JustLurkin
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Post by JustLurkin on Mar 30, 2011 18:03:26 GMT -5
Came home today to a FedEx letter from Chase offering to lower my mortgage rate by 1% with no fees.
I'm assuming they offer this with the hopes I'd take cash out. Otherwise, I don't see what's in it for them.
Is there some sort of catch to this?
Thanks.
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azphx1972
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Post by azphx1972 on Mar 30, 2011 18:19:22 GMT -5
Get a Good Faith Estimate sheet and post it here.
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oreo
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Post by oreo on Mar 30, 2011 19:08:11 GMT -5
Several years ago (maybe 2003 or 2004?) my mortgage company did something that sounds similar. I had a 6% mortgage and sent me paperwork to allow me to modify it to be a 5.5% mortgage and all I had to pay for was the notary. Not sure if what you have is the same or not but it was a good deal for me at the time.
Good luck!
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Deleted
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Post by Deleted on Mar 30, 2011 19:11:54 GMT -5
I got one from Chase yesterday and a few weeks before, but it isn't like yours. Mine said they could refinance my 5.99% (it's 5.75, but I know the APR is different) to 4.99%. They could finance up to 125% LTV but no cash out. If I had a second mortgage, that was fine, but they couldn't refinance that part. They might not need an appraisal, and the whole process would be streamlined. Oh, and if I didn't already have to pay PMI, I wouldn't have to pay PMI even though the LTV was no longer 80%.
But nowhere did they mention closing costs. Are you SURE they said "with no fees"? Most places that say that mean the closing costs are rolled over into the loan, but since this one said no cash out, I don't think they can do this. I might be interested in the one you received if it really is different than mine.
I threw my offer away because the truth is they are trying to use me to satisfy the government's requirement that they modify loans. They said I qualified for some program. My loan doesn't need modifying. My ltv is probably fine, my payments are directly deducted so they don't even begin to be late, I pay a little extra each month, and I have no debts other than my mortgage. But if they refi me, they can make me a statistic in their favor with no risk plus make $$$ off me (about $4000 was their closing costs when I asked before).
No, thanks, Chase.
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seriousthistime
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Post by seriousthistime on Mar 30, 2011 19:14:59 GMT -5
My friend took advantage of a deal like this with Chase a few years ago and seems happy. Maybe Chase realized that she could refi with anyone, and she had a good history with them so why not keep her business? I don't know whether she got the going rate for refi's or if Chase refi'd it at a slightly higher rate than it would get for a new-customer refi, figuring she'd go for the convenience and a lower rate than she would get if she stayed with the existing loan.
What does this do to the 30-year clock? is it for however many payments you have left, or does it reset the clock back to 30 years?
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JustLurkin
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Post by JustLurkin on Mar 30, 2011 19:33:49 GMT -5
Will call in the morning...but they enclosed a checklist (at the top it says in bold CHASE WILL PAY YOUR CLOSING COSTS): Says refinance my current balance, but can apply for larger loan. I assume by "apply" they mean the terms will be different than this offer. |
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azphx1972
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Post by azphx1972 on Mar 30, 2011 19:36:17 GMT -5
Out of curiosity, what's your current rate? Maybe it's still above market, and they're afraid you'll jump ship if they don't do something.
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JustLurkin
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Post by JustLurkin on Mar 30, 2011 19:37:51 GMT -5
6.13, new rate would be 5.13...hadn't refinanced because I didn't want to be bothered with fees.
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Gardening Grandma
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Post by Gardening Grandma on Mar 30, 2011 20:26:49 GMT -5
Wow. 6.3
If I planned to be there long term I would definitely look at a refi. When you run the numbers, you may well discover that you'd come out ahead.
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txengineer
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Post by txengineer on Mar 30, 2011 20:55:18 GMT -5
I would find out how many points Chase used in coming up with the “lower” interest rate. You really need to compare APRs, not interest rate alone.
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Deleted
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Post by Deleted on Mar 30, 2011 23:05:29 GMT -5
Was there an offer number?
