Mortgage Rages - Negotiation?

Question

I heard on CNN that one might be able to enter into renegotiation of a sub-prime or low interest rate with the lender. I have one that will expire in June 2008, but carries a penalty of about $2000 (at this time) and less as the maturity of the loan matures.

I was not told that this was the type of loan I had applied for, although when I signed the papers I was surprised that my interest payments would skyrocket after three years and that if I refinanced before that time that I would have to pay penalties.

My question is directed at mortgage professionals in that can I ask and obtain a current interest rate without paying those penalties and without paying typical refinancing fees (closing costs)? What questions would I ask or how would I answer questions regarding transitioning to a fixed rate?

On CNN Donald Trump stated that, "The lender does not want your house". He continued by saying to "negotiate" with the lender to transition to a fixed rate. How do I do this?

From answers: My mortgage is with CountryWide's subprime lender, "Full Sprectum". I did not know this, nor was I told that I had a penalty for refinancing until the documents were to be signed. If I had not signed them on this day immediatly, I would have lost the ability to buy this home because the builder had a backup contract that would take effect on that day.

Answer 1

Here's my advice. - You have 8 months to implement this plan. Let's get busy.

If you have an ARM it was because you did not have stellar credit. Fix that now! Eat, sleep and breath getting your credit score up. Get you credit cards paid off if you can. If you can't get them below 30% of their limits. Do not generate a lot of inquiries on your credit report. Opt-out of pre-approved credit cards. If you have no credit cards. Get some. Even a secured card if used wisely will boost your scores. Get with a mortgage broker that has "score wizard" or "what-if". If they don't know what your talking about move on to the next one. Do not waste any time with a broker that does not know what those are. Once you find one he'll know what to do with you. Using these tools I have helped people boost their credit scores by more than 100 points in less than a year.

You probably also got 100% financing. If so, save every dime you can get your hands on. Get a second job, borrow from family, sell your crap on ebay. At a minimum get enough money to at least pay closing costs. If you can manage to come up with 10-20% of the loan value even better. You also want some money in reserve (liquid assets, savings account, cd, etc) at the time of applying for the loan.

Next, if you can afford it, improve your home. Update the kitchen and bath. Paint and carpet. Add a deck. Do what ever you can afford to improve the value of the home.

Loans are based on your willingness to pay (your credit) and your ability to pay (your income and reserves) and the value of the home. The higher your credit and the lower your LTV (loan to value) the better loan you'll qualify for.

Face it, you got a bad loan. Like it or not it's your fault. You're an adult and I assume you can read. It's your responsibility to read your loan doc's and the terms are spelled out in very plain English. You just didn't read them or ask questions. Forget wasting your time trying to renegotiate with your lender. I negotiate with lenders everyday...it's what I do. It's not for the faint of heart. It takes time, patience, and it's frustrating. Bite the bullet, pay the prepayment penalty, pay the closing costs, get a new loan and learn from your mistakes.

In 8 months you can improve your credit and financial situation dramatically. If you set your mind to it, develop a plan and stick to it. Then at least one month before your loan adjusts refinance out of that bad boy into a new fixed rate mortgage that you can live with the rest of your life.

Or, do like 10% of America. Blame it on someone else and walk away and let the bank foreclose. You can always get another house 2 years later. (sarcasm)

Answer 2

First of all, scratch what the last 2 people said. What Donald Trump is talking about is called a "streamlined refinance". The fees are lower (if there are any fees at all), but the loan has to be done through the SAME LENDER you currently have. Here's the problem though, if you have a sub prime loan, is the lender you have the loan with still in business? If not, you are going to have to refinance and pay normal fees (that is if your rate is even going to adjust). You have almost a year left though, so you may be jumping the gun on your concern. If you do want to refinance, you just need to find someone that isn't going to rip you off. Here's the first clue that you are dealing with someone shady...ask them directly "what kind of fees will I be paying", if they dance around the answer, ask them again. If they continue to dance around the answer, hang up the phone and call someone else.

Also, you DO NOT have to be in foreclosure to get help, that's one of the most rediculous things I've read all day lol. Now...if you ARE in foreclosure, there is NO help for you from the program being referenced for help from FHA and the government, as the rule states to qualify for the new help available your payments have to be on time BEFORE the rate adjusts, your income has to qualify full doc, and you have to prove that the rate adjusting is what got you in trouble. This information is available all over the place. At this point in time it is only FHA loans offering help to people in foreclosure, and you have to currently have an adjustable rate FHA loan. Only 240,000 people are eligible at this time. If you are in the Carolinas, I can do a streamlined refinance (since most of the subprime lenders do not work directly with consumers). If you are not, e-mail me anyway and I can give you advice anyway on how to find the right lender to work with (for FREE, I just want to help because I'm tired of seeing people get ripped off). If you need to sell the property because you are in trouble, I also buy properties. My work e-mail is [e-mail]

P.S. when it comes to anything you are buying, all prices are negotiable no matter what it is.

Answer 3

These renegotiations are only for those who are in or close to being in foreclosure.

It is likely not going to help you.

The lenders are not going to renegotiate with someone who is making their payments and has the ability to pay.

Didn't your lender explain that you were getting a 3/1 or 5/1 and that you had a prepayment penalty and then didnt the title company when you went to sign your documents allow you to read your terms?

Sorry that you are in a bad loan for your circumstance or one that you're not comfortable with but what's going on in the news is addressing those defaults or risk of default loans.

If you had to go with a subprime loan to get in your home....
it may be worth looking into fixing the rate.......2k prepay could be recooped in just a few months when that payment kicks in. Do you know what your increase will be when it adjusts? I am getting new clients coming to me with payments going up as high as 11K a month!

Make sure that if you do not understand the terms, that you either keep talking til you do or find another broker to help you who educates his clients as to what they getting into.

Good Luck

Open Book Advisors™

Answer 4

Yes, you can negotiate in today's climate. Arm yourself with as much information as you can such as your credit scores, the index used for upping your loan payments, and the mortgage broker's business structure. Deal with underlings first, but always work your way up to talking with the boss.

Think of it as re-negotiating a contract. That's what you're doing. The boss will always have the final say-so on how much he is willing to give back in order to get something rather than nothing. The lender will have the most leeway in easing up on penalties. Keep emphasising that you weren't told x, y, and z, and that z alone is going to kill you.

Ask around. Talk to your lender's competitors and get as much inside info as possible. Compare rates and terms and present them to your present lender in the best (for you) possible terms. Be a tough customer, but not a jerk. Good luck.

Answer 5

Depends on how rapid the transaction demands to be accomplished. Mortgages take time, particularly now, and the dealers possibly enticed in to taking much less cash in the event that they realize that they would possibly not must wait. You do not truthfully must use coins, you would leverage your present dwelling. Home fairness strains are faster and simpler than an funding form mortgages. Later you would refinance the estate at your entertainment. Good Luck!