My journey to refinance our mortgage began with high hopes, much like a hot air balloon taking off into the sky. However, it didn’t take long for everything to come crashing down.
Here’s how my week went:
Local Mortgage Company:
First, I reached out to a local mortgage company that my neighbor recommended. I chose this company because my neighbor and I have identical houses in a subdivision built about eight years ago. He’s currently getting his home appraised, which will give me a good idea of my home’s value, within about a 10% range.
After answering some preliminary questions, the agent presented three decent options. However, upon closer inspection, I noticed that none of the offers included PMI (private mortgage insurance), which I currently pay $90 for each month. After a follow-up call to the agent, I learned that PMI would need to be added to each estimate, making the options less appealing, even though one was a bit better with a 20-year term.
My Local Bank:
My dad, who recently had a positive refinancing experience, and I share the same bank. Due to his higher home equity, I spoke with a mortgage specialist who informed me that, because I might owe more than my house is worth, I’d likely need to use the Home Affordable Refinance Program (HARP). This government program allows refinancing even if the loan-to-value ratio is up to 125%. For me, this means my home could be valued as low as $112,000. One requirement of HARP is that your loan must be backed by Fannie Mae or Freddie Mac, which mine is.
The twist is that if you pay PMI, you can only refinance with your current mortgage provider or the loan originator. A new PMI provider probably wouldn’t approve you if you’re underwater on your mortgage. This was surprising and frustrating, as it contradicted other information I had received. I’ll need to investigate further.
Quicken Loans:
I wanted at least three quotes, so I also tried getting one online through Bills.com, which connected me with an agent from Quicken Loans. After discussing my current loan and home, the agent checked my home’s approximate value online but quickly determined I was a high risk. Internet sites like Zillow estimated my home at $101K, although my state taxes valued it at $134K. This discrepancy arises because these websites use neighborhood sales to estimate values and may not account for my house’s larger square footage. The only way to know the true value is through a formal appraisal, which costs about $300. Given my high-risk status, the call ended without any progress.
Next Steps:
1. I need an accurate appraisal of my home. I’ll wait for my neighbor’s results and may pay for my own if necessary.
2. I need to verify what the mortgage specialist told me about PMI and refinancing restrictions. There could be nuances missing from our conversation, and further investigation is required.
3. Until I resolve these points, there’s no value in seeking more mortgage quotes or offers.
Check back for more updates.
