The past five days have been filled with activity.
Yesterday, we met with the mortgage broker to discuss refinancing our house. We were going over the numbers, he discussed a FHA refinance program, and the noticed that our loan was actually conventional. I had thought it was FHA too, but apparently not. He also thought that the sellers had paid our down payment, when in reality, there had been no down payment.
We talked numbers, he asked what houses were selling for in our area, I told him I wasn't sure but that Zillow had our house valued at about $95,000. Its weird, because the house right next to ours is built exactly the same, except that they added a bonus room to the back, and it's at $105,000 on Zillow. The bonus room only added an addtional 100 square feet. Anyway, I told him that we've had at least four foreclosures on our house, and that if he'd called us two months ago, our value was sitting at closer to $105,000, but in the past two months we've lost about $10k on the value of our house because three of those foreclosures sold at less than $40,000 each. That's been since the first of June.
He gave us two different possibilities and is looking into which one will work for us. If he's able to refinance our conventional loan under the FHA program, we won't need an appraisal and we'll need to show up to closing with $1500 to start our escrow account. We'd close the end of September and not have an October mortgage payment, so it's completely feasible. If we can't do the FHA refinance, then we'll have to do the Fannie Mae refi, which involves an appraisal. I'm not sure if our house will appraise high enough to refinance that way or not. It may, because our house is the second highest valued on the street, according to the auditors office and Zillow, but it may appraise lower because of cosmetic things that we simply haven't had time to fix, like the fence our neighbors ran through, the hole in the wall behind our front door where my son slammed the door handle into it, and the crack in the ceiling above our shower. I do know that if we have to have an appraisal, I will probably be painting the bathroom sooner, rather than later, to get rid of the peeling paint and border.
He should be giving us a call back in the next two days. Regardless, both options make our monthly payment about $50 less than what we're paying now, and $138 less than our new payment that will go into effect on October 1, so we'll be better off financially. I figure that if we are able to refinance, I will continue to pay that additional $50 towards our principal, so our payment will stay the same.
I forgot to mention, the mortgage lender will also be paying all closing costs for either option, including the appraisal fee if we need one. We only have to come up with the escrow amount. It won't actually cost us anything additional.
The other thing that I have been looking in to, and am waiting on a response regarding, is a credit limit increase and balance transfer. I already struck out with my husband's credit union, but my credit union has always been a lot more likely to work with us.
For example, my husband's credit card through his credit union has a $3500 credit limit and a 14.99% interest rate. It's been the same credit limit for years and years and years. When we applied for the credit limit increase, instead of giving us a reduced amount, they offered us a fixed term personal loan.
My credit card through my credit union started with a $5000 limit and a 13.99% fixed interest rate. I called this past January for a credit limit increase. They increased my limit to $7500 and asked if I would be interested in moving the balance to an 8.99% variable rate card and told me that, if at any point in the future, it looked like interest rates were moving so high that the variable rate card was no longer a good option, we could always move it back to the fixed rate card. I called them on Monday and asked how long it would be before I could apply for a credit limit increase for the sole purpose of a balance transfer.
The loan officer told me, "Usually, it is between six months to a year, however you have a very extensive history with us and an excellent payment history, so we may be able to reconsider you now. Let me get this to one of our underwriters and I will give you a call back". I love, LOVE that they look at my entire history with them and not just how much total debt I have. Even if they can't give me an increase, which I kind of expect, I'll still be singing their praises because they looked at more than just our astronomical debt when I told them that we're trying to transfer a balance from a 24% interest card.
So today, I just get to sit and wait, and see if I get good news from either company. If we were able to refinance and do the balance transfer, we'd probably be saving close to $100 a month in interest, maybe more. That's money that would be going directly towards paying off the principal amounts.
On a side note, our mortgage broker mentioned the fact that they're building a casino near our house. He said that he expects to see property values increase once it's built and they start to improve the area around it and suggested that in the next two to three years, we check our property values and consider moving, if it's feasible. We had already told him that we wanted to move in probably five years, so it was nice to get that bit of info from him. Of course, by then interest rates will probably be sky high, but we'll see.
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