Thinking of a refi : hidden traps in fine print ?

[timewilltell]

I have a concern about maybe doing a refinance on my home. It's been a while since I've done this since I see bankers and these types as the scum of the Earth, I am understandingly nervous.
My basics: 11 years into a 30 year fixed at 6.75%, with about 160 K left to pay on a 500K house ( California  ).
They seem to offer about 4.5% fixed on a 15 year. Payments would go down a little, maybe 100 bucks , and total interest would go down $80K.

So are they writing any 'tricks' into the fine print to benefit the criminal bankers when-if things get strange with the country ?
Should I look at any of the ARM loans ?
I am not doing this to 'keep my house' or ward off foreclosure, I am in good standing, and have no problems paying the current loan.

I'm hoping some financial wizards might stumble on my post. I'm financially dumb.


-thanks!

[exocet5]

Who is your current lender?

Make sure any signature you make includes your hand-written date. There is a trick where some documents will appear with a sig line but with no date line. If you sign w/ no date, this is an open door for continual 'lookbacks' by your bank at your current financial status. With a dated signature, there is a timeout of the lookback period. (a few years instead of infinity).

I've heard that IndyMac is pretty strict with any problems down the line....BofA is much more lenient when it comes to modifying terms. Additionally, try to get the longest lock period you can......45-60 days. Do not go with a 30 day lock unless it's your original lender doing the modification/loan. There are multiple cases of refi's dragging on past 60-90 days and folks losing the terms. It's absurd.

The good news is that your loan is over 100k. Sub-100k loans are bad news b/k they don't make enough money for most banks to dabble in (for mortgages).

Another product you may consider is looking at Union Bank of California to see if they still offer the fixed-rate HELOC product. Instead of a traditional loan, consider a HELOC or HEL that is a zero-cost product. There are zero fees/points/costs the last time I checked.

Your mortgage is low enough you may qualify for the HELOC terms and Union Bank has a nifty product where you can turn the variable loan into a fixed rate product aka just like a regular mortgage. Did I forget to mention it's a ZERO COST product???!! You could save 5-7k upfront vs. a traditional refi into a new Deed of Trust (aka mortgage).

here: https://www.unionbank.com/personal/products/credit/home_equity/home_equity_line_of_credit.jsp
(haven't checked the terms lately so do your due diligence)

[timewilltell]

Thanks for the info!
 My current loan is with Chase ( it was with WaMu, but they were absorbed  ).
Funny thing is when I asked Chase about refinancing, they transfered me to Quicken. Quicken explained that Chase is too busy with problem loans, and they don't want to bother with people like me.
So if I call Union, I guess I should just ask if they still have mortgages with terms similar to the HELOC product? Something with an extra low variable rate that can settle into a fixed rate would be great!

[exocet5]

You want to see if they have the HELOC product with the fixed rate option. From the link I posted (didn't look at it too closely), it seems like they still do.

It would probably be a good idea to compare all this stuff using bankrate.com 's calculators.

Union's HELOC product might have zero costs up front but might cost more in the long term.
The other banks traditional mortgage/refi will have more costs rolled into the loan. (5-7-9k depending on the lender/terms)

Personally, I'm of the opinion that inflation will hit hard sooner than later. Therefore it's better to keep more money in your pocket now by avoiding points/fees/ whatever you can.

The other question you might have to ask yourself is does a HELOC (10 or 15 year term) with it's tantalizing ability to draw out cash make sense vs. a traditional loan? The honest question is are you/& significant other disciplined to not break into the cookie jar? If the answer is unclear, a traditional refi'd mortgage might make the most sense as it eliminates the possibility of drawing out equity.

You could also go with a straight-up Home Equity Loan (5-10-15 year terms) that acts like a mortgage. Should be zero-fee like the HELOC but with no equity/cash-draw function.

[cz]

Thanks for the info!
 My current loan is with Chase ( it was with WaMu, but they were absorbed  ).
Funny thing is when I asked Chase about refinancing, they transfered me to Quicken. Quicken explained that Chase is too busy with problem loans, and they don't want to bother with people like me.
So if I call Union, I guess I should just ask if they still have mortgages with terms similar to the HELOC product? Something with an extra low variable rate that can settle into a fixed rate would be great!

They're too busy rejecting people with problem loans to bother with someone with an obviously stable loan they're making money off of.  Why would they want to help, when you said yourself you'd be "saving about $80K in interest" (ie, they would be *losing* $80K in potential interest).  I know, I know, if you go elsewhere they lose it all, but... this is "bank think" we're talking about.

Oh, mine is paid off now, but years ago when I refi'd from the original 30year, I went with another 30year.  I could've gone with a 15, and my payments would have stayed about the same (with 1-3/4% lower interest at the time), but our company was being bought out and the future (employment) was "unknown"... so I went with the 30, my payments were $250/mo less, and I just kept paying the original amount (ie, $250/mo extra principal every month).  Interest savings (on paper) is somewhat irrelevant if you pay it "as if" it was the 15 - and if I'd been laid off (which didn't happen, despite my fears), the lower payment would have been far easier to keep up with (in fact, $950/mo or so, I probably could've covered it with unemployment).  I'd do the same today if I was getting/refi'ing a mortgage - keep the *required* payments low, and pay "as if" it was a shorter term.

[Shayler]

My experience with refinancing back in 2005 with Chase was not very pleasant.  Not sure if they (banks) are playing this same game. 

I had a 115k house with 25 years and 85k left on a 30yr 6.75% mortgage. Chase offered a 15yr 5.65% fixed loan for the rest of the 85k.  After signing, I realized I paid about $1000 in points, $3000 in closing cost and now paid PMI (mortgage insurance $30 a month).  They said over the phone none of this.  It took 3 years, several calls to Chase, and two formal letters to the Consumer Advocate to have them to stop charging the PMI.  Chase claimed PMI would have to be paid for the full 15yrs of the loan. 

My advice would be to get your own lawyer to do your closing, not one provide by the bank.  Also be ready to walk away from signing the paperwork if it does not match what someone said over the phone.