Any home mortgage experts here?

Not sure on the Chase or the papeerwork they sent. I closed on one like that where they sent a notary directly to me but I made sure I didnt use any mailed paperwork, I called my bank directly and went that way to avoid any possible scams.  Im not a realestate expert either.  When I took the deal it was very early into buying this place so not much lost in time/money but the much better rate will more than make up for it.  It does benefit them greatly in the long run hoping you take full market value on the house versus just redoing what is owed which is what alot will do costing them a bundle in the end.
But you could do that if there is a minimum balance required (jumbo loan) then just drop the rest/extra back on the loan basically getting around that.

Not positive but something to think about

I've had over 30 mortgages, but I've never seen any like the one you've described.  It might be a sign of the times, but it doesn't make sense at face value...  If I were you, I'd really examine the paperwork - especially look to see if there are any riders that will cause the interest rate to rise after a certain amount of time, if any interest is being added to the end of the loan, if there is any change in the length of term ("Yeah, it's cheaper but it's for 36 years!") and make sure they don't restrict you from prepaying the loan or forcing you to have PMI.  All of these will make the overall loan more favorable for them down the road and all will negate the current savings.

There are loans out there right now with stupidly low interest rates (even fixed rates) so maybe they're trying to tie you down while they can.

Maybe they are making a good buck on the front end with the fees and such?

When you called them, where did you get the phone number? From the correspondence they sent or on your own? 
just flagging the obvious.

Seems a little fishy to me. As in, if it's too good to be true, it probably isn't.

Bit, a few things come to mind quickly...

If your current mortage is locked in and is written with no loop holes such as
the contract being open for rate changes if it is sold, then you opting for change
may be the way- not only for temperary rate lowering but raising too.
Legal language, as I'm sure you know, is best left to lawyers.

Mortages written that can finance rates changed when the contract is sold should be outlawed.
Many times folks don't even know that is in their contract and should be aware of the possibility and question to find out. Especially if the institution is changed. When they learn is at tax time....to late.
I'm not saying this is your issue- only that it is one way a "locked-in" contract can be
"unlocked".

There is a reason for them wanting to "open" your contract and it will probably take
an attorney you trust to find out. I can't imagine it is for your benefit...but it's possible.

"Fixed rate" means nothing if the contract can be changed when it's bought and sold.
And it doesn't require your approval for that to happen if that claus is in the contract.

There may not be fees but I imagine you are probably paying points. They usually add that into your balance as opposed to having you write a check. Over the term of the loan the net effect to you can still be good if you're planning on staying where you are at least a few years. But they can probably recognize the points immediately on their financials which in the short term makes their books look better. Even though their motivation for doing it is to for their best interests, that doesn't mean you don't benefit too. But if you're not planning on staying there a while, paying the points may not be worth it. You've got to look at the interest you'll be saving during the time you'll actually be there, not the life on the mortgage. Most people don't actually stay in their house 15-30 years so they "savings" they show you can be misleading.

MY Credit Union supplies me with a document ( before they ask me to sign) showing each payment over the term and the principal and interest of each of those payments. It also shows total amount borrowed and the total cost to me over the term. Very simple.
Some loans/ mortgages, have large penalty's attached for early payment, some don't. Some will allow a bulk sum payment on the anniversary date each year. Something to think about if you plan on selling the home before the term is up.
A clarification too,  mortgage will be a 30 year mortgage but the term will be a 1, 2 3 or 5 year term, the intrest rates will go up if term is longer. then your back to the bank for new contract. I don't believe any finance company in their right mind would lock in at a low rate for 30 years.

johnnyV


MY Credit Union supplies me with a document ( before they ask me to sign) showing each payment over the term and the principal and interest of each of those payments. It also shows total amount borrowed and the total cost to me over the term. Very simple.
Some loans/ mortgages, have large penalty's attached for early payment, some don't. Some will allow a bulk sum payment on the anniversary date each year. Something to think about if you plan on selling the home before the term is up.
A clarification too,  mortgage will be a 30 year mortgage but the term will be a 1, 2 3 or 5 year term, the intrest rates will go up if term is longer. then your back to the bank for new contract. I don't believe any finance company in their right mind would lock in at a low rate for 30 years.

Jonny - I'm not sure if you mean what I think you mean, but finance companies sign hundreds of mortgages across the country every day with 30 year fixed rates.

Beagle

johnnyV


MY Credit Union supplies me with a document ( before they ask me to sign) showing each payment over the term and the principal and interest of each of those payments. It also shows total amount borrowed and the total cost to me over the term. Very simple.
Some loans/ mortgages, have large