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Not eligible for HARP...any other options?

I am six years into a 7yr fixed interest (6.375%) only/ARM loan with a balance of $850K with B of A. House appraised 6 weeks ago at only $844K. Neither Frannie nor Freddie are the investor so BA told me I'm not eligible for HARP. Not having a problem paying, but I am wasting money paying the higher interest rate. Is there any way to get the note to covert to ARM a year early...the rate it would drop to would be in the 3.5-4% range...I'd continue paying the amount I'm paying now so I can start paying down principal. B of A Mortgage rep at the bank was less than helpful. Options???? by brian_206_388 from Santa Cruz, California. Apr 12th 2012 Reply


William J Acres (William_Acres)
#73 ranked lender in Arizona - 8,726 contributions

I think you're out of luck my friend.. There is nothing out there to help the Jumbo market.. Everything out there, and everything that is being talked about is for conforming loan limits.. if BofA won't help you, then you're pretty well stuck... you might try to contact a LOCAL mortgage broker, not the local "Big" bank, and certainly not one of those 50 states internet lenders... the LOCAL broker is familiar with local customs and works with numerous lenders, seeking out the best loan terms for your particular scenario. Because he has lower overhead, he can offer you lower rates and lower fees than most of the larger lenders.. it's possible there's a portfolio lender who will consider higher loan limits, but it's a long shot.. I'm a Broker here in Scottsdale AZ and I only lend in Arizona. If you or someone you know is looking for financing options, feel free to contact me or pass along my information. 480-287-5714 WilliamAcres.com

Apr 12th 2012
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Kiyoshi Inui (Kiyoshi)
#535 ranked lender in California - 109 contributions

you're going to have to get creative with this. do you have any cash to buy down, own any other properties or suffer a loss of income? Feel free to give me a call, and we can brainstorm over what option you may have. Kiyoshi 619-822-2407

Apr 12th 2012
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Bert Carpenter (BertCarpenter)
#37 ranked lender in Arizona - 1,823 contributions

Well, my friend, there is at least some good news, such that it is. You could be in a 30 year FIXED rate loan. Because there is no program (yet) for Non-Fannie/Freddie loans, you are stuck with the mercy of the current market, which is not much. Unless you are willing to pay down a chunk of the principal to get the loan balance down, you are stuck with whatever your current lender (B of A) is willing to do, and as you can see, that's nothing. If you don't have the cash to pay down the principal your best option is to wait out the year and take advantage of the downward adjustment. When that happens, the best thing you could do is keep paying the same amount each month that you are paying now and designate the extra to principal reduction. ~ Bert Carpenter, The LoansA2z team of NOVA Home Loans ~ NMLS 40586 ~ www.LoansA2z.com

Apr 12th 2012
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Blake Kleckner (BlakeK)
#387 ranked lender in California - 258 contributions

There is really nothing to worry about. The not so good news is that you're stuck in the 7-year ARM, but there is some great news! The index that is added to the margin on your loan to determine your interest rate (IR) is probably 12 month LIBOR (12L), and your margin may be as low as 2.25. You can find out out by looking at the note in your docs to determine this. Currently, 12L is at 1.049, so If your loan has a 2.25 margin and the IR adjusted today, it would be at about 3.229%, As long as 12L goes no higher than 3, you should be okay when your loan adjusts. Chances are that's not going to happen for quite some time. It has only risen .277% in the past year. The last time is was over 3 was on 11/15/08,and with the condition our economy is in right now the likelihood of 12L going over 3 in the next 3 to 5 years is probably pretty slim. You can check it out daily at http://mortgage-x.com/general/indexes/wsj_libor_history.asp?y=2012. Assuming the same increase happens over the next 12 months, your new IR would be about 3.576%. However, next year your loan will amortize for 23 years, that is, the payment will be based upon a 23 year loan life. If you have been paying P&I for the past 6 years, and have made no extra payments, your original loan should have been in the $925K realm with a $5,771 monthly P&I payment. If this is correct, in 12 more months the balance should be roughly $836K, and your new monthly payment at 3.576% will be $4,448, saving you $1,323/mo. That's not too shabby. Keep in mind, though, every year after 7 the IR will adjust and the amortization period will shorten by 1, so at some point it would be best to get out of the ARM loan and into a fixed rate loan. For now, you should be safe for at least 1 year, if not 2, and maybe 3. Give me a call 16/7, or email me, and I'll be happy to discuss how to best plan for the futre of your mortgage loan. To learn more about me and our mortgage brokerage, click on my picture. When the next page pops up, click on "Website" and you will be redirected to ours. We work exclusively in CA and get loans done fast, typically in less than 30 days, at low interest rates and costs. Representing 39 quality lenders that offer more than 1,000 loan programs, we definitely have something for everybody.

Apr 15th 2012
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