Community Chat

[Irshgrl31201]

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@MyGirlsMom wrote:

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@Irshgrl31201 wrote:

One reason banks offer refinancing to existing customers is because Fannie Mae and Freddie Mac don't require lenders to vouch for for the quality of new mortgages so the lenders won't be require to buy back bad loans. I read that a couple of years ago.==

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That would be true a few years ago when sub prime loans were big business.  After 2008, a LOT of that changed.

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This was from an article I read in 2014.

[novamc1]

No, that is not the reason banks offer refinances. 

 I could explain some of the reasons and economics behind the buying and selling of mortgages among banks and other types of mortgage iinvestors using the "discount points" that homebuyers and homeowners pay for loans and refinances, but I don't think it would be helpful in answering the OP's primary question.

[Kachina624]

So many helpful replies!  I do have a financial advisor and will call him.  The new interest rate would be about 2 points lower.  I bet they want to finance it for 30 years, when I currently will have it paid in 14 years.  I have a VA loan and the new one would be FHA.  I only owe less than $100K.

Thank you all so much.

[Snowpuppy]

You'll be "saving" that $300 a month by extending your mortgage back out to 30 years.

See! Easy Peasy!

[Kachina624]

My first basic question was "what's in it for them?"  Now I think I know.

[Lynneuk]

If the mortgage rates are significantly lower than what you are paying now then refinance down to a ten year loan. You may pay the same but be paid off in ten years instead of 14 years. Check how much the closing costs would be though to see if you will save money.

Also, call the VA and ask if you can do a stream line refi with them. Much less paperwork and closing costs.

[sgraham30]

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@Kachina624 wrote:

My mortgage was recently sold to a company named Carrington Mortgage Services in Anaheim, Ca.  They've started sending me notices that I can refinance my mortgage and lower my monthly payment by $300.  This is appealing but I keep asking myself why would want to do this and make less money for themselves.  The higher interest rate would be to their advantage, right?

Anybody have a clue about this arrangement?

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My refinanced mortgage is with Carrington but I refinanced via an office they have in Schaumburg, IL. There were no fees involved, my new interest rate is 4%, (original mortgage was 5.5%) The new interest rate is saving me $240 per month. It took about a month from start to finish before I signed the paperwork. I did refinance to a 30 year mortgage but I'm sending an additional principal payment every month.

[PamfromCT]

If you are interested, I would act soon.  Sounds like the Feds will be hiking interest rate for the first time in a number of years (maybe 9?).  

[novamc1]

Whether the Federal Reserve raises the overnight rate that banks charge each other (i.e., really short-term interest rates)  has little to no bearing on mortgage interest rates, which are tied to the 10-year Treasury note rate, and they HAVE gone up (and down) on their own due to market forces in the past couple years.

All depends on worldwide demand for the safety of 10-year Treasuries, and if world turmoil continues and domestic market forces indicate, mortgage rates could either go up or down.  The Federal Reserve's actions might have little to do with it.

[silkyk]

IMHO (because it worked for us) is stay the course. No refinancing....just make extra payments on your existing loan to pay it off early if you can. A few years back when refinancing was the BIG thing all our friends fell for it....took money out of their homes (all their equity and more!) and bought new cars, went on cruises etc AND they added years and years and years on to their mortgages. Our home is paid off.They, on the other hand, are ready to retire but HAVE to keep working to pay the bank for all that wonderful refinancing.