help
edit

Forums ›
Finance

Mortgage Refi and AOR- Seeking Your Thoughts

  • filter:
  • Email Topic
  • Text Only
  • Search this Topic »
  • switch to 'Classic' view
  • Page :
  • 1
rated:
   posted: Apr. 11, 2008 @ 9:35a
alert mods    

I'm looking for some advice. My AOR winds down in autumn. I have 5 yrs left on a biz real estate mortgage with an interest rate that resets close to prime annually in Dec, so now it really sucks. At 20% loan to value, I should be able to get a great rate. Another bank wants to refi, saving me ~$350/mo, locking the rate, but with 2k closing cost. I think they would freak at my financials, as I have 365k out in BTs, (earning/saving $1875/mo).

If I unwind, refi, and restart, that'll take a couple months. So my inclination is to do nothing. Giving financials now to one of the major BT banks is not what I want to do.

Options:
1) Do nothing
2) Unwind, refi, restart
3) Attempt refi with balances
4) Tell my current mortgage holder I want a new rate now, no financials, no fee, or they lose a customer with a 10 yr history of no late payments.
5) Refi with next AOR

I'm leaning toward #4, then #5 if it fails. Any other ideas?

   posted: Apr. 11, 2008 @ 9:35a

Quick Summary is created and edited by users like you... Add FAQ's, Links and other Relevant Information by clicking the edit button in the lower right hand corner of this message.


rated:
   posted: Apr. 11, 2008 @ 11:40a
alert mods    

Refi after AOR winds down.
I have 5 yrs left on a biz real estate mortgage with an interest rate that resets close to prime annually in Dec, so now it really sucks
Prime is 5.25% right now - I don't think that is terrible.

rated:
   posted: Apr. 11, 2008 @ 11:50a
alert mods    

TyroneSchulace said:

Another bank wants to refi, saving me ~$350/mo, locking the rate, but with 2k closing cost.

I have 365k out in BTs, (earning/saving $1875/mo).

Pretty sure you'll lose more than you gain.
Back of envelope, or in this case in a post math sez...

Assumpitons Autumn = Oct.

Savings $350 * 6 months - $2K closing = $100.
Lost BT earnings $1875 * (how many months to unwind and reapply)?

Well we can stop there. Risks to waiting ishigher rates. Still before the pres. election so you'll probably be okay.

rated:
   posted: Apr. 11, 2008 @ 12:07p
alert mods    

that is just a ridiculous amount of BT money. Where are you putting all that money into? Almost all savings accts are pretty weak right now in savings.

rated:
   posted: Apr. 11, 2008 @ 1:01p
alert mods    

There are two ways continuing to carry the AOR credit card debt could hurt you relating to a mortgage refinance that I can identify, compared to paying it all off to zero balances:

1. "Backend" Debt to income ratio. I believe they would look at the required monthly payments (or perhaps, use the "recent payments" off each account in your credit report), add them all together to figure your debt to income ratio. There is a "front end ratio" and a "back end ratio". The credit card payments get added into the back end ratio but not the front end.

As long as the debt to income back end ratio isn't a weak link in your financing, I wouldn't assume there would be any problem carrying the credit card debt.

2. Inadequate credit score for best financing deal. If high utilizations are making your credit scores too weak, that can be fixed by paying back individual account utilization to (my recommendation) either: 69% (for some "good" effect), 49% ("better") 34% ("best, and good chance every bit as good as paying down to $0."). Based on research I have done (at least in the PM123 FAKO scores), there is very little to no benefit to paying utilizations down to below the 34% number. Of course, YMMV, and it likely would even depend which credit scoring algorithm is used, but I'd be surprised if you found much benefit to paying down lower than 34% utilization.

Those are just my thoughts. You might find a trustworthy, preferably non-commission based mortgage guy and ask him. You could try applying and see how far you get. Then if you receive feedback, perhaps you will know what to correct (how high to raise you credit score by, or how far your backend DTI ratio must be reduced) etc. Then if you don't qualify for the best rates, you know how to plan to achieve it (while not excessively giving up 0% BT profits.)

I use a mortgage officer based at a Wa Mu bank branch, and he is paid salary and so has no motivations to sell to me. He has proven an excellent source of information for me. Having a contact like that guy would be useful for getting info.

Best of luck!

rated:
   posted: Apr. 11, 2008 @ 1:03p
alert mods    

therivler1: I'm at 7.5% right now. I've been offered a conditional 4.75%.

mhesidence: It's the 5yr lock that got me interested.