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azphx1972
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Post by azphx1972 on Mar 30, 2011 23:11:07 GMT -5
6.13, new rate would be 5.13...hadn't refinanced because I didn't want to be bothered with fees. According to Bankrate the current fixed rate on a 30 year mortgage is 4.85%. You can't just look at fees, but calculate how long it takes to recoup them given a lower rate. I think 6.13% is high enough that a refinance may make financial sense, especially if you plan to stay there for a while. Try playing with a refinance calculator like the following: www.bankrate.com/calculators/mortgages/refinance-calculator.aspx |
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Plain Old Petunia
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Post by Plain Old Petunia on Mar 30, 2011 23:13:30 GMT -5
My friend took advantage of a deal like this with Chase a few years ago and seems happy. Maybe Chase realized that she could refi with anyone, and she had a good history with them so why not keep her business? I don't know whether she got the going rate for refi's or if Chase refi'd it at a slightly higher rate than it would get for a new-customer refi, figuring she'd go for the convenience and a lower rate than she would get if she stayed with the existing loan. What does this do to the 30-year clock? is it for however many payments you have left, or does it reset the clock back to 30 years? Yes, when you refi you set the mortgage clock back to zero. Of course, you can easily keep to your existing schedule by using a payment calculator to see what you should pay each month to pay off your new 30 year loan in 25 years (or whatever). |
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Gardening Grandma
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Post by Gardening Grandma on Mar 31, 2011 9:41:36 GMT -5
Yes, when you refi you set the mortgage clock back to zero. Of course, you can easily keep to your existing schedule by using a payment calculator to see what you should pay each month to pay off your new 30 year loan in 25 years (or whatever).
This is what we did two years ago when we refinanced our 15 yr mortgage. The payments went from 1400/mo to 1122/mo. We continue to pay 1422/mo stipulating that the extra $300 go to the principle. Our bank makes it very easy to change that extra payment - two minutes to fill out a form since we use an auto pay system.
(Before anyone starts beating me up for paying extra on the mortgage: we are retired, it's our only debt. we are in our 60's, and I want the damn thing paid off!! I plan to up the extra pmt next year to $500/mo. My goal is to have it paid off by 2014.)
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tskeeter
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Post by tskeeter on Mar 31, 2011 11:56:22 GMT -5
I think what's in it for Chase is to re-amortize the mortgage. Say you've got 20 years left on a 30 year mortgage. Re-finance and I bet you're back to a 30 years mortgage. Chase collects some interest for 10 additional years and the total interest you would pay over the new mortgage is more than what you would pay if you just paid off your existing mortgage when the payments come due. If you sit down and compute the interest remaining on your current loan vs. the interest on a new loan, I suspect that you'll find chase gets more interest. Now, if you'll be able to pay off the loan in a few years and there is no pre-payment penalty in the new loan (something to check for) you might be able to come out ahead by re-financing.
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zuzu
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Post by zuzu on Mar 31, 2011 12:26:55 GMT -5
I think what's in it for Chase is to re-amortize the mortgage. Say you've got 20 years left on a 30 year mortgage. Re-finance and I bet you're back to a 30 years mortgage. Chase collects some interest for 10 additional years and the total interest you would pay over the new mortgage is more than what you would pay if you just paid off your existing mortgage when the payments come due. If you sit down and compute the interest remaining on your current loan vs. the interest on a new loan, I suspect that you'll find chase gets more interest. Now, if you'll be able to pay off the loan in a few years and there is no pre-payment penalty in the new loan (something to check for) you might be able to come out ahead by re-financing. Exactly my thoughts. And like the OP stated, they are probably going after people who aren't risks to skew the statistics of their "modifications." |
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Gardening Grandma
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Post by Gardening Grandma on Mar 31, 2011 21:10:05 GMT -5
Another possibility is that Chase may sell the mortgage to another company instead of keeping it.
No refi = no sale = no profit
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8 Bit WWBG
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Post by 8 Bit WWBG on Apr 1, 2011 12:48:55 GMT -5
...:::"Maybe Chase realized that she could refi with anyone, and she had a good history with them so why not keep her business?":::...
My boss got one of these, and took advantage of it. As I quoted above, they know that rates are low now and "good" customers could get loans anywhere, so they wanted to keep him.
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Plain Old Petunia
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Post by Plain Old Petunia on Apr 1, 2011 13:36:47 GMT -5
WWBG, your new Pokemon avatar is hysterical! I have the giggles now.
I don't think Chase or any other big mortgage company does anything other then service your loan. Bonds are issued to pay back Chase, and it is the bondholders who really are owed your principal and interest. Chase does make some money when they write a new mortgage, though.
