We are on 2 years ARM of house mortgage and want to refinace.?

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Our 2 years ARM house loan is coming up on next July and we plan to refinance our house loan. We plan to get a loan thru wellsfargo. What should we do? Will we need to pay lots of penalty for our current mortgage or should we wait till next July?
I need to add more details about our situation. My husband bought this house last year before we got married. He didnt have good credits back then and I was not involved with this. His credits has improved and my credits are almost perfect. Well, the interest rate he has is 9.5% which is high so we want to get out of this asap. Should we wait till our 2-year ARM expires then get a fixed rate loan thru the bank first or should we do it before it expires? Is it going to be a penalty if we drop this mortgage now?

8 Comments
  1. Reply
    Miss V
    January 28, 2011 at 11:11 am

    When you refinance you are paying closing costs all over again. This means new attorney fees, origination and processing fees, appraisal fees, etc. Wait until closer next year, as at least you know what your costs are now.

    Also be sure there is no prepayment penalty involved.

  2. Reply
    luckyone_27105
    January 28, 2011 at 11:23 am

    Sorry Miss V. The payments made between now and next july are just interest on the loan. Virtually no money will be principle that will bring down the amount you owe. Refi now and understand that even if you don’t have to pay money at closing, they are going to roll in $ 2000 – $ 2500 in closing costs into your loan. Don’t even think about anything but a fixed rate, 15 years if you can swing it.

    I live in NC and there are no penalties for paying off a loan early.

  3. Reply
    Turbo Baby
    January 28, 2011 at 12:19 pm

    Miss V is right about pre-payment penalties, call you servicer.
    Countrywide offers no cost refinances. I suggest you check them out as well

  4. Reply
    Etta P
    January 28, 2011 at 12:57 pm

    I would certainly check to see if you going to be dealing with a prepayment penalty on the existing mortgage. Then check with your Wells Fargo HMC and see if what the current rate rate is at curently. Discuss with your HMC about longer term lock ins to be able to wait until july if you too. hope this helps

  5. Reply
    harmycj
    January 28, 2011 at 1:06 pm

    Sometimes it makes sense if your credit situation has improved to re fi. But sometimes it doesn’t! If you are in the state of California I work with a great morgage company. That can put together 5 or 6 options for you to see what better fits you. If you are intrested get back to me. harmycj@yahoo.com

  6. Reply
    yourmtgbanker
    January 28, 2011 at 1:08 pm

    You need to pull the copies of your husband’s loan papers. It will state on the note if there is a prepayment penalty and how it is calculated. If you cannot find the paperwork call the lender and ask them how the prepayment is calculated and how much it is? Next, call and see what rate you qualify for and what your payments are. Ask for an amortization schedule. Compare the amortization schedule with the prepayment penalty and you can calculate if the savings to refi are feasable now. I have refinanced customers and saved them money even though they have had to pay a prepayment penalty.
    As far as the Countrywide no closing cost suggestion of another user. Beware of this, any lender can offer no closing cost refi’s it’s called “premium pricing” your rate is raised from what you qualify for to compensate for the closing cost fee’s. Whether they do it this way or roll in the closing costs you are still paying for it one way or the other. If you have more specific questions you can click on my icon and email me. Good luck!

  7. Reply
    Casey C
    January 28, 2011 at 1:48 pm

    AT 9.5% it could very well make sense to refinance today and incur the prepayment penalty and pay closing costs.

    For example: If a prepay penalty and closing costs end up costing $ 10,000, but your monthly interest savings between now and the time your prepayment penalty is up ends up being higher than $ 10,000, it makes sense to do it.

    I work for Chase as a nationwide loan officer. No matter what state you are in, I can evaluate your situation and help you out. Wells Fargo has recently cut back on many of the programs they are able to offer their customers and Countrywide is operation at 50% of what they were even last month.

    I also offer $ 500 cash if any other bank can beat my offer.

  8. Reply
    ringmessenger18
    January 28, 2011 at 2:23 pm

    You have to call your current lender and find out the term of your Pre Payment Penalty if you don’t have one your in the clear and can refi right now. If you have one for one year your still clear because it’s now august. If the term is two years, i recommend you wait till you refi again. If you want some help i am a Mortgage Specialist working with TopDot Bank and you can email me at Ringmessenger18@yahoo.com to find out more or go to TopDot.com to see more about our company.

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