Author Topic: mortgage refinance with restricted lender options  (Read 566 times)


  • 5 O'Clock Shadow
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  • Posts: 11
mortgage refinance with restricted lender options
« on: April 08, 2020, 07:05:57 AM »
Looking for some advice on whether to move forward with a potential mortgage refinance.
Goal is simply to lower interest rate to take advantage of macroeconomic circumstances. No cash out desired.

We’ve been in the house since 2015 and intend to stay for the forseeable future. Three kids 10 and under in good public schools, and I have stable employment with large gov defense contractor.

The loan is a “portfolio loan” held by a small local credit union. I foreclosed on a property in Arizona in 2014 and the credit union was willing to take on the loan at a 0.25%-above-market rate. The foreclosure will age out of my credit report in June 2021 but I have been itching to get the rate down and this may be my opportunity.

Current loan terms:
4.75% interest FRM
$255,000 loan balance
~$425,000 property value
25 years remaining

Refinance offer from the same credit union:
3.375% 30-year 3/1 ARM
$3,089 in closing costs (excluding prepaids and escrow which would be the same for old/new loans)

What’s the right way to analyze this offer? I can take the simple P&I view:
Old: $255,000 @ 25 years = $1,454 P&I
New: $255,000 @ 30 years = 1,127 P&I
The difference of $327 per month indicates a simple payback period of 9.5 months

But I’m not sure this is the complete analysis. I played with some of the calculators on but he assumes mortgage interest is deductible (I take the standard deduction on my taxes since the TCJA).

Should I be looking at FRM instead of ARM? I think I could get 3.75% FRM 30-year from the same credit union with no points. Once the foreclosure ages off my credit report, I will be able to shop around to any lender, but for now this is my only option. Of course no telling which direction interest rates are moving in the future.


  • 5 O'Clock Shadow
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  • Posts: 47
Re: mortgage refinance with restricted lender options
« Reply #1 on: April 15, 2020, 02:47:17 PM »
A question: Why would you consider an Adjustable Rate Mortgage when rates are at historic lows? Which way do you think your rates will adjust? (What index do the use, if any, is it arbitrary? How much can the bank adjust per year?) yeah, I bet the credit union is “willing” - lol


  • 5 O'Clock Shadow
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  • Posts: 11
Re: mortgage refinance with restricted lender options
« Reply #2 on: April 18, 2020, 07:19:34 PM »
Which direction are interest rates headed in the future?  I don't know...but I do know that I've been hearing talk of "historically low rates" ..and "nowhere to go but up" for at least 10 years now.

Have you seen this chart?

Had an interesting conversation with the loan officer yesterday.  She told me that Fannie Mae underwriting guidelines enforce a 7-year waiting period after foreclosure to write a fixed-rate loan, but it allows a shorter waiting period if they're writing an adjustable ARM.  I searched online to confirm this, and I can't find a trace of this from Fannie Mae.  Are there any bankers or underwriters on this site who can confirm this is not bullshit?