AnimEva:

AAFCU x 3=150k, 6%
SBOT for 70k, 4%
TDAmeritrade, 30k, 8% with bonus
Paid off 100k second lien and other note, 8% (I have an unused HELOC for backup)
20k went to an associate at 6% so he could pick up a first lien 7% mortgage
The rest chases bank bonuses or goes to FABT

rated:
   posted: Apr. 11, 2008 @ 4:15p
alert mods    

jakeru said:
2. Inadequate credit score for best financing deal. If high utilizations are making your credit scores too weak, that can be fixed by paying back individual account utilization to (my recommendation) either: 69% (for some "good" effect), 49% ("better") 34% ("best, and good chance every bit as good as paying down to $0."). Based on research I have done (at least in the PM123 FAKO scores), there is very little to no benefit to paying utilizations down to below the 34% number. Of course, YMMV, and it likely would even depend which credit scoring algorithm is used, but I'd be surprised if you found much benefit to paying down lower than 34% utilization.

These utilization numbers are probably bogus. The generally accepted thresholds for significant positive impact are below 90% and below 50%.

Message edited by: HappyGuy on 2008-04-11 16:17:07 CDT
rated:
   posted: Apr. 11, 2008 @ 6:20p
alert mods    

HappyGuy said:The generally accepted thresholds for significant positive impact are below 90% and below 50%.Agreed, and the 50% ratio coincides with jakeru. I've seen 70% mentioned elsewhere as a break point also. I thought the 90% was for AA, and for me 34% leaves too much on the table. If I'm going to 34, then I'll go to zero. But I'm still leaning toward a simple conversation with my present banker, unless I get a novel idea by next week.

mhesidence: Thanks for your input. I've done the math. This is why it takes me 1 1/2 months to do an AOR.

Message edited by: TyroneSchulace on 2008-04-11 18:53:44 CDT
rated:
   posted: Apr. 14, 2008 @ 9:47a
alert mods    

It's done. I called my loan officer this morning and very nicely started discussing current interest rates. She cut me off with "How does 5% sound? Then let it reset in December like it always does." Done deal, no paperwork for me, new rate on May 1st. That turned out to be easier than the typing for this thread.(I'm a lousy typist.)

rated:
   posted: Apr. 14, 2008 @ 2:20p
alert mods    

Thanks much of updating us on the outcome of your mortgage refi while carrying AOR balances.

I see you mentioned "no paperwork", does that mean you got a favorable loan modification without any formal application or credit pull? (If so... congrats!!)

Message edited by: jakeru on 2008-04-14 14:23:31 CDT
rated:
   posted: Apr. 14, 2008 @ 2:48p
alert mods    

Yeah, no application, pretty sure no pull. She didn't say anything about it, just made the offer. 10 year history I think really helped. They know me by my first name, and I've had other loans with them. She said since the loan was already set up for yearly rate adjustments, it would be no problem to do an interim one. They just send me a letter every year. This year I'll get two.

Message edited by: TyroneSchulace on 2008-04-14 14:50:26 CDT
rated:
   posted: Apr. 14, 2008 @ 5:14p
alert mods    

jakeru said:Based on research I have done (at least in the PM123 FAKO scores), there is very little to no benefit to paying utilizations down to below the 34% number. Of course, YMMV, and it likely would even depend which credit scoring algorithm is used, but I'd be surprised if you found much benefit to paying down lower than 34% utilization.

Does not work with real FICO. Threasholds are very fine-grained: 5%, 10%, 20%, 30%, etc. I have paid down BTs slowly, aiming to see the effect, and even paying down the last $4K (less than 5%) makes the real FICOs jump 12-15 pts.

My score recovered to 800 from about 755 in the course of paying from 39% down to about 1%.

W/ respect to TU FAKO, I agree. My score was in the neighborhood of 790 at all times, except for small, 5-pt, deviations due to adding a new account here and there and bumping off an inquiry here and there.

 Close

Sign Me In
Nickname: 
Password: 
Remember My Login Information:

Forget your login information?

Not Already A Member?
Sign Up Now!


Disclaimer: By providing links to other sites, FatWallet.com does not guarantee, approve or endorse the information or products available at these sites, nor does a link indicate any association with or endorsement by the linked site to FatWallet.com.


  • © 1999-2008
  • Message Board Statistics RSS Feed Information