Mortgage & Financial Independance

[danb]

I had a question about mortgage and how it related to my financial independence

My current goals are:
Pay off Car- Done
Save an emergency Fund - 2,000/20,000
match 401k employer 4.5% of salary, employer puts in 9%
Pay off House - $279,879.31
Max 401K & Roth IRA
Live off 30% of income and invest 70% into vanguard index fund
Retire early and live off dividends

Currently my mortgage is broken down like this:

I pay $1900 per month and my bill says

Principal $510.10
Interest $874.62
Escrow $445.07
Current payment $1,829.79


So $70.21 goes to the principle

I got a letter from the VA today saying

"Per the new Department of Veterans affairs VA form 26-1880 eligibility on september 18, 2014 your loan has been marked for this program and notification is being submitted per issuing guidelines.

You will have a new lower monthly principle and interest payment of $1,201.57 beginning December 1, 2014 per program benefit specifications.

Statement date: September 18, 2014
mortgage amount $285,000
New payment amount $1,201.57

You must call 1-888-271-3305 withing 5 days of receipt to ensure timely processing


I'm confused about this.

So currently i have my property tax rolled into my mortgage which i believe is the escrow number above, meaning, my current rate is

$1384.72 and they are offering to change it to $1201.57

My loan is $279,879.31 but this document says $285,000.

Question: Does this mean to get the lower rate i have to pay an extra $5120.69? and Do you think it's a wise choice to take advantage of this offer and why?

[oldfierm]

I've been lurking on this site for weeks, but just registered to respond to your question. 

Are you ABSOLUTELY SURE the letter is from the VA?  I would call the VA (not the number provided on the letter) - the number from the VA website.  Ask about the letter.  I don't trust anyone, especially when it comes to mortgage offers, and especially given that the amount does not reflect your actual loan amount. 

Plus, the form references is just the basic "VA Eligibility" Form so I'm not clear how that could result in an adjustment to your principal.  Scams abound! 

[arebelspy]

+1 to what oldfierm said. Google that number. There's basically no real results besides this thread. It could be legit, but make sure.

[Tyler]

This could be perfectly legit.  But my default position is that all unsolicited offers are scams.

When receiving letters of questionable origin, I generally ignore the included contact info.  Look up the VA office online and call them directly to inquire about the letter. 

[shitzmagee]

I get these all the time. They are not from the VA. They are from a multitude of refinancing companies that want you to "take advantage" of the VA Interest Rate Reduction Refinance Loan (IRRRL) program. See the VA's site here (http://www.benefits.va.gov/homeloans/irrrl.asp). The program is legit, but is nothing special...just a refinance for your VA loan. The company that sent you the letter just wants to process your refinance so they can pocket the fees. From public records, the company knows that you have a VA loan and know roughly what your balance is, so in their offer letter they are guestimating what your refinance loan balance and interest rate would be.
I refinanced my VA loan through VA IRRRL in 2013, but I did not do it through any company that sent me spam in the mail. I called USAA and asked them what they could offer me and went through them. If you're not in the market for refinancing your house then simply shred the letters as they come in (and they'll keep coming!).

[GizmoTX]

Check with your property taxing authority to see what your annual property tax is. Currently your mortgage escrow is paying this, but sometimes the amount collected is considerably more than needed & they play with your float. In any event, you'll need to know what this amount is when you pay off the house. Also pay attention to appraisal valuations for property tax -- some communities keep inflating this to raise revenue, & you have to file a protest to contest it.