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Peteusa Aug 27th 2009 7:10 pm

Mortgage Refinance help please...
 
After 12 years loyal service with my company, I got "let go" last week.

The problem is that we've arrived at the 5 year point from new, when we had intended to refinance. We payed very little down in 2004, and the mortgage was for a 30 year period. I'm 65 now, but with the market the way it was in '04 I dont suppose the mortgage company cared if I lived long enough to pay it, or not!

Any suggestions as to what I should do at this point? I take it that getting refinanced while out of work is not a good thing, although my wife still works.

Is the recent Obama plan likely to be of any help?

Pete

Michael Aug 27th 2009 8:42 pm

Re: Mortgage Refinance help please...
 
A refinance probably won't work because you are likely underwater but a loan modification may be possible.

Loan modifications usually require a triggering event such as loss of job or salary cut. The easiest modification to get is a temporary reduction in interest rate (usually 5 years) and then the interest rate reverts back to the original rate. A more difficult loan modification is a reduction in interest rate for the term of the loan or reduction in principle.

Only certain loans are eligible for the government subsidy loan modification but lenders have their own program. The majority of the loans are modified through the lenders own program instead of the government subsidized program. The success rate of getting a government loan modification is highly dependent on who is the lender with JP Morgan Chase as the best and Bank of America and Wells Fargo as the worst among the major lenders).

http://www.bloomberg.com/apps/news?p...d=a7kYntqozaKo

Due to your financial hardship (job loss), it would be worth looking into a loan modification. You have nothing to lose.

Bob Aug 27th 2009 9:28 pm

Re: Mortgage Refinance help please...
 
Got nothing to add, but ouch....good luck!

CelticRover Aug 28th 2009 3:06 am

Re: Mortgage Refinance help please...
 

Originally Posted by Michael (Post 7881181)
A refinance probably won't work because you are likely underwater but a loan modification may be possible.

Loan modifications usually require a triggering event such as loss of job or salary cut. The easiest modification to get is a temporary reduction in interest rate (usually 5 years) and then the interest rate reverts back to the original rate. A more difficult loan modification is a reduction in interest rate for the term of the loan or reduction in principle.

Only certain loans are eligible for the government subsidy loan modification but lenders have their own program. The majority of the loans are modified through the lenders own program instead of the government subsidized program. The success rate of getting a government loan modification is highly dependent on who is the lender with JP Morgan Chase as the best and Bank of America and Wells Fargo as the worst among the major lenders).

http://www.bloomberg.com/apps/news?p...d=a7kYntqozaKo

Due to your financial hardship (job loss), it would be worth looking into a loan modification. You have nothing to lose.

This pretty well covers it.
I would only add that VA and FHA have streamlined refinance programs to lower the interest rate if it has fallen since loan origination.

made of kent Aug 28th 2009 4:10 am

Re: Mortgage Refinance help please...
 
these 30 year morgages are so wrong!! we got one last year and I was 37 and HD 42, in the UK I had 3 morgages BUT each one was designed for our circumstances, I didn't have one over 20 years, and I lost money but not as much as I would have done for a longer period mortgage, I always over paid in the uk.
okay logistics I was 37 DH 42 a 30 year mortgage means we work til 67 and 72, the realitor pointed this out, but then said you will down size in about 15 years (twins 4) to help you kids through college! WTF which means the system still expects me to work to these ages, F off!:eek:
sorry no refinanceing stuff, but find a morgage that lets you pay off early, you will save a ton.

CelticRover Aug 28th 2009 4:20 am

Re: Mortgage Refinance help please...
 

Originally Posted by made of kent (Post 7882310)
these 30 year morgages are so wrong!! we got one last year and I was 37 and HD 42, in the UK I had 3 morgages BUT each one was designed for our circumstances, I didn't have one over 20 years, and I lost money but not as much as I would have done for a longer period mortgage, I always over paid in the uk.
okay logistics I was 37 DH 42 a 30 year mortgage means we work til 67 and 72, the realitor pointed this out, but then said you will down size in about 15 years (twins 4) to help you kids through college! WTF which means the system still expects me to work to these ages, F off!:eek:
sorry no refinanceing stuff, but find a morgage that lets you pay off early, you will save a ton.

This is all accurate if the buyer intends to own the house throughout the life of the loan. During 'normal' market conditions of the past, the average house turned over every 5 years on average, making the decisionmaking a little different since the mortgage was seldom held for the amortization period.

Michael Aug 28th 2009 5:12 am

Re: Mortgage Refinance help please...
 

Originally Posted by made of kent (Post 7882310)
these 30 year morgages are so wrong!! we got one last year and I was 37 and HD 42, in the UK I had 3 morgages BUT each one was designed for our circumstances, I didn't have one over 20 years, and I lost money but not as much as I would have done for a longer period mortgage, I always over paid in the uk.
okay logistics I was 37 DH 42 a 30 year mortgage means we work til 67 and 72, the realitor pointed this out, but then said you will down size in about 15 years (twins 4) to help you kids through college! WTF which means the system still expects me to work to these ages, F off!:eek:
sorry no refinanceing stuff, but find a morgage that lets you pay off early, you will save a ton.

