoff the mortgage.
Choices # 1 and 2 depend on your goals. Why don’t you want the existing mortgage? If your goal is to refiance the mortgage to get a lower payment, then choice #2 makes sense unless you have a prepayment penalty which means if you pay off the loan before a certain time you may be charged. To find out read the mortgage paperwork or have an adviser read it like an attorney or friend.
Read the terms and conditions of your mortgage carefully. There may be penalties involved depending on what your contract says if you try to refinance now. You may be able to refinance in a year, or maybe two years. It depends on what your mortgage reads. Try increasing your credit score over the next 6 to 12 months and then try refinancing
What it sounds like to me that you have is a 2 year fixed sub-prime loan which typically comes with a two year pre-payment penalty; specific states excluded.
What this means is that your rate will not adjust for the 1st two years of the loan which happens to be the time period of your pre-payment penalty. Once your 2 years is up then get ready for the ride since your payment will in all likelyhood double. What you want to do is get your loan docs and find the NOTE. This will explain all there is to know about the terms and conditions of your loan product.
If you do not have a pre-pay (unlikely) then refi away if you can save money doing so; however if you do have a pre-pay your looking most likely at 80% of 6 months interest as the pre-payment penalty. Depending on you existing loan amount this could be a HUGE sum of money. You may not have the equity available to refinance this without coming into the transaction with funds to close which really makes this an undeseriable situation.
Also, if you want to cash any equity out the majority of lenders in the sub-prime world will require that you have owned the property for 12 months to use a new appraised value. This is highly desirable if your property values are on the rise in your area.
If you would like to discuss the specifics of your situation drop me a line.
Kevin 866-562-6838 x 106
kruorock@firstratelending.com
http://www.firstratelending.com