What do you think about this? refinance question?

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We have an investement property- a 2 family home. We are collecting less rent than the mortgage paymentt This has been the case for a while. I decided to call the bank to see if they would give us a loan modification (last year they would not). However this year, they say we are eligible for a Fannie Mae refinance, since our loan exceeds the value of the home and we would otherwise not qualify.

When I go online and use the online tool with my information/account in the system, 30 year fixed rate is 4.875%, but loan officer is giving me 5.65%. The option he is giving me says I will save $ 445 monthly. Closing will cost between 6K and 9K. When I ask why, I feel like he is giving me the run around and is not answering my questions…he says

“That is based on a certain scenario, but this is the best option for you because you are upside down anyway”. (meaning I owe more than house is worth). When I asked him to give me other options..he said

“You are already upside down on your house, don’t you want to save money?” When I asked him to explain the scenario in which I would get the 4.875%, he said “At this point it really doesn’t matter because you are upside down” –

When I asked him to tell me the interest rate on a 7 yr. ARM- he said I would be paying almost the same thing- but did not give me a dollar amount or interest rate. When I told him I wanted to discuss with my husband, he said- “What do you need to discuss, do you think he’d have a problem saving money?”

I have not signed the papers yet and don’t know if I want to. Should I contact a different loan officer. Is this one doing the right thing. I just want answers and he’s not giving them to me. Or should I just suck it up and sign. My current rate is 7.5% and loan amount is $ 402K.
New loan amount will be at least 410K. According to them, the house is worth $ 383K
The Refinance option is PART OF the making home affordable program. Obviously I don’t qualify for a modification, but I DO qualify for a refinance under this program…I know what I’m talking about in regards to that, just want to know what you all think about the representative who’s ignoring my questions!!
under normal circumstances I would not qualify for a refinance..
Less rent is because yes, we did make some bad choices, but more than that have trouble attracting tenants who can pay a $ 1700 rent (which is what a 3BR goes for in NYC), so rented for $ 1400- ended up evicting anyway. Before eviction rent collected was $ 2650, mortgage payment is $ 3215. After eviction= less rent collected.
we are not behind on payments, we are doing the right thing I thought by taking out of savings, so cannot qualify for any of deed-in lieu, forclosure assistance, etc. because we are up to date.

  1. Reply
    April 29, 2011 at 9:21 pm

    Run away! He refused to tell you the interest rate, a sure sign of someone less than fully honest and candid.

    You should educate yourself more on how mortgages work. Lots of good and bad information on-line. Try Fannie Mae website.

  2. Reply
    April 29, 2011 at 9:29 pm

    generally, the interest rate you are quoted is based on, among other things, your credit history. Depending how far you are into your 10,15 or 30 year note, and whether you can roll the $ 9k into your note, this may be a good option for you…

  3. Reply
    April 29, 2011 at 9:31 pm

    Honestly 5.65% id pretty darn good for investment property. You should be grateful they are even modifying your loan, they do not have to, this is not your primary residence. They are simply increasing your net profit.

  4. Reply
    April 29, 2011 at 9:52 pm

    I don’t know what “online” thing you’re looking at, but no “online” estimator guarantees your entitlement to a specific interest rate. Underwriting will determine what APR you are offered. That takes into account your credit and income as well as the LTV for the loan (apparently 100% or more in your case).

    A refinance is not a “loan modification.” I doubt that you can get your current loan “modified” on an investment property. You have the option to seek quotes from other lenders, if you can find one willing to refinance.

  5. Reply
    Johnnie P.
    April 29, 2011 at 10:27 pm

    DO NOT SIGN THIS!! Obviously this is a BAD DEAL if he wont give you the answers you are seeking! and from what im getting it sounds like a terrible deal! He makes commision off of you,,, which is WHY he wants you so eagarly to sign!! First off WHY are you getting less monthly then the mortgage amount? you obviously made some sort of terrible deal along the way if this has happened. Your best option will usually be a separate lender or the federal government. The government offers refinance options through the FHA, but these options are only extended to victims of predatory lending. If you received a subprime loan, made payments before the rate adjusted and can no longer make payments, you may be eligible. Otherwise, shop your mortgage around to other traditional lenders. Try settling the debt?? If you fear you will face foreclosure, the lender may be willing to work with you in order to mitigate the potential losses they will experience if a foreclosure occurs. Lenders rarely recover fully if a home is seized and liquidated, especially in a bad market, so you may find this process easier than you think. Ask for a quote to settle the remainder of your mortgage. Then, shop for a new loan that would totally pay off that quote. The lender may adjust the remainder of your mortgage to a level more in line with the value of the home, mitigating your losses and getting you out of the upside down situation.

  6. Reply
    April 29, 2011 at 10:46 pm

    You have a bigger problem then a lousy broker. You cannot get a 4% interest on a commercial mortgage. That is not your primary residence.

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