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Honored Contributor
Posts: 34,984
Registered: ‎03-10-2010

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?

New Mexico☀️Land Of Enchantment
Respected Contributor
Posts: 2,096
Registered: ‎03-09-2010

Re: Mortgages

Without knowing all the specifics, you would probably be paying less each month for a longer period of time. The mortgage compNy or bank is always going to come out ahead. They're not looking out for you. If you need to pay less each month and don't mind paying for the house longer then see what they offer you. Add in points and closing costs and any other fees. I prefer to pay off my mortgage sooner by paying an extra payment or 2 a year. We have less than a year left.


'I refuse to engage in a battle of wits with an unarmed man'.......Unknown
Respected Contributor
Posts: 3,013
Registered: ‎07-02-2015

Re: Mortgages

I think I can answer that for you.  When your mortgage is sold to another company other than the original lender you signed up with, the new "mortgage servicer" receives only a fee for collecting your payments.

 

On the other hand, if the new company can sell you a new mortgage, the people doing the selling it to you-- and all the accessory personnel who complete the transaction paperwork and record the new lien at the courthouse--- all get paid new fees and commissions, plus the company STILL gets to collect a "mortgage servicing fee", just as it is doing from you now.

 

You can and should refinance if the difference between your old and new loan rates and payments are beneficial to your bottom line, but be aware that sharks are out everywhere trying to get people to refinance, and lately they are using the hook of fear about the possibility of rising interest rates.

 

Nobody in the mortgage business works for free, and the customer will pay the costs of a new loan or a refinanced loan, even if these costs are not starkly apparent and easy to understand.

Respected Contributor
Posts: 3,013
Registered: ‎07-02-2015

Re: Mortgages

And here's a suggestion for you........if you are truly interested in the refinancing idea, shop around with banks, credit unions and other mortgage brokers in your area.  Your current mortgage servicer might just wind up being sorry the idea was planted in your head, if they lose your business.  This enhances your negotiating position, perhaps.

Respected Contributor
Posts: 2,158
Registered: ‎03-10-2010

Re: Mortgages

Kachina, why don't you call them and get a breakdown of the costs/benefits.  Wells Fargo did this offer of a free refi to a neighbor of mine several years ago and she did it and saved a bundle.  Around the same time we refinanced thru Costco at almost no cost and went from 30 year 7.5% to 15 year 3% (to which we pay $200 extra principal mthly).

Honored Contributor
Posts: 10,551
Registered: ‎03-11-2010

Re: Mortgages

You could probably accomplished the same by

applying the $300 to the principle each month and pay

it off quicker.

If that is your goal

Esteemed Contributor
Posts: 7,829
Registered: ‎03-18-2010

Re: Mortgages

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.

Those who make peaceful revolution impossible will make violent revolution inevitable.
JFK
Esteemed Contributor
Posts: 5,758
Registered: ‎03-09-2010

Re: Mortgages


@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.==

 

***

 

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


 

Keep Your Face To The Sunshine and You Will Not See The Shadow
Honored Contributor
Posts: 10,551
Registered: ‎03-11-2010

Re: Mortgages


@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?


other thing

 

new company:

can't have a bunch of brokers sitting around with nothing to do, so here are a list of possible new mortgages,  it is busy work so to speak

Respected Contributor
Posts: 3,164
Registered: ‎01-05-2015

Re: Mortgages

People will usually refinance at a lower interest rate, not higher, so are you absolutely sure that your interest rate will be higher?

 

My husband and I refinanced our mortgage a few years ago to a15 year mortgage and at a lower interest rate...Also, as another poster mentioned, we have been adding a few hundred dollars extra to the principal each month and it has now put us in a position where we will be talking to our financial advisor about paying the balance off from one of our investment plans now!

 

If you have a financial advisor, I would advise consulting with him about the specifics of the refinancing plan that the bank is offering you.