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 Post subject: Refi advice for young couple
PostPosted: Sun Sep 30, 2012 11:28 am 

Joined: Sun Sep 30, 2012 10:51 am
Posts: 7
Hi everyone - long time lurker, first time poster. We want to lower our monthly payments but aren't sure if now is the time to go about a refi. Here's as much info as I can think of:

Current loan:
- Bank of America FHA 30-year fixed @ 4.75%
- $246k borrowed
- $239k balance (have just been paying minimum, no extra)
- $1889 monthly payment incl. taxes/MIP

House info:
- Appraised at $260k early 2011
- Newer home (built in 05) that we plan to stay in or rent out if we move. We're in Austin TX in a growing lakeside neighborhood - comps currently rent at $2k/month, this is a big reason we want to keep this house/lower our payment

Credit/debt info:
- One auto loan to be paid off in October, after that no other debt besides mortgage
- 702/720 FICO for me/wife as of last month

Financials:
- We're both 26, no kids, annual income ~$115k (me ~70, her 44.5), both steady jobs, 401k's, IRAs, etc.
- $7100 monthly net income
- Avg monthly expenses will be ~$4k after the auto loan is paid off in Oct
- $5k in short-term savings
- $57k in investment/retirement accounts ($36k in an acct we can withdraw from without penalty)

Are we in a good position to refi? I know our LTV isn't great, but we have no problem paying down points due to our available income and savings. I really want to get rid of MIP since FHA requires you to pay it for 5 years regardless (we're only a year and some change in). Ideally we would lower our payments but keep paying the ~$1890 monthly to pay things off quicker. Like I mentioned, we plan on staying in this house long term and keeping it as a rental property if not, so I think getting our monthly payment down as much as possible is in our best interest.

If we should refi now, any recommendations on the best way to shop around for rates? Do it all at once? In person? Online?

Any advice would be appreciated. I'm happy to provide more info if it helps to determine whether or not this is a good idea for us now. Thanks!


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 Post subject: Re: Refi advice for young couple
PostPosted: Sun Sep 30, 2012 12:27 pm 
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Joined: Wed Sep 23, 2009 9:01 am
Posts: 5398
It sounds like you would qualify by the usual rules but it's tougher now. I think you should be fine though. It sounds like it would be a good idea


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 Post subject: Re: Refi advice for young couple
PostPosted: Sun Sep 30, 2012 7:40 pm 

Joined: Fri May 04, 2012 2:23 pm
Posts: 810
You LTV is a little low. And your credit will get you a notch below the best rates. You really need a 740 to get the best rates. Shop around online. we just completed a refi online. it was really slick and was a no cost.

try out a few places and see what you can get. it never hurts to "just talk."

_________________
Bichon Frise

"If you only have 1 year to live, move to Penn...as it will seem like an eternity."


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 Post subject: Re: Refi advice for young couple
PostPosted: Mon Oct 01, 2012 5:52 am 

Joined: Tue Jun 05, 2012 9:42 am
Posts: 15
It wouldn't hurt to try. The only thing it should cost is the appraisal.

If it does go through, I would not send them any more than the new payment. Keep the cash and build up your emergency fund. It seems very low compared to your current mortgage payment.


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 Post subject: Re: Refi advice for young couple
PostPosted: Mon Oct 01, 2012 4:19 pm 

Joined: Sun Sep 30, 2012 10:51 am
Posts: 7
Thanks for the advice. What am I looking for in an online lender? I don't mind going online, but I want to make sure I'm dealing with a reputable lender. Is there a site I can check out? Googling yields more advertisements/homepages than impartial sites.

As far as actually 'applying', don't they do a hard credit pull? If so, how can I minimize the impact to our credit scores if I'm checking out rates from multiple lenders?

Thanks for the advice so far everyone.


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 Post subject: Re: Refi advice for young couple
PostPosted: Mon Oct 01, 2012 4:34 pm 
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Joined: Wed Sep 23, 2009 9:01 am
Posts: 5398
slamjam wrote:
As far as actually 'applying', don't they do a hard credit pull? If so, how can I minimize the impact to our credit scores if I'm checking out rates from multiple lenders?


