Mortgage Refi Question

[ArgentCy]

Automated valuations work great in places like subdivisions where everything is the same and there is lots of data. They fail pretty bad when you have a different variable that is more important like condition, waterfront, etc. Neither one is great if there are no sales available

 

[ArgentCy]

As someone who sold loans years ago, boy do i wish they always came in at or above 90% of the time. Of course, that was during the downturn. I had multiple deals die on bad appraisals, even when i'd been conservative in my home value estimates, pulling from as many sources as i could.

Another problem is that the appraiser will get blamed and possibly sued if the value/market goes down. completely unrelated to the report but still a major risk. Especially when a market is already going down. I think half the reason banks still get an appraisal is simply buying their E&O insurance.

 

[CloneGuy8]

Current mortgage is a 30 year at 4.25%; got a lock today for a 25 year at 3.5% w/ no closing costs. Talking with another lender tomorrow, but I'd be surprised if they can beat that.

I keep going back and forth on whether to take this. On the surface it seems like a good deal, however one thing I'm hung up on is the equity I have. I think I'm at about 20%, but I'm not totally sure (only put 5% down when purchasing the house). If the appraisal comes in less than what I think my house is worth, then I would hate to be out $500.00 for the cost of the appraisal.

 

[CloneGuy8]

I keep going back and forth on whether to take this. On the surface it seems like a good deal, however one thing I'm hung up on is the equity I have. I think I'm at about 20%, but I'm not totally sure (only put 5% down when purchasing the house). If the appraisal comes in less than what I think my house is worth, then I would hate to be out $500.00 for the cost of the appraisal.

Also I've recently started paying a couple hundred dollars extra on principal each month. Doing a calculator with the extra principal payments, the payoff dates for my current mortgage vs what my new mortgage would be are nearly identical.

 

[alarson]

Also I've recently started paying a couple hundred dollars extra on principal each month. Doing a calculator with the extra principal payments, the payoff dates for my current mortgage vs what my new mortgage would be are nearly identical.

Even if you continue making those extra payments?

 

[CloneGuy8]

Even if you continue making those extra payments?

According to this site, yes.
https://www.mortgagecalculator.org/calculators/what-if-i-pay-more-calculator.php#top

 

[alarson]

According to this site, yes.
https://www.mortgagecalculator.org/calculators/what-if-i-pay-more-calculator.php#top

I must be missing something then.

If you change nothing about your loan other than lowering the interest but otherwise keep making the same payments as today, you should pay down your loan quicker..

 

[CloneGuy8]

I must be missing something then.

If you change nothing about your loan other than lowering the interest but otherwise keep making the same payments as today, you should pay down your loan quicker..

That's what I was thinking; maybe I'm misunderstanding it.

 

[Gossamer]

Correct, it’s a recertification form! If it’s a Fannie to Fannie loan product, u can often get a waiver as the valuation info is already in their automated system. I think we’ll see a lot more automated valuations over the next decade... will be good for consumers cost but I would be worried about job security if I was an appraiser.

There are two different things being talked about here...a recert and a waiver are not the same.

See from FNMA: https://www.fanniemae.com/content/guide/selling/b4/1.4/10.html

https://www.fanniemae.com/content/guide/selling/b4/1.2/02.html

Appraisers will continue to have jobs as long as new properties are being built...but you're right, they are in harms way long term. So many are terrible at their jobs in terms of customer service and timing.

 

[Gossamer]

Another problem is that the appraiser will get blamed and possibly sued if the value/market goes down. completely unrelated to the report but still a major risk. Especially when a market is already going down. I think half the reason banks still get an appraisal is simply buying their E&O insurance.

Both of those statements are false. Appraisers don't get sued because market conditions may impact the value of a home they once appraised.

Banks/CU's get appraisals for two reasons: 1-they are required to (in nearly all cases) because the GSE they are selling them to requires it....2-because collateral is the ONLY thing in a transaction worth a damn.

 

[Gossamer]

Recast costs and options vary greatly amongst services. Anyone wanting to do a recast should check with the lender before they originate so they can shop for an investor that has a favorable recast policy. The cast can drop your monthly payment so not something u can typically do on your own.

I've never seen someone investigate a recast policy unless they know ahead of time that they will have the need, but agree it would be smart if you know you may want it...furthermore, it's nearly impossible to know for sure who will hold your mortgage long term because so many sell servicing...and the servicer dictates the recast policy.

Anything over a couple of hundred dollars is ridiculous.

 

[2forISU]

Keeps getting better from a purchase/refi standpoint. Rates might see another .25%-.50% drop this week

 

[ArgentCy]

There are two different things being talked about here...a recert and a waiver are not the same.

See from FNMA: https://www.fanniemae.com/content/guide/selling/b4/1.4/10.html

https://www.fanniemae.com/content/guide/selling/b4/1.2/02.html

Appraisers will continue to have jobs as long as new properties are being built...but you're right, they are in harms way long term. So many are terrible at their jobs in terms of customer service and timing.

It takes times to do real work. Does anyone ever complain how long it takes lawyers to get anything done? And you are paying a heck of a lot more for that job. There are lots of terrible appraisers because they don't make any money. The good ones are stopping doing any lending work and transitioning to private work.

 

[ArgentCy]

Keeps getting better from a purchase/refi standpoint. Rates might see another .25%-.50% drop this week
View attachment 65685

I don't see this being real short term. Looks like we have a recession coming to the US for the first time in a long time. We set a new record low yield for US Treasury 30 year bonds.

https://www.zerohedge.com/news/2019...2s10s-yield-curve-inverts-first-time-12-years

 

[2forISU]

I don't see this being real short term. Looks like we have a recession coming to the US for the first time in a long time.

https://www.zerohedge.com/news/2019...2s10s-yield-curve-inverts-first-time-12-years

We had an inverted yield curve in 2005 and it took 2-years before we were in a recession.

 

[Sigmapolis]

Keeps getting better from a purchase/refi standpoint. Rates might see another .25%-.50% drop this week
View attachment 65685

 

[ArgentCy]

Both of those statements are false. Appraisers don't get sued because market conditions may impact the value of a home they once appraised.

Banks/CU's get appraisals for two reasons: 1-they are required to (in nearly all cases) because the GSE they are selling them to requires it....2-because collateral is the ONLY thing in a transaction worth a damn.

Yes, most banks still get appraisals because they are required but there are numerous and growing exceptions. Fannie Mae hasn't required appraisals under the de minimus ($250,000) I believe it was and they've been trying to raise that level to $400,000. Of course we see the requirements decline significantly just as we hit a peak in the market.

Collateral is not the only thing of value in the transactions. The borrower has always been as much or a bigger piece of the value. It's not like they are going to just let the borrower off the hook if the home declines in value.

And yes, many appraisers faced lawsuits after the 2008 decline. There were some that were awful and some outright fraud but most were minor errors. Nobody paid any attention or cared until the market declined.

 

[ArgentCy]

We had an inverted yield curve in 2005 and it took 2-years before we were in a recession.

And it arrived and it was a doozy.

 

[isukendall]

Locked in a couple years ago on a 20 year at 3.25%. Super glad we did. If you have the opportunity to do it, do it.

 

[cyfan92]

Hopefully it swings down. They just told me it went back up to 3.625 today.

Most economic research pieces I'm finding are called for another 15-40 point fall thru year-end. Global economy is damn near in recession with China leading the downturn.

Even if things swing up, I'd say the ceiling is like a 1.75 10yr.