Hmm How do I get me one of those?

BTW I know this is a little off topic, but can I re-finance a second mortgage only? We did a second with the intention of paying it off when we sold our old house, however we ended up with a restriction on paying it off within a year so the money has been in the bank since then. Now I think I'd rather hang on to my money, but I'm not liking the high rate.

Or is it better to re-finance the 1st and 2nd into one?

Hi Lyfia,
A) you can get you one of those by chatting with the loan pro you trust (or, if you don't have one you trust, get one ;~)

B) Yes, you can refi a 2nd only. Again, chat with the pro you know.

C) SOMETIMES it is better to combine old 1sts and 2nds together... but it depends on many issues, so have your trusted pro do the analysis according to your actual details & show you your best options.

Luck!
Dave Donhoff
Leverage Planner

Unfortunately these rates are for first mortgages, primary homes. I just hung up with Wells Fargo who quoted 7 1/4% + 3 1/2 points on a rehab loan, 20% down. The loan amount was 150K + 40K for repairs. The lady there also indicated that this would be the last mortgage (a total of four) and five houses that I could have.

I am pursuing Dave's (A) above, entertaining (C) to get up some more cash in order to make (D) happen. Wife is nervous and needs to see the big picture. Our current stake is 805K (zillow) in four houses, 400K in paper, and they start maturing in 11 years. Monthly cash flow is positive (barely). Best way to do my next deal?

Hi Bushleague,

There are still investor loans available for unlimited financed properties... but the down payment (or existing equity) typically needs to be healthier, like 30% or so.

Alternatively, we are doing a LOT of private banking loans more & more these days... that is; matching private individuals with underperforming CDs, IRAs and 401(k)s who like the idea of making safe loans secured by real estate.

Not what you'll ever find talking with the retail clerks at the glass & marble banks though. Need to either DIY, or work with the kinds of brokers (or leverage planners (not spamming here)) that do this regularly.

Cheers,
Dave Donhoff
Leverage Planner

We were quoted 4 7/8 with 1 7/8 pts for 15 year fixed yesterday. As we don't HAVE to refinance, we're waiting...

My current 30 fixed is 5.8%.

I would love to refinance my existing owner-occupied SFH to a 15 year fixed at approx 4% up to 4.25% with zero points and low(or nearly none) closing costs.

Sounds like this rate might be realistic at some point in the near future. This would be excellent.

David,
Do you know if they are extending into 2009 the legislation that raised conforming limits past $417K in certain geographical areas - or does it end with 2008?
Spy

Hi Spy,
Certain members of Congress are indeed pressing to keep the higher conforming limits in place.

Its certainly not a "lock"... but when has government EVER significantly reversed a candy giveaway?

I'm betting they make it so. NONE of the elected politicos want to be associated with anything that could be construed as increasing the burden on the housing markets.

Cheers,
Dave Donhoff
Leverage Planner

Hi Dave,

After I asked you the question about 2009 Conforming Limits in High-cost areas, I decided to do a little research myself.

I went to the OFHEO's website and saw that in early November they did indeed announce the 2009 conforming limits. Similar to last year - they've designated higher limits to "high-cost areas", but I was disappointed to learn that they lowered the conforming limit in my "high-cost area" (Greenwich, CT) from $708,750 in 2008 to $511,750 for 2009 (1 family home). $511K will barely by a 1-bedroom/1 bath home in my town.

Oh well....

Here is a link that might be useful: OFHEO High Cost Loan Limits for 2009

I could have got 4.875% zero points at USAA yesterday. I didn't jump on it b/c I didn't want to 'jump on it'. We're currently at 5.75 - a good rate, but if we refi'd even to 4.875 at zero points (or less) it would pay for itself in about 12 months.

I'm going to watch rates a bit more. I have a few alerts set up. I'm gearing for 4.5 zero points.

