Refinancing a home

[HaloMilliVanilli]

We are considering looking into refinancing our home.  Might be able to get a better interest rate but was wondering about the cost to do it.  Anyone know what a refinance can run?  I've heard potentially $10k +.  Any way to lower the cost?

[Adam]

We re-fi'd our last place. I think it was just a few hundred bucks. 

 

That shit changes all the time. Send some emails out. 

[Brandon]

Average closing costs are around 3k.....origination, title, escrow, appraisal, etc.

Really depends what you qualify for and what the buy down is. Most places have a no cost option, as well. The only thing you'd need to do is set up your escrow account.

Also, you can generally roll all your costs/escrow into the loan and not come out of pocket.

[Tank]

i was way off on guess the OP.

 

 

this had happy bat written all over it.

[AngelsLongBall]

i was way off on guess the OP.

 

 

this had happy bat written all over it.

My exact thoughts when I saw the thread

[deepdrive]

It would have had to go terribly wrong and be near going into foreclosure because of some Nigerian loan shark to be a HappyBat thread.

[Vegas Halo Fan]

We did HARP about a year ago. The costs were folded into the loan, but I don't remember it being a lot.

[Brandon]

HARP is a cool program. The rates are a little higher because it's basically a no doc loan, but extremely easily qualifications and generally some benefit to make it worthwhile.

HARP was set to expire in December, but it's having such a positive response that the government extended it another year until next December.

Fannie or Freddie backed loan, no late in 12 months, and a loan before June 1, 2009....you're good. If it's a same servicer all you need is your dec page and a verbal verification of employment.

[Adam]

Holy shit

[Vegas Halo Fan]

HARP is a cool program. The rates are a little higher because it's basically a no doc loan, but extremely easily qualifications and generally some benefit to make it worthwhile.

HARP was set to expire in December, but it's having such a positive response that the government extended it another year until next December.

Fannie or Freddie backed loan, no late in 12 months, and a loan before June 1, 2009....you're good. If it's a same servicer all you need is your dec page and a verbal verification of employment.

 

Ours went through in a matter of days. Saved us several hundred dollars per month - one reason that I'm not driving an 18 year old car anymore (besides that it got too costly to maintain).

[Stradling]

Brandon, at what point do you get a Ferrari?

After he's finished paying for that watch

[Brandon]

Eh, I don't know anyone that went that nuts but am sure it happened in OC. I only knew one dude that went nuts with top of the line cars, but he was number one in the nation during the hey day before I took his spot. But he was making six figures a month, so it wasn't the dude in OC pitting a Ferrari on a credit card.

I still see a ton of high end sports cars out here in the financial sector of OC, but those days of being a housewife turned realtor or loan officer are done. Now you work twice as hard to make half as much after all the regulation that took place.

[Lhalo]

There were plenty of them but this guy took the cake:

https://hannahluci.wordpress.com/2013/06/24/i-met-the-predator-zero-in-a-bar-in-beirut/

[ten ocho recon scout]

Eh, I don't know anyone that went that nuts but am sure it happened in OC. I only knew one dude that went nuts with top of the line cars, but he was number one in the nation during the hey day before I took his spot. But he was making six figures a month, so it wasn't the dude in OC pitting a Ferrari on a credit card.

I still see a ton of high end sports cars out here in the financial sector of OC, but those days of being a housewife turned realtor or loan officer are done. Now you work twice as hard to make half as much after all the regulation that took place.

A buddy got me a job ouing cold calling for him at hisg place, and i stayed maybe 3 days. Wasnt for me. But he and his buddies were making ridiculous money, and youre right, i used to bartend with the guy who got me the job...and thats was both our only experience.

There was some little shit there (guy was a prick, even added a point to gis moms loan) who was about 24 years old and making 15-20 a month. Crazy

[ten ocho recon scout]

There were plenty of them but this guy took the cake:

https://hannahluci.wordpress.com/2013/06/24/i-met-the-predator-zero-in-a-bar-in-beirut/

Is it me, or should a 5 mill a month income lamd you better ass than the two in that picture?

Crazy story though, id watch the movie.

[Brandon]

That links a trip. We all worked for our self or through a credit union, everyone was doing well but I never came across those types of stories. Now out here in OC I hear them pretty often from the companies out here. One place had a Hummer or Ferrari that you got to use for a month if you were the top sales dude in the office.

The stories sound straight out of Boiler Room/Wall Street, but real life.