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JustLurkin
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Post by JustLurkin on Apr 1, 2011 20:32:48 GMT -5
I think what's in it for Chase is to re-amortize the mortgage. Say you've got 20 years left on a 30 year mortgage. Re-finance and I bet you're back to a 30 years mortgage. Chase collects some interest for 10 additional years and the total interest you would pay over the new mortgage is more than what you would pay if you just paid off your existing mortgage when the payments come due. If you sit down and compute the interest remaining on your current loan vs. the interest on a new loan, I suspect that you'll find chase gets more interest. Now, if you'll be able to pay off the loan in a few years and there is no pre-payment penalty in the new loan (something to check for) you might be able to come out ahead by re-financing. Sorry, my son had a medical emergency, but I'm back now and just hung up from Chase. They are going to send me a 30-page document to review and sign. The operator did say the mortgage would go back to 30 years with the current balance--but if I continued with the current payment it would be paid off the way it's set up now. He asked if I would pay the lower rate or the current rate...I thought he was just curious, but now that I've come back to the thread it was probably part of his checklist of things to ask. He did say there was no pre-payment penalty. Wonder how they picked people for this. |
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JustLurkin
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Post by JustLurkin on Apr 2, 2011 11:38:21 GMT -5
Get a Good Faith Estimate sheet and post it here. | Total of Boxes 1-8 on page 2 of GFE. | + | $ 2041.27 | | Total of Boxes 9-11 on page 2 of GFE. | + | $ 1232.92 | | Total Charges | | $ 3274.19 | | LESS charges paid by Chase | - | $ 1991.27 | | LESS charges paid by Seller | - | $ 50.00 | | Estimated cash you will need for Settlement Charges | | $ 1232.92 |
Boxes 9-11 are for the escrow account and the daily interest charges if the loan doesn't settle by April 30th. $1232.92 is the amount I currently have in my escrow account. |
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tallguy
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Post by tallguy on Apr 2, 2011 19:54:00 GMT -5
Just Lurkin,
I got a similar letter several months ago which I did take advantage of. Yours may not be the same, but mine was a HARP loan with restrictions. If I recall, some of them were: No cash out, not being able to change names on the loan, no changing of term, and a few others. It would have to be a straight rewrite for the current balance (except at the lower rate) at the original term. I wanted the financial flexibility of dropping my payment by about 45% with no prepayment penalty so that I could if I chose continue to pay it at the higher payment and original schedule.
I have no idea why I received the letter. I was not behind on payments, my credit score is over 800, my LTV was ridiculously low (about 13) and I have my payment automatically drawn from a Chase account. The idea that they are offering this to people in good standing to look good as far as government requirements probably has merit. My guess is that only people with solid records are being offered. I went into the branch and spoke with the manager. She told me she had only seen three other people with that offer. The closing agent also said something about only seeing extremely credit-worthy applicants with that program.
Ultimately, mine went very well. I received a call ten days after application to set up an appointment for closing.... No catch as far as I determined.
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Timberwolf
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Post by Timberwolf on Apr 3, 2011 0:46:48 GMT -5
I'll be another to chime in that my mortgage company, Wells Fargo Mortgage, offered me something similar about 6 years ago. It seemed too good to be true, but I verified it and went ahead with it. All I had to do was initial a lot of paperwork, have it notorized and send it back to them. The terms were the same as my original mortgage, just at a lower rate, something like 1 3/4% lower if I remember correctly (the mortgage has since been paid off). It worked out quite nicely. I also don't know why I was chosen, maybe because I was considered "ripe" to refinanace but hadn't done it. I think I'd go for it if I was you.
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azphx1972
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Post by azphx1972 on Apr 4, 2011 16:02:25 GMT -5
| Total of Boxes 1-8 on page 2 of GFE. | + | $ 2041.27 | | Total of Boxes 9-11 on page 2 of GFE. | + | $ 1232.92 | | Total Charges | | $ 3274.19 | | LESS charges paid by Chase | - | $ 1991.27 | | LESS charges paid by Seller | - | $ 50.00 | | Estimated cash you will need for Settlement Charges | | $ 1232.92 |
Boxes 9-11 are for the escrow account and the daily interest charges if the loan doesn't settle by April 30th. $1232.92 is the amount I currently have in my escrow account. Looks ok but I would still check the payback on refinancing at current rates to see if you can get a better deal over the long run. |
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