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Christine's Blog: A Dispatch From Deep Inside the Mortgage Refinancing Process (5/6/09)
Christine updates readers about her progress in refinancing her home mortgages.
Well, I'm half-way through my root canal process…I mean refinancing process. So far, I feel like I've overdosed on Novocain; it hasn't been as painful as I anticipated.
Under the terms of one of my mortgages, I qualify for a modification. What this basically means is that the mortgage can be reviewed and for a minimal cost (~$600), the rate and term (length) of the loan can be modified. So, with very little documentation – all I had to send was my last two years' tax returns – I was able to have my interest rate lowered as well as my term. Even though I bumped the loan down to a 10-year loan, because of the lower loan amount and the lower interest rate, the payment went down around $100 per month. Yippee!
On my other loans I was not so lucky: I have to do full refinance. That means I have to get all the documentation together and send it off. The one part that has me on pins and needles is the appraisal. Though I think we'll be fine, this will be the true realization of where the market is today. (They came by last week to do the appraisal. I don't have the results back yet but I'll keep you posted.)
For those of you looking into refinancing, there are some tricky rules involved if you've ever taken out a HELOC (home equity line of credit) against that property. We have one that we took out when we purchased (we had an 80-10-10), and the mortgage company is requiring a copy of the HUD-1 document that proves the HELOC was used to purchase the home. So if you are ling into a refi, be sure to call and ask about the ramifications of the HELOC before you proceed down a path and hit a dead end.
Happy Refinancing!
Christine
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Have you refinanced your vacation home recently? How has the process gone for you?
"Christine is absolutely right! The banks are using the low-ball appraisals as their excuse not to re-finance otherwise highly qualified borrowers at today's historically low rates. We had a similar experience in southern California. As a Realtor, I was able to provide actual SOLD comps in the past 3 months that would support a much higher fair market appraisal. And now it is not legal in California for mortgage brokers to choose appraisers or have any contact with them, so the Lender controls the entire process. Banks, feeling comfortable with the tax payer TARP money on their balance sheets, are choosing not to lend and are using unfair low appraisals to justify their lending practices. Unfortunately some homeowners faced with the inability to re-finance and take advantage of the low rates will be forced to sell in a down market adding to the housing inventory a nd putting further downward pressure on home prices." -Mireya, La Jolla, CA (HomeAway #131800, VRBO #30556, VacationRentals.com #52894)
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© Copyright 2009 Christine Karpinski
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