Countrywide is trying to get us to refinance our loan with them. WHY?

Deal Score0

We have a 30 year ARM loan with Countrywide @ 10.65%. It is 7 months old. We pay our mortgage before the due date each month and have no credit card debt and no negative credit since paying off all debt 7 months ago. We have almost 50% equity now.
Since they effectively “own” us already, at 10.65% (at least for the next 2 years), why are they aggressively seeking to get us to lock in at a lower 7.5%? The idea sounds great ($ 900 vs. $ 1,400 per month), but it just seems strange to me!
Any insight out there?
When we took out the loan, we were in serious debt with real bad score & huge tax debt. All those items are paid now & we don’t use credit cards.
I just don’t understand why, if they can get the 10.65% interest from us (we have 17 more months before we can pay off without paying the prepayment penalty) that they are ‘offering’ this deal. Please note: there would be no prepayment penalty if we refinanced with them.
\In any event, it still seems like there’s a ‘logistics link’ missing.
I would LOVE to take them up on the offer. It’;s just that this seems like one of those proverbial “Too Good to Be True” situations from which intelligent people run. Hence, my question: WHY?

6 Comments
  1. Reply
    JR
    April 29, 2011 at 9:14 pm

    I suspect that because of the surge in defaults on ARM loans in the past year they want to get some ARM loans off their books and more fixed rate loans on the books in order to calm their jittery investors.

  2. Reply
    Mr. P
    April 29, 2011 at 10:13 pm

    Maybe they think you’ll jump ship.

    Most mortgages won’t let you move for a time after setting them up – or you pay a high penalty.
    Maybe you’re out of this period, and are free to choose.
    I would check what other companies are offering – you may get a better deal.
    Most mortgages also are cost effective when taken out, but quickly loose their shine,so many start looking around when they can.
    As the property market is in line for a fall / adjustment, maybe they are looking for some stability.
    What would happen if your property went down in value in the next 2 years? – don’t get locked into anything if you can avoid it.
    They contacted you remember, and companies exist to make money, so be very careful when reading small print and compare them to others.

  3. Reply
    LEHI
    April 29, 2011 at 10:48 pm

    They would like you to refinance their loan with them, before you refinance with a competitor. You pay your mortgage on time. You are a good customer to hold on to.

    Colleen,
    I received the same offer from Chase Financial a few years ago. There was no charge for the refi. I was at 6.25% which is a low rate and Chase changed it to 5.75%. It was easy and I was grateful for it.

    Yes it did feel like it was to good to be true. Yes we are supposed to be worried about things that are to good to be true. Countrywide Financial is a company with financial stress and a company that was just purchased by Bank of America.

    Take the advice of the other responders to your question. Call some other financial institutions. Tell them about the offer made by Countrywide. If you are going to live in your home over a long period of time. Then a lowering of your interest rate at reasonable fee would be beneficial to you.

    If your lucky they will refinance for no charge like Chase did for me.

    God Bless,
    Continued Success,
    Lehi

  4. Reply
    donniebre
    April 29, 2011 at 11:09 pm

    LEHI is right. Before you jump on this, shop around for a better refi rate. If countrywide is offering 7.5 you could probably get lower through a company that makes its money by NOT ripping people off. Just make sure you don’t have to pay fees for early payoff and such.

  5. Reply
    Sgt Big Red
    April 30, 2011 at 12:08 am

    Probably their just re-stacking the books to make their bottom line look better. After all, they are about to be bought out by Bank of America.

  6. Reply
    Bob
    April 30, 2011 at 1:01 am

    With 50% equity, you should be able to get a 30-year fixed rate loan at WAY less than 10.65%. The know that you will soon figure out that ARMs are a stupid and expensive way to finance a house and will refinance the loan on a fixed rate. They would rather you refinanced with them than with a competitor.

    My question is: why don’t you want a fixed loan at a lower rate? ARMs only make sense in periodes when fixed loans are really expensive (like 12%) and you expect rates to go down in a couple of years.

    Leave a reply

    Register New Account
    Reset Password