"Unfortunately these rates are for first mortgages, primary homes. I just hung up with Wells Fargo who quoted 7 1/4% + 3 1/2 points on a rehab loan, 20% down. The loan amount was 150K + 40K for repairs. The lady there also indicated that this would be the last mortgage (a total of four) and five houses that I could have.
I am pursuing Dave's (A) above, entertaining (C) to get up some more cash in order to make (D) happen. Wife is nervous and needs to see the big picture. Our current stake is 805K (zillow) in four houses, 400K in paper, and they start maturing in 11 years. Monthly cash flow is positive (barely). Best way to do my next deal?"

you are playing with fire given your small cash flow. however you seem to have a lot of total equity. do you need all the homes; maybe try to sell to close the debt so you can refi or secure new loans.

be wary of private financing. the terms can be onerous (pre-payment penalities, interest only, required minimum payment terms, etec.)

good luck

Hi Dave,

Just wondering how come our local mortgage rate is still at 5-1/2% for a 30 year fixed (from a mortgage broker.) Our rates are always higher than the national average. Granted we live in a small town in the Midwest.

Is there any way we could refinance via a bank or a mortgage broker and get the rate you mentioned? Where and how? (We live in Carterville, IL)

I really appreciate your input.

Hi waterlover,

As your loan size gets smaller... rates get squeezed higher. Reason is because service fees don't get any smaller after the loan size gets to a certain point... so, as a percentage of the loan the fees look larger and larger.

Because of state lending restrictions, we are all limited in the upfront fees we can charge as a set percentage of the loan amount... so as the loan size shrinks, the amount of upfront fees that can cover the real costs gets smaller & smaller (despite the real costs staying put.)

In order to cover the costs, the lenders have to add a premium to the interest rates, so they can re-sell the loan more profitably on the secondary market (and thereby cover the real costs.)

Hope that helps explain.
Dave Donhoff
Leverage Planner

Waterlover,
You asked how to get around it;
Check with other brokers & lenders.
If I am wrong about your loan size being smaller, there ought to be a taker at lower rates for you.
Dave Donhoff
Leverage Planner

Dave,
I read something today (for the life of me can't remember where) that said rates are expected to stay crazy low well into 2009. What do you think of that? I want to refi because I have a 10 year ARM. I have 7 years left on it, but since rates are so low might as well do it now. (it's 5.375, it was a jumbo but the amount is no longer a jumbo since they've been revised) I am not in a position to refi right now, but should be later in Q1. What do you think? Thanks.

Also, out of curiosity, do mortgage brokers like you work nationally, or only in your state?

Hi Sue,

I think the underlying cause of the currently low rates (government intervention) is going to continue... in a BIG way... for the immediately foreseeable future. I think rates in the mid 4%s to low 5%s will be grabbable for a good 3-6 months (knock on wood.)

Some mortgage brokers have national licensing... AND yes, I do, indeed.

Cheers,
Dave Donhoff
Leverage Planner

Thanks, Dave.

I believe one of the CNBC analysts was already quoted as saying that the Fed is aiming to get mortgage rates to the 4-1/2% level for the foreseeable future.

Welcome back, Dave! May 2009 be a year of healing and renewed joy for you and your wife.

Dave,

When DH and I finish building in late Feb. we will have to convert our construction loan to a fixed loan. We used most of the money from the sale of our previous home to build most of the house. But...we will have to carry about $100-120K. If we have the means would you advise to totally pay that off? These uncertain times make me lean towards that way, however, the loan rates should certainly be feasible.

Warm wishes to you for the holidays and God Bless!

Hi twotogo,

When DH and I finish building in late Feb. we will have to convert our construction loan to a fixed loan. We used most of the money from the sale of our previous home to build most of the house.

Ouch... that sure feels risky right off the bat. I hope your retirement earnings assets aren't suffering from that loss of cash.

But...we will have to carry about $100-120K. If we have the means would you advise to totally pay that off?

It depends on what you mean by "the means." Does that mean that after you paid that off, you would still have at minimum 12 months' worth of total living expenses, plus sufficient remaining working assets at a saf rate of return for both financial freedom AND security againstg under-insured risks?

Few people have THAT much in means... but if you actually do, I suppose you could afford the risks of giving up your liquidity to the mortgage bankers.