30 year mortgages are different in the US than in the UK. Generally there isn't any prepayment penalty in the US when you refinance. My girlfriend has refinanced her 30 year fixed mortgage about 5 times with lower interest no point/no fee mortgages in the last 20 years reducing the interest rate from about 8.75% to her current 4.875% interest rate. Every time there was a no point/no fee mortgage that was about 1/2%-1% lower than her current rate, she refinanced. I suppose that she could have gone to a 15 year mortgage and gotten a slightly better rate but she can always make extra payments if she wants to pay it off early.

Boiler Aug 28th 2009 6:10 pm

Re: Mortgage Refinance help please...
 
A 30 year mortgage for those older is more akin to an interest only deal.

But you have the benefit that you do not have to re mortgage. A friend has a Construction Loan and is finding it very hard to re finance, a real ouch.

If the wife's income is sufficient and you have equity, go that way.

Peteusa Sep 1st 2009 6:00 pm

Re: Mortgage Refinance help please...
 
Thanks for the help so far everyone.

Boiler, Unfortunately we have negative equity (not by much though), and my wifes income alone wont suffice.

Obviously I'm looking to find another job, but at 65 its a drawback.

What could the consequences be if we just tried to carry on without refinancing at all? When we got into this 5 years ago, we never really considered that we'd totally pay for the property. We'd have to live to be over 100 to do that!

Any thoughts?

Boiler Sep 2nd 2009 3:00 am

Re: Mortgage Refinance help please...
 

Originally Posted by Peteusa (Post 7894675)
Thanks for the help so far everyone.

Boiler, Unfortunately we have negative equity (not by much though), and my wifes income alone wont suffice.

Obviously I'm looking to find another job, but at 65 its a drawback.

What could the consequences be if we just tried to carry on without refinancing at all? When we got into this 5 years ago, we never really considered that we'd totally pay for the property. We'd have to live to be over 100 to do that!

Any thoughts?

What was your exit strategy?

Downsizing?

May still be an option depending on your finacial position.

fatbrit Sep 2nd 2009 3:02 am

Re: Mortgage Refinance help please...
 

Originally Posted by Peteusa (Post 7894675)
Thanks for the help so far everyone.

Boiler, Unfortunately we have negative equity (not by much though), and my wifes income alone wont suffice.

Obviously I'm looking to find another job, but at 65 its a drawback.

What could the consequences be if we just tried to carry on without refinancing at all? When we got into this 5 years ago, we never really considered that we'd totally pay for the property. We'd have to live to be over 100 to do that!

Any thoughts?


Yep -- you can pick up a reasonable property in Phoenix for less than 100k. Time to downgrade.

Steerpike Sep 2nd 2009 7:31 am

Re: Mortgage Refinance help please...
 

Originally Posted by Peteusa (Post 7880843)
After 12 years loyal service with my company, I got "let go" last week.

...

Sorry to hear that. What is your line of work?


Originally Posted by made of kent (Post 7882310)
these 30 year morgages are so wrong!! we got one last year and I was 37 and HD 42, in the UK I had 3 morgages BUT each one was designed for our circumstances, I didn't have one over 20 years, and I lost money but not as much as I would have done for a longer period mortgage, I always over paid in the uk.
...

We are in our 50s and just refinanced our 'five years to go' mortgage to a new 30 year term; if used appropriately, they are very powerful. It has nothing to do with 'paying until we are 80' ... We were both nervous about losing our jobs, and refinancing to a new 30 year loan allowed us to have very low monthly obligations. As it happens, we both found new jobs, so we are over-paying the loan but ... should things change, we can drop down to 'next to nothing' until the job market recovers. The absolute key is to refinance BEFORE you lose your job; we submitted our paperwork in December, got the final loan in April or so. We locked in a rate of 4.8% or so - very low.

JCSUPERMOTO Sep 2nd 2009 7:43 am

Re: Mortgage Refinance help please...
 
What about selling it and then just renting?

Steerpike Sep 2nd 2009 6:17 pm

Re: Mortgage Refinance help please...
 

Originally Posted by JCSUPERMOTO (Post 7896361)
What about selling it and then just renting?

I believe in the OP's situation, current value < original loan, so if he sells he still owes a lot on the loan. He either has to come up with that $, or, declare bankruptcy/etc. So re-negotiating the loan is the better option. What you are doing is saying, "I owe you $x, but property value is only $y; let's re-negotiate the loan to (something closer to $y) so that I can stay in the house and keep making the payments, and you (bank) can avoid having to through the whole short-sale/foreclosure process" (where they end up with less than '$x' anyway).

Boiler Sep 2nd 2009 7:25 pm

Re: Mortgage Refinance help please...
 
So you are effectively treating the 30 year fixed as an interest only loan.

Nothing wrong with that.

But you still have to have a plan to pay it of.

If the missus is working and earns enough to pay the loan I doubt they would be interested.


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