Do NOT allow anyone to pull credit before quoting you a rate. They should be able to tell you a rate and a minimum score BEFORE pulling credit. The credit report and score will be to verify the information you provide. So, you can shop multiple lenders without giving them your credit information. Most will try to get you to apply before giving you a quote so that once they get a pull it is hard for you to go elsewhere. Don't fall for that!


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 Post subject: Re: Refi advice for young couple
PostPosted: Mon Oct 01, 2012 6:01 pm 

Joined: Fri May 04, 2012 2:23 pm
Posts: 810
I gave a few options in this thread.

viewtopic.php?f=2&t=55182

I most recently used Homeboxloans on my refi and can recommend them. They lend to "safe" mortgages--good LTV, good credit etc no frills type of loans. the put everything online with credit brackets so you can check right there online without talking to anyone. You can then apply, but they will not pull your credit until you tell them to do so.

Provident was who originally had our loan. Same thing, very picky lender and they have the best rates. Same thing with homeboxloans, they'll give you credit score brackets and their offers. Provident is VERY picky though. You have been warned! I closed on my house almost 3 weeks late b/c of them.

_________________
Bichon Frise

"If you only have 1 year to live, move to Penn...as it will seem like an eternity."


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 Post subject: Re: Refi advice for young couple
PostPosted: Wed Oct 03, 2012 7:06 am 

Joined: Sat Jun 06, 2009 11:49 pm
Posts: 263
Location: Cincinnati, OH
Your property value has probably not increased since the last appraisal, and quite possibly (depending on other properties in the neighborhood) may have decreased some.

So lets assume your appraisal comes in at $260,000 and your current mortgage balance is $239,000 + 30 days of interest (remember even if you pay your mortgage off on the 1st of the month, FHA collects the full months worth of interest). So the 30 days of interest is probably somewhere north of $900.

Value: $260,000
Payoff: $240,000
LTV = 92.30%

So the options you have, are:

1. Do an FHA Streamline Refinance, currently FHA rates are in the low 3's on a 30 year. However the 5 year clock on FHA's MIP (mortgage insurance) starts over.

2. Do a Conventional loan (through Fannie Mae or Freddie Mac). Rates for these will be in the mid 3 to high 3's depending on lender. The mortgage insurance would be roughly 60-70% of what it would be with an FHA loan, and it will fall off once your balance reaches 78% of the new appraised value.

In my opinion, most consumers are better off with a Conforming Loan than an FHA loan, as long as the credit scores are above 700. But remember each situation is unique.

As far as lenders/brokers, I always suggest talking to friends/family/co-workers and getting their recommendations. I know that I work harder when it is a referral than if it were someone that just walked in off the street (may not be the greatest thing to admit, but its the truth).

_________________
T.C. Strait
Ohio Loan Officer / Manager @ Mortgage Broker
NMLS ID 164070
Ohio Mortgage Solutions
Ohio FHA Mortgage


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 Post subject: Re: Refi advice for young couple
PostPosted: Mon Dec 17, 2012 11:52 pm 

Joined: Sun Sep 30, 2012 10:51 am
Posts: 7
Thought I would follow up on this since no one ever really does.. hopefully someone will appreciate it :)

House did not drop in value - appraised at $265k. Our credit was also higher than expected, both 740+. We chose a 30-year conventional and locked our rate in at 3.375%.

Due to high LTV had to finance a bit extra, bringing the total finance to $249k, which makes our total payment (principal, interest, taxes, insurance) $1653/mo. Just closed yesterday.

We paid nothing but the appraisal fee up front, and will save a huge chunk of change ($50k in interest alone, not counting us paying ahead of schedule). MI also drops at 78% LTV, which knocks an extra ~160 or so off the monthly payment.

Thanks everyone for the input, and hope the update helps someone!


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 Post subject: Re: Refi advice for young couple
PostPosted: Tue Dec 18, 2012 8:23 am 

Joined: Fri May 04, 2012 2:23 pm
Posts: 810
thanks for updating! Glad it worked out for you!

_________________
Bichon Frise

"If you only have 1 year to live, move to Penn...as it will seem like an eternity."


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