These uncertain times make me lean towards that way, however, the loan rates should certainly be feasible.

I'm confused... uncertain times have you PREFER to volunteer your safety cash and working capital away?

The more uncertainty in the economy, the ever more critical and precious is our retention of reserves, safety resources (sufficient insured coverages,) and working capital, preferably quite liquid.

Warm wishes to you for the holidays and God Bless!

Right back to you as well, with my appreciation and love.

Cheers,
Dave Donhoff
Leverage Planner

Thanks so much, Dave! I guess what I was trying to put forth was, shouldn't we aim to be debt free? I mean if we could pay off our house....actually our plan was before this rotten downturn was to sell our home we had been in for 15 years, take the profits and pay cash to build our house on our paid for property on the other side of the state! But I see your point about being "liquid"......Thanks again :)

Twotogo,

Remember, all debt is not the same... just as all scissors are not the same. Throwing away all of your tools (even the sharpest ones) before you're done needing their functionality and standby benefits can be as dangerous (or MORE so) than keeping them in your control carefully.

If you focus on FINANCIAL FREEDOM and SECURITY... instead of debt freedom... you WILL also get debt freedom... but you won't as likely accidentally paint yourself into a financial trap corner.

EVERYONE ought to get out of all debt as SOON AS IS SAFE... and not a day earlier ;~)

Cheers,
Dave Donhoff
Leverage Planner

Glad you're back, Dave, and hope the new year proves kinder and gentler for you. I've been thinking about you and Dagny a lot lately.

I owe about $140K on a home in a relatively-unfashionable Maryland suburb of DC; the house is probably worth about $250 to $300K, but there are over 75 homes for sale in the two miles around me, so it's hard to know what the true value is. My present mortgage with GMAC is 6 3/8 APR, so yes, I am looking to refinance. My credit scores are around 760; I have no major debts and pay my credit card off in full maybe 11 of 12 months each year.

Best NFCU would quote me as of a week ago is 5% APR with 2+ points, best GMAC would offer (same timeframe) is 6 1/2 with 1 point. Is it because of the small loan value? or am I missing something? Shouldn't I be able to do better than that?

Lynn

Hi Lynn,

Thanks for the kind & gentle thoughts for us... we feel them, appreciate them, and do our best to let the love reverberate back out from our hearts as well (forgive the woo-woo-siness... these are the times for deep spirituality & love, IMO.)

With a loan size of $140k or so, you're above the size restrictions that create artificially higher rates. I think the problems are probably compounded;

A) calling around for rate quotes is a crapshoot anyway... the industry has no requirement for being bound to any quotes given, so even if an honest originator WANTED to try to pick a reliable rate from the constantly changing markets... that honest originator knows that unsavvy rateshoppers will compare him to the lowball liars (as though the lowball liars were actually legitimate.) THUS, honest originators generally won't "quote" with any seriousness, and rateshoppers will perpetually find their ways to the lowball liars.

B) In the current rapidly-changing market environment, many retail lending agents/clerks (who are strictly bound to ONLY their own bank's internally published rate sheets,) are forced to 'quote' rates that are not actually very competitive anyway. This is because (it seems to me) the retail banks are trying to "get away" with more profitability because most retail rateshoppers tend to be a little less savvy, and more likely to believe what the retail bankers tell them.

Keep in mind my standard rant;

Choose your provider according to preliminary "quotes,"
And you've simply chosen the most successful Liar.

Choose according to character quality, competitiveness,
honesty, and your personal assessment,
And you will set yourself up for the better Experience AND
the better bottom line pricing!

Cheers,
Dave Donhoff
Leverage Planner

I'm shopping around also. Got a rate of 4 1/2 from Chase but with points. Will cost me approx $7,000 on a refi.

I have a HELOC at 3% and it makes me nervous. But I'm also feeling greedy. Paid off an auto loan and my first mortgage with it. Using it to fix up the house to put on the market this Spring. Wondering if its worth refinancing and how long this low interest rate will last.

Jane