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Should I refinance now or later? Have I missed my chance?

Two years ago, I refinanced my existing home to borrow against the equity of the home. In doing so, I continued with the 80/20 style loan to avoid mortgage insurance and now have a 5 yr. ARM with a rate near 10%, which has virtually increased every month.The value of my home at the time was $175K. Right now I owe $134K on the 1st (30yr FRM) at 6.5% and $17K on the 2nd (5yr ARM) at 9.75% interest. Zillow.com indicates the value of the home to be $185K, whereas 2 years ago it was at $165K ($10K less than appraised value).My question is, should I move forward with refinancing my loans to a single 30 yr FRM? I'm growing tired of watching the 5yr ARM increase all the time. It's grown by 2+% in 2 years. I would need my appraisal value to be no less than $190K and could avoid the insurance. I plan to be in our house for 3-7 more years. by leifra_724_287 from Lago Vista, Texas. May 21st 2012 Reply


William J Acres (William_Acres)
#73 ranked lender in Arizona - 8,722 contributions

Ok.. So you should absolutely refinance, even if you have to bring a few dollars to the table to buy down your principal. But there is one issue that needs to be addressed.. Conventional guidelines will say that you're doing a "cash out" refinance, because you will be refinancing both loans into one mortgage.. And lenders have overlays as to what % they will lend on a "cash out" basis, with 80% being the industry average.. Keep in mind that Texas has some pretty strict laws governing refinancing so for that reason, I would suggest you contact a LOCAL mortgage broker, not the local "Big" bank, and certainly not one of those 50 states internet lenders...By applying with your LOCAL Broker, you have an advantage because he's 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.. 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

May 21st 2012
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John Cannata (TexasLoanGuy)
#118 ranked lender in Texas - 4 contributions

I'm a little late to the party, but I noticed you started your comment with 'you refinanced to borrow against the equity' but you continued on saying that you ended up with two mortgages. What was the purpose of the 2nd mortgage? Did you complete some sort of Home Improvement? In the state of Texas, you can not take out equity in your home above 80%. That leads me to believe that you didnt take any cash out, if you have a second mortgage unless you completed a Home Improvement loan.If that is the case, we could assist you with your refinance and still avoid the "Texas Cashout' guidelines, which ultimately pushes you into a higher rate. Would love to get more details so I can give you a better idea of whats needed. If you are still open to lender opinions, it costs NOTHING to find out what we can do for you except a few minutes of your time. My website is www.TexasLoanGuy.com or you can find out more about me at www.JohnsBlogSite.com Have a great day!

May 22nd 2012
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Eric Blossman NMLS 211144 (eblossman)
#116 ranked lender in Texas - 63 contributions

Yes, in your particular situation iit makes perfect sense to refinance. Those ARM loans will continue to be an issue, and rates are as low as we have ever seen. You are correct about keeping the loan to value under 80% to avoid mortgage insurance. but since you utilized the 2nd to which is not a purchase money second this would be considered a cash out transaction and in the state of Texas we are limited to 80% loan to value. So I think that the appraisal is key in your case. What should be done is to run some comps on your property to make sure that you are going to get the value you need to get under the 80% mark. I can help you with this, and I am out in Lakeway so not too far from you. Eric Blossman Southwest Funding 512-788-2502 eblossman@southwestfunding.com

May 21st 2012
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Henry J Daniels, CMPSI, CMHS (HenryJDanielsNationalMortgage)
#13 ranked lender in Texas - 133 contributions

Hello With Rates as low as they are right now it would be prudent to get out of an Adjustable rate and into a fixed rate. I would be delighted to assist you in seeing if this is the best option for you. Sincerely,Henry J Daniels - Sr. Mortgage Banker & CMPSI Certified Mortgage Coach"Educating you to make the right financial choices for your family today and tomorrow" Direct/Text: (936) 228-1944 & Fax: (832) 217-3033

May 21st 2012
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Brad Cahoone (info@globalhomefinance.com)
#90 ranked lender in Texas - 1,042 contributions

Hello, since rates are much below your first mortgage rate of 6.5% it does make sense to refinance as all of the money would be at a rate lower than your best rate. The risk is an appraisal. An appraisal runs about $375 to $450 depending on what AMC/Lender it is ordered from. Don't waste your time working with one of the bigt banks as their rates and closing costs are higher and they may never close or will take at least 75 to 90 days to do so. If I may be of service let me know.Brad Cahoone - 972-724-3222 x 227 - bcahoone@globalhomefinance.com - http://globalhomefinance.com/apply.php

May 21st 2012
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Chris Kelso (Chris Kelso)
#8 ranked lender in Texas - 11 contributions

Yes...you should look at refinancing. Please call any of the numbers who answered your question or look me up at www.chriskelso.comBest Regards,Chris

May 21st 2012
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Robert Le (robert_le)
#620 ranked lender in California - 36 contributions

My recommendation is you refinance now with No Point/No Cost. If rates goes down again, then refinance again with No Point/No Cost. It does not cost you anything to submit in an application

May 21st 2012
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Kelly Krauth (KKrauth)
#1 ranked lender in New Mexico - 28 contributions

You can do a HARP refi with NO APPRAISAL.

May 21st 2012
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Linda Wintersteen (Linda123)
#62 ranked lender in Arizona - 1,256 contributions

I can do the harp loans, without bank overlays ,, email me your address ,and i will look at the comps i use to be a underwriter, so i have all of the same ways to check values, in fact , it is what appraisers use, and then I can see if is ok to harp loan, without wasting your money on a appraisal or I will let you know if you need to do a appraisal, and its free service to you linda yourloanpartnerforlife@live.com

May 21st 2012
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Michelle Curtis Loan Originator NMLS 401173 (EmbassyFundingLLC)
#78 ranked lender in Florida - 2,240 contributions

You should definitely refinance now before rates start to increase. You should contact a mortgage broker to discuss your options. If you have questions feel free to contact us. All the best!

May 21st 2012
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Michael Diaz (sincityloandr)
#60 ranked lender in Nevada - 66 contributions

I would definitely refinance right now, if you email me and send the info I could get a property profile and let you know more accurately what value we think. Also right now we are one of the few companies that can do appraisal waivers if it passes through the computer system we have. Our 7/1 arm rates are very well priced many times coming under wells and chase. please email me for details mike.diaz@rate.com or get info at www.escrowsaver.com

Jan 30th 2018
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