Author Topic: Help in refinancing - couple options  (Read 2119 times)

MrSal

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Help in refinancing - couple options
« on: February 17, 2016, 04:24:12 PM »
Hello everyone. I resort to this group in hopes someone can help me!

I am shopping for some mortgage rates with cash out in order to help my wife's and wifes family with loans.

Currently, my wife still has some few student loans along with her sister and her parents also owe some in their mortgage.

Their parents used their house as collateral and co signed a couple loans, however, the bank did some weird things which i did not understand.

Instead of consolidating everything in one mortgage, they did 3 different loans, which meant that the loans that the daughters are the owner and have the property as collateral is not owner occupied! Not only is the interest rate higher, as well as the taxes are not deductible for the parents on the interest paid! And this doesnt make sense if the goal was to mitigate risk since the property was the collateral nonetheless!

The rates on the loan are 3.62% for the primary mortgage on the parents... and 5.74% on my wifes and 5% on her sister.

I was thinking of consolidating everything into a primary mortgage having the parents as owners.

Total payment responsabilities per month right now on these 3 loans is about 1750 dollars.

By refinancing to a 15 year at current rates of around 2.88% it would lower payments to 700-800 dollars. Of course I advised to keep paying the normal payments but just putting the money towards principal.

Now the question is... we can either opt for fixed rate or... according to my calculations, if they keep the payments the same the loan would be fully paid off in 5.3 years.

So I am thinking a 5/1 ARM would be a good idea here!

We live in central PA and I was thinking if you guys know any good lenders with good rates? Online or not!!

I found one online that seems to be too good: Third Federal Savings & Loan ... they offer a few 5/1 ARM with no closing costs... from the website i cant discern how can they waive the closing costs and the APR is a bit higher than the normal 5/1 so there has to be something there increasing it. Will call these guys tomorrow.

Any other ideas of lenders would be welcome!!

So far I have shopped local banks only ... those online aggregators seem to be so much over the place is ridiculous.

This would be a cashout mortgage but even with closing costs it is beneficial for them in terms of savings

GrowingTheGreen

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Re: Help in refinancing - couple options
« Reply #1 on: February 17, 2016, 09:10:17 PM »
I'm a little confused. Is this question for you or them? If you, then why are you taking this loan out for them?

5/1 ARM doesn't make me too excited considering the Fed is planning on raising rates incrementally over the next few years. Beware with calculations. How positive are you that they will pay it off in 5 years? A lot of people in 2002-2003 thought that things would be different in 5 years with their ARM. You know what happened 5 years later.

MrSal

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Re: Help in refinancing - couple options
« Reply #2 on: February 17, 2016, 10:39:26 PM »
I'm a little confused. Is this question for you or them? If you, then why are you taking this loan out for them?

5/1 ARM doesn't make me too excited considering the Fed is planning on raising rates incrementally over the next few years. Beware with calculations. How positive are you that they will pay it off in 5 years? A lot of people in 2002-2003 thought that things would be different in 5 years with their ARM. You know what happened 5 years later.

im not taking the loan... they will. The 5 year ARM sure the FED may raise the rates but as I said the rates are locked the 1st 5 years, which currently they are paying 1700 dollars in loans already.

A refi in a 5 ARM would decrease the interest rate almost in half, payments would be low, and the remaining would be applied towards principle. They would still keep paying the 1700 dollars monthly. How confided am I? Well I cant make decisions for them but I wont be the owner of the loan so if they stop paying they will be the ones at fault or getting a negative effect.

Its to their benefit to keep the payments. My question of the 5 year ARM is just because, keeping the payments the same, the full loan would be paid out in 5.5 years or so. The ARM would keep the rate locked for those 5 years. Any risk, if any, would be only exposed to 6 months and at the most the rate would jump 2% so we are talking 4.5% range for duration of 6 months.

Even though they - parents in law, wife and sisten in law - are not financially the most savvy, they are responsible and do know their responsibilities.

All this ideia was just cooked up by myself in order to save them interest since they are paying hight rates unnecessarily

GrowingTheGreen

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Re: Help in refinancing - couple options
« Reply #3 on: February 18, 2016, 07:33:47 AM »
If they're sure that they can keep up the existing payment for 5 years, the go for it.  It would definitely save money.  My only word of caution would be that not paying the existing amount would be an easy trap to fall into.

MrSal

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Re: Help in refinancing - couple options
« Reply #4 on: February 18, 2016, 03:30:26 PM »
If they're sure that they can keep up the existing payment for 5 years, the go for it.  It would definitely save money.  My only word of caution would be that not paying the existing amount would be an easy trap to fall into.

Of course. They are already paying those amounts ...

Actually just saw this bank:

well i found this one bank... incredible rates and they waive most closing costs!

Im still in awe and still cant believe these rates. So much so that will have me digging all the dirt about them to see how legit they are.

They do 30 year loans for example with 5/1 ARMs at 2.4% !!!

If you do a 3/1 ARM, rates go to 1.99%!!

Worried about closing costs? You only pay 295 USD on closing costs. Everything else they pay themselves. There has to be something here!

I am going to read the contracts tonight and see if i can find something.

Their website is https://www.thirdfederal.com/mortgages/productsoffered#ncost if anyone is interested

with this i cant see how it doesnt pay off to just refinance lower maturity loans to a higher maturity for example and just pay off principle. According to who i talked to, there is no fee for early payoffs so i cant understand how can they be making money off of paying the closing costs for us. I see them making money on the differencial of interest rates they provide if the loan is maintained for full length... but if there is no early payoff fee then they dont make money off the borrower for sure if he pays off early.