What would be the first step you would recommend taking to refinance your home loan? I keep hearing about how advantageous it is to get this done, so I'm thinking I might need to take serious action on it.

My home loan is a piggyback loan (to avoid PMI) with the big one (70%) at 5.85% and the smaller loan, (30%) at 9.75%. The first loan is through Countrywide, the second loan is through BB&T. Additionally, I have excellent credit, but have only owned this house since March of this year....so about 8 months.

So my questions are: Should I refinance this? Do I go to the original lenders to talk about it? And should I expect a fee for doing so? I'm worried that it may be difficult to refinance both loans at once and by god I wouldn't have any idea where to start. Maybe if someone has referrals to of accountants, or lenders, that'd be good.

12/17/2008 12:59:56 PM

refer to bous

V that's his company's calculator that he made

12/17/2008 1:02:47 PM

These guys have a good online calculator
http://www.daylightdiscountmortgage.com/quote/?amount1=126000&amount2=54000&value=180000&purpose=No%20Cash-Out%20Refinance&occupancy=Primary&property_type=SFR&credit=780&state=NC&county=None&documentation=Full&escrow=Full&lock=30&program_wanted=All&am_type=All&pmi=pmi

I used 180k as the cost of your home at 100% financing with 790-799 credit. The quote they give is a blended 5.85% which would be the average of both of the loans you would need. Best you can do is look at all your payments now and ask them what it would be after you are done. It's going to be lower now for sure, but you'll having closing costs associated with the new loan. Figure out how much you are paying now, how much you'll save to refi, and how long it will take to recover the closing costs. If you are pretty certain you'll be in the house longer than that recover period, do it. If not, then don't bother. This doesn't include income tax deductions into the calculations which will make things slightly more difficult to calculate.

The lawyer you get and the loan officer/mortgage broker will help you with everything. You don't have to bother with the original mortgages per se. You just secure the new financing at the new rates, set a closing date, the lawyer will call and get the loan payoffs for those dates, the lender will fax over the HUD with the funds itemized, etc, and you sign the papers and start making your payments to a different lender. I'm currently in the process of doing this now on a purchase and have been doing everything over the phone and email. I don't even have a fax machine (have a scanner that will do pdfs for me).

The most important thing would be the closing costs and a good faith estimate/ truth in lending statement.

[Edited on December 17, 2008 at 1:20 PM. Reason : .]

12/17/2008 1:16:03 PM

Thanks, that's pretty much the price of my home (179K).

But the 730/month it lists is umm, drastically different from the 1300/month I pay now. Something has to be off (probably me)

12/17/2008 1:19:15 PM

I'm not sure how accurate the calculation is with 2 loans. I've only been working with one on my purchase. I glanced at it and noticed it looks low, they seem to be only showing the 1st loan payment piece. Just call them up and tell them you want to refinance 179k (or whatever you have left) at 100% financing and see what they tell you. Shouldn't take more than 5 minutes or so for them to quote you and give you an idea of your payment and closing costs.



Actually, the 5.875 is their first rate, not blended. I was looking at it wrong. So, there is a good chance you won't get to take your second loan rate much lower. With the closing costs and the size of that loan, even with it going down to something like 5% (which is impossible) you won't break even for many years. Because of the housing crisis and the banks getting burned they are reserving the best rates for high credit folks with 20% down and well under their debt/income ratio.

[Edited on December 17, 2008 at 1:26 PM. Reason : .]

12/17/2008 1:22:57 PM

you may pay taxes/insurance as a part of your mortgage as well....that would throw the # off some - i can't imagine by ~600 though

12/17/2008 1:32:39 PM

^^ What he said.

I'm not even sure you would qualify for a refi, it sounds like you have no equity in the home. Regardless your situation is pretty complex, the easiest way to find out your options is to start calling banks and explaining your situation to them.

[Edited on December 17, 2008 at 1:38 PM. Reason : .]

12/17/2008 1:37:25 PM

It's not really that complex. I'm in the process of a refi from my previous 80-20 piggyback loan, then again I have almost 20% equity and am still eligible for the FHA first time home buyer loan. I'd say talk to a mortgage broker and he will tell you what you might qualify. There is no doubt that rates are extremely low right now, though.

12/17/2008 2:41:09 PM