Loan modification

This will not look unfavorable to FICO, will it? If not, sounds like a good - without actually knowing what your rates are.

whats your interest rate? you should be able to get a refinance 7/1 today 3.75 or less.

With the information you have given us, it seems like a good deal. The biggest thing is what the interest rate will be for the 5 or 10 year ARM. Here is one big catch. The reset interest rate on your current ARM could reset at a much lower rate than the rate you have now. If my ARM was to reset it would drop over 1%.

"This will not look unfavorable to FICO, will it?"

Good question PS, my loan is current therefore no FICO issues. If anyone has heard otherwise please speak up!

"whats your interest rate? you should be able to get a refinance 7/1 today 3.75 or less"

Yes, but at what cost and hassle? Also, this isn't my primary residence (it was when I got the original loan) so there could be some issues / rate pressure with a refinance.

"The reset interest rate on your current ARM could reset at a much lower rate than the rate you have now. If my ARM was to reset it would drop over 1%."

Another good point csn, if I wait it out I would reset at LIBOR + 2.25% (about 3.25% today). However, I would only enjoy the new rate for 12 months and it would adjust every year. Three years in, I may not be real happy.

My current rate is 4.5, the 5 year extension they are offering at 3.625 and the 10 year at 4.75.

I don't know if my situation is an exact corollary to yours, I am looking into refinancing but first called my mtg holder to see if there were any loan mod programs that I could take advantage of instead of going through refi. I was told that I could apply for a loan modification which would be based on my current fiancial situation- ie income and expenses/debt, and presumably if I was in bad enough shape according to whatever ratios they use, I could get mtg terms modified in some way- and this WOULD negatively impact my credit. Since I was doing this just to try to take advantage of low rates, i did not pursue. sounds like they are offering you something else- ie not based on your economic hardship so i can't imagine how they could report this negatively

Interesting kiz, I received a mailer from the bank with the offer (not a distressed situation). I wonder if banks have expanded these programs as a way to try and keep customers?

Regarding loan mod, that's what I was afraid of (what kiz said). I was initially interested in doing a refinance to a 30 year fixed from a IO 7/1 ARM, but the NYC Mortgage Recording Tax rate of $2.175 for each $100 of my condo price didn't justify the refinance.

Then I was interested in the loan modification from my bank (BofA), but I have been informed by numerous people that it will hurt my FICO score.

PS, this property is outside of NY so no issues with the recording tax. However, I recently refinanced my NYC property without a Recording Tax requirement. This was done through an assignment of the loan by my prior note holder and cost about $700 to get it done. Quite common in the city but your current lender has to be willing to do it.

Thanks for the tip on the FICO issue, I will definitely check into it.

If shong is out there, do you have anything thoughts on this?

ProperService: You don't have to pay the mortgage recording tax again on a refinance. Virtually every single bank will allow you to assign your existing note to a new lender (except HSBC, so be forewarned about taking a loan from them) allowing you to avoid paying the mortgage tax again since you already paid it when you purchased the property. On a refinance, you would only pay mortgage tax on the "new" money if you were taking cash-out above your original loan balance. This should have been explained to you by the bank.

Juiceman: If you're simply doing a rate modification it will not negatively impact your credit as a short sale or foreclosure would. The rates you're being quoted above are about 0.50% above market but you get to avoid the majority of the closing costs. The size of your loan, where the property is located (closing costs), and how long you planned on staying there would determine which route is better for you.

Feel free to email me at nycmortgage@gmail.com if you like.

JM, what do the 5/1 and the 10/1 being offered reset to? LIBOR + what? Being quoted 0.5% above-market seems stoopid high. NYCmortgage, can you let us know how many points it would take to buy down 0.5% in rates, so that JM would have an idea as to its present value. Something like 3 points?

Also, what's a typical 1-year ARM these days in terms of initial rate & reset rate? I.e., does he already have a below-market 1-year ARM as things stand?

Inonada: It varies, but on average it's closer to 2 points. Most Agency Arms adjust to Libor plus 225bps, some go as high as 275bps above.

A typical new one year arm today would probably be around 2.625%. His reset rate is undoubtedly going to be low, but most longer-term Arms have a floor of say 3% so that's probably what he's looking at. I don't see any value in going that short term though when you can go significantly longer out for just a few basis points more.

"The size of your loan, where the property is located (closing costs), and how long you planned on staying there would determine which route is better for you."

Thanks NYmortgage. Let's just say that the rate difference between the 5 an 10 is negligible from a monthly payment perspective. I don't owe much on the place, but enough where I don't want to pay it off.

"JM, what do the 5/1 and the 10/1 being offered reset to? LIBOR + what?"

2.25%

"Being quoted 0.5% above-market seems stoopid high"

I think you missed where I said this wasn't my primary residence (but it used to be). If I refinance, the new bank may say it is a second home or investment property, and jack the rate up a point or more. Through a loan mod, I may be getting a rate slightly higher than market, but the difference is fairly minor from a monthly payment perspective.

"I don't see any value in going that short term though when you can go significantly longer out for just a few basis points more."

I agree.

Someone iz about to fund me the cheapest 30 yr fixed money in my lifetime. Oh no mr.bill, what about the mortgage recording tax? Financial ninnies unite!!!!!!