Need advise on Mortgage?

Question

Just bought our first home and the monthly payments are very high. It is approx at 50% of my total income, which the pros say should be no more than 30%. Reality is now kicking in and the payments seem too high and I need some advise. I bought the home with 0 down and my rate is 7.25% (1 Loan so I am paying PMI of $245 a month) A 80/20 loan was more due to my credit. It is in the low 600's due to disputes. When should I re-finance? The reason we bought the home was because of the deal - we paid $310,000 but the tax records for 2006 appraised it at $395,000. I want to re-finance to get the 20% in equity to eliminate the PMI..but also I want a better rate. I have been in the home for 1 month...advise?

Answer 1

You dont have to refinance to get the PMI removed!!! If your home is indeed worth that much, just pay a few hundred dollars for an indpendant appraisal company to perform the appraisal. if it comes out that you have equity all you have to do is give that to the finance company and they remove the PMI.


Call them and ask if they have any requirements like a preferred appraisal company or anything and hten move forward....you should have no problem getting the PMI removed if it comes out to $387,500 or more (if you owe 310K.) If you hire the appraiser, let him know whats going on..... he will have your neccessary price in mind and then try to validate that using comps.

Answer 2

Guess what? You should really go to a qualified mortgage individual who deals with this sort of thing and go from there. Many RE agents (good ones) can recommend qualified people in the business who know their stuff. You will get lots of ADVICE here (some of it isn't bad but really there are many variables and not everyone here knows EVERYTHING. In fact, a couple of posters are wrong with a couple of things they stated, as was the guy concerning PMI. It isn't for people with bad credit or ones who have not established credit. That is NOT the purpose of PMI. It goes by how much you put down on the home, and some lenders require PMI if you have not put down at least 20% or more.). Why you took on more than you were able to pay initially is beyond me. People seem to do this ALL the time and then as you said, reality hits and the payments come due, and you find you come up short, and are in a panic (as you seem to be). You are right, 50% of your income is WAY to high to be shelling out for your mortgage. Why you would have agreed to this a mere month ago is a mystery, but get a hold of a qualified mortgage individual, sit down, and outline EVERYTHING and then let that person give you your options. And, as far as the disputes go, I have a feeling there is something you are leaving out of this equation.

Answer 3

Alot of your scenario depends on whether or not you have a pre-payment penalty. If you do, it might not be worth it to get away from your current lender. Also, it depends on who your lender is and whether or not they would be willing to work with you to get a lower interest rate. Unfortunately, because you only have 1 month's worth of equity, its really not enough to bargain with a lender. The purpose of PMI is for folks with less than stellar or new credit, however, some lenders are willing to not charge you that but the rate will be high. You could shop around but you are probably going to have to bite the bullet for the next 18 to 36 months. Once you've built up the equity, you could approach your lender and see if they are willing to keep you happy by giving you a better deal & not charging you the prepay penalty. If you have no pre-pay, you may be able to get a lender that will play with the monthly payment but again, the rate may be high. I used to put people with questionable credit in higher rate loans but with lower monthly payments with the knowledge that once their credit was better (after consistent monthly payments), they could renegotiate their rate. Hope this info helps you!

Answer 4

If you are thinking about refinancing, which may mean big closing costs, you may be able to get a HELOC. With a HELOC, there is usually no closing cost. Also, you may be interested in this new program. It works well with a 30, 20, or 15 year mortgage. I am currently using a HELOC with a new software program from United First Financial, called the Money Merge Account. This software helps build equity fast, and will help me payoff my home in less than half the time without refinancing, and without extra payments. It is saving me thousands in interest, and pays off home in less than half the years.

Answer 5

All the old rules are out the window these days with the agressive refi companies out there. refinance as soon as you can turn it to your advantage. Look up American Equity Mortgage who are presently offering 5.7% fixed 30 year -- see if you can find a better deal. Watch out for hidden fees and closing costs from all of them. It is possible that even though you have only been in the home for a month you have enough equity to get a better deal. Comparable pricing is more realistic than tax appraisals for refi purposes.

Answer 6

I do this for a living, and with your ltv (loan to value) and your credit score a refi would get ride of the mi and you should get a rate of at least a point less. 6.25. And FYI an 80/20 could have been done with a much lower score than yours. Hope this helps!

Answer 7

The bank lent you the money becuse typically even if you cant afford it they realize you will go to any length to mke the payment- you wont risk losing all. Trust in your lender, to this point you have only been there a month and you are freking out cuz - quite frankly you' re scared...but give it lil time and it will ll come together for you. I wish you the best!! Cheers!

Answer 8

wait six month and do a rate and term refinance. You rate is good,but it sound like you went to you max on your approval. Make sure you keep your credit CLEAN. Many had the same ideal, but jack up there credit and got stuck......