For the sake of this blog post, and since I don't feel the need to discuss my personal finances online, lets assume that my credit score and salary are good enough to get a loan equivilant to the refinancing that I am seeking. Also, for simplicity, lets assume that the house I am trying to refinance cost me $200,000 and that I currently owe $150,000.
My loan was recently purchased by Countrywide Home Loans and so I figured that was a good place to start. My loan resets every 6 months and currently, my interest rates are just over 4% but with 30 year fixed rates running at 4 7/8% I wanted to lock in the loan for long term. Oh yea, my monthly payments are $1,200 and I pay $2,000 per month in order to pay down my loan.
Of course, like every other home in Florida and across the country my home has lost value. It is my main residence and I am certainly not going to default on my loan so I just pay my loan as normal. So on yesterdays call with Countrywide, the very nice lady went through all my refinancing options, my credit score, salary and also noted my monthly overpayments towards my loan and then asked me what I thought the house was worth. I safely said $150,000 as that is what comps in the area are and this is where the trouble began.
Luckily, since I have a good Fico Score and a good salary, I have options. The options all suck, but at least I have options. The bank can loan up to 97% of the appraised value so I would only have to pay a few thousand dollars to refinance but ... I have to pay insurance on the loan until I get it down to 80% Loan To Value OR I can put up $30,000 and get an 80% loan on the remaining amount at a nice low interest rate. Put up $30,000 to get a fixed rate loan that I am paying on time anyway?
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I have had this loan for 4 years, never missed a payment and have overpaid each and every month. Why wouldn't the bank simply rewrite my loan as a 30 year fixed rate loan? I am a good credit risk, I am a nice guy and I was very polite (until I finally got frustrated and hung up).
I understand that banks package loans and resell them as bundles. But is the resale and the inflexibility of bank to adjust loans the reason the government has to get involved in this. Luckily, I am not in the position of being forced to refinance but many people are. Why aren't bank less rigid and more flexible towards their customers.
After this recession or depression is over with, will the banks look to be more customer oriented and get ahead of issues or will they continue to make the loans and stick their heads in the ground.
Mr. Countrywide ... why won't you rewrite my loan? I know the company line, we don't have a program like that, but I want you to tell me why that makes sense. Feel free to post on this blog or if you prefer use the contact us and ask for me ... I am waiting.
Tags:
refinance,
mortgage,
banking