[HaloMilliVanilli]

Great info guys.  Just bought the house a year ago but the rates seem to have dropped so I thought I might look into it.  Sorry for the Happybat fake-arooski.

[Vegas Halo Fan]

The biggest problem here was speculators. Houses were appreciating at an astronomical rate. You could buy a house, do nothing to it and then flip it in three or four months for a five or six figure profit. When the crash came, they were holding a bunch of suddenly unsalable properties. Their rampant buying drove prices up even faster, and they fell hard.

Edited September 3, 2015 by Vegas Halo Fan

[Brandon]

Plenty of blame to go around.

The banks allowing no doc loans, the borrowers taking them and signing docs saying they make 90k as a janitor or doing the pick-a-pay loans and always picking the minimum payment which is lower than an interest only, the scummy loan officers bullshiting helpless people into loans they couldn't afford.

There was just an environment of free money. I still see people that have interest only loans on investment properties trying to save or keep them like it's 2005.

It went all the way from people on this board to Wall Street packaging subprime loans and selling them to the people on this board. It was a money cycle that wasn't remotely sustainable.

[Lhalo]

CNBC did a pretty good documentary on the '07-'08 financial crash. It explained credit default swaps and NINJA loans to a certain degree. Our friend the Lebanese bartender even makes an appearance.

http://www.imdb.com/title/tt1957928/

[Brandon]

I've seen just about all of them at some point. I'll probably remember it when I start watching.

It's tough to explain in simple terms how loans were packaged and put into tiers and sold on Wall Street or even how the credit companies and their parameters for loan packages.

It's actually a trip to see how deep down the rabbit hole things got for our economic crash, the whole derivative insurance shit where people knowingly backed bad loans is a trip.

[Tank]

I've seen just about all of them at some point. I'll probably remember it when I start watching.

It's tough to explain in simple terms how loans were packaged and put into tiers and sold on Wall Street or even how the credit companies and their parameters for loan packages.

 

 

i know nothing about any of this, so forgive me if this question is on the simple side . . . but if i take a home loan through bank of america, for instance, why in the world do they sell my loan to someone else?

[Brandon]

Generally, two reasons.

The most common one is that places just want to originate and do loans, but not service them. Usually, it's just a lack of capital to manage a portfolio of customers. Fannie Mae and Freddie Mac pay servicing fees to companies that service loans....take payments, general service, etc.

The second is common these days where companies like BofA or even who used to be the largest non-bank servicer in the nation, Ocwen, have egregious compliance errors or fraud and Fannie and Freddie will basically revoke the loans/servicing rights and give them to another servicer.

Most places that do loans don't have the capital to back them and sell them off.

[mrwicked]

Right, you are selling them so that you get $$ right away (although at a total less than you would had to kept it for 30 years), and the other party gets said total at a lower rate than had they originated the loan themselves.

 

Say I (the bank) lend a hundred dollars to someone (the buyer), at 5% interest. After 30 years I would get paid back something like $200 (or whatever).

Well, I don't want to wait 30 years to get my money, so I'll sell you one of my loans at a discount.

You give me $150, and I'll give you this loan that entitles you to the $200 payback. This is the "security."

Now you eventually get $200, but you only paid $150 for it. There's the investment.

And I turned my initial $100 into $150 immediately (I gave the $100 to the buyer, and got $150 from you the investor).

 

So just do that many millions of times, bundling a bunch of these together.

 

Banks make money hand over fist because they can immediately sell these things.

The people buying these securities see them as a great investment because the return is just crazy good.

 

But, what happens when people stop paying on the loans?

 

The bank doesn't give a sh*t, because they already sold it off. They just want to originate the loans and sell them, not deal with the slow process of receiving payments.

The person/entity left holding it is screwed. And a lot of times it was foreign investors who had bought these things.

 

Poof. The house of cards falls down.

Anyone who still had them on their books is F*CKED. They are essentially worthless now.

 

But you can see how it gets out of control, the banks #1 priority is LEND.

Doesn't matter how much you want, they will give it to you.

This in turn causes assets (ie real estate) to go up up up because money is so easy and cheap.

 

I'm sure there are better explanations out there but that's how I understand it.

B knows this sh*t better than I do he can probably get you all the dirty details of how it works.

Pretty crazy stuff.

Edited September 3, 2015 by mrwicked

[Tank]

thanks both of you, that was helpful.

 

 

now, can you explain freddie mac and fannie mae? i have no clue what those are.