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Refinancing

Troopers

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Anyone know why banks will not refinance it's own loans?

I'm not underwater but my loan to value ratio is somewhere near 90%. I would like to refinance and capitalize on the low 30 yr fix rates but my my bank will not refinance it's own loan. I don't understand why my bank won't refinance. The bank wouldn't incur additional risk since they already on own the note. In fact, the bank would earn some $ in refinancing costs.
 

gorevs9

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... but my loan to value ratio is somewhere near 90%.

You basically answered your own question.

Does your bank still "own" the loan or have they packaged up your loan and sold it to Fannie Mae and Freddie Mac like 90% of all the other financial institutions?

I agree with you, if a bank still carries the paper, then it would behoove them to refinance, which allows a homeowner to continue paying off the mortgage. Otherwise the house goes to foreclosure, which really does do the homeowner OR the bank any good.

Banks (and CC companies) don't want to discuss loans and financial issues until people have missed several payments.
 

Troopers

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You basically answered your own question.

Does your bank still "own" the loan or have they packaged up your loan and sold it to Fannie Mae and Freddie Mac like 90% of all the other financial institutions?

I agree with you, if a bank still carries the paper, then it would behoove them to refinance, which allows a homeowner to continue paying off the mortgage. Otherwise the house goes to foreclosure, which really does do the homeowner OR the bank any good.

Banks (and CC companies) don't want to discuss loans and financial issues until people have missed several payments.

Wamu still owns the loan and they won't refinance it.
 

wilma

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Have you shopped around and asked other banks or brokers to refinance? No reason to stay w/WAMU if they won't refinance.
 

Troopers

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Have you shopped around and asked other banks or brokers to refinance? No reason to stay w/WAMU if they won't refinance.

Other lenders aren't interested. Loan to value ratio is too high. Note, I'm able to pay the loan down, but choose not to.
 

donnaval

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We were talking to a local banker yesterday, and she told us that they now require an 80% LTV ratio before they'll consider refinancing.
 

gorevs9

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We were talking to a local banker yesterday, and she told us that they now require an 80% LTV ratio before they'll consider refinancing.
When I bought my first (and only) house in '83 the rule of thumb was always 20% down. If I did not have the 20%, then I could go as little as 5% down, but I had pay extra for "mortgage insurance" which basically covered the difference between the 20% and whatever % I put down.

Is this type of insurance still prevalent today and can you get it for a refinance? AND, if mortgage insurance is still a requirement for those low and 0% down mortgages, then it should've paid off to the banks when all the forclosures started.
 

gorevs9

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Note, I'm able to pay the loan down, but choose not to.
Have you considered paying a bit extra every month (as opposed to a one-time payment down to 80%). In time, you'll either get to the 80% and/or the value of the house may go up.
 

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I experienced your problem several times. Even though my LTV was good, my lender would not do the refi. This forced me to find other lenders who thought more like I did. In the long run, I have learned a lot about banks and I am much better off.

I just shifted some debt from a 0% credit card back to my HELOC which is now charging a whopping 2.75%. I'll cope with that. :D But I would never have gotten that if I had stuck with my original lender.
 

Troopers

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Have you considered paying a bit extra every month (as opposed to a one-time payment down to 80%). In time, you'll either get to the 80% and/or the value of the house may go up.

Yes, but the current low interest rates may not be there when I hit 80%....so, this isn't very appealing to me.
 

Troopers

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I experienced your problem several times. Even though my LTV was good, my lender would not do the refi. This forced me to find other lenders who thought more like I did. In the long run, I have learned a lot about banks and I am much better off.

I just shifted some debt from a 0% credit card back to my HELOC which is now charging a whopping 2.75%. I'll cope with that. :D But I would never have gotten that if I had stuck with my original lender.

Unfortunately, my LTV is high and I do not want to put my available cash into the sinking house. I just want a better loan (that no one seems to be able to give me...ugh).
 

Troopers

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We were talking to a local banker yesterday, and she told us that they now require an 80% LTV ratio before they'll consider refinancing.

I was told the same thing by Wamu. But I just don't get it. The LTV ratio is simply a risk indicator for the banks. At this point, why should Wamu care what my LTV ratio is...they already have my loan. I'm not seeking a cash out loan, I just want better loan terms for the loan.
 

DebBrown

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I was told the same thing by Wamu. But I just don't get it. The LTV ratio is simply a risk indicator for the banks. At this point, why should Wamu care what my LTV ratio is...they already have my loan. I'm not seeking a cash out loan, I just want better loan terms for the loan.

Maybe they don't care to give you better loan terms? Why should they make less money on the loan when they know you can't go anywhere else?

If it were me, I'd just be paying additional principal every month to get the loan paid off faster.

Deb
 

Troopers

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Maybe they don't care to give you better loan terms? Why should they make less money on the loan when they know you can't go anywhere else?

You may be right that they don't care and they they will make more money if the load is not refinanced. However, they have a higher risk of me foreclosing on the house. If they refinanced the loan, they have a lower risk because they have made it more affordable for me to stay in my house. In this economic environment, wouldn't they want to be more conservative? Also, they would make some money if they did do a refi (small dollars relative to the interest).
 

bigrick

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You may be right that they don't care and they they will make more money if the load is not refinanced. However, they have a higher risk of me foreclosing on the house. If they refinanced the loan, they have a lower risk because they have made it more affordable for me to stay in my house. In this economic environment, wouldn't they want to be more conservative? Also, they would make some money if they did do a refi (small dollars relative to the interest).

This was the very argument I used to make with my lenders. They never agreed with me either.

The lenders know you have not found an alternative so they have no incentive to help you.

Recently I had a credit card with a 1.9% balance transfer rate with no balance transfer fee. I moved 40% of my mortgage to this card for the 8 months it was offered. For the last 2 months I called the card company to see if they would extend the 1.9% rate for another 8-12 months. The company always declined. I said I would payoff the balance if they would not extend the rate. The company said that was my choice. At the end of the original 8 months, with no rate extension possible, I paid off the balance via my 2.75% HELOC. (This is my correction to my post above where I said my prior rate was 0%, it was really 1.9%. I still have another credit card with 60% of my mortgage at 0% until Dec 2009.) HELOCs adjust with the prime rate so lets hope the fed figures out how to lower the interest rate some more. :eek:

These credit card options don't work when your LTV is high as the payments tend to be 2-4% of the balance. Just like your arguments above with the lenders, they set the payment rate and we live with it for the duration.
 

Troopers

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This was the very argument I used to make with my lenders. They never agreed with me either.

The lenders know you have not found an alternative so they have no incentive to help you.

Recently I had a credit card with a 1.9% balance transfer rate with no balance transfer fee. I moved 40% of my mortgage to this card for the 8 months it was offered. For the last 2 months I called the card company to see if they would extend the 1.9% rate for another 8-12 months. The company always declined. I said I would payoff the balance if they would not extend the rate. The company said that was my choice. At the end of the original 8 months, with no rate extension possible, I paid off the balance via my 2.75% HELOC. (This is my correction to my post above where I said my prior rate was 0%, it was really 1.9%. I still have another credit card with 60% of my mortgage at 0% until Dec 2009.) HELOCs adjust with the prime rate so lets hope the fed figures out how to lower the interest rate some more. :eek:

These credit card options don't work when your LTV is high as the payments tend to be 2-4% of the balance. Just like your arguments above with the lenders, they set the payment rate and we live with it for the duration.

Well, the lenders get what they deserve.
 

TerriJ

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This is a bit off topic, but if you strive for a debt free lifestyle, you free yourself from the various terms and conditions of the lenders. Anyone that is motivated can do it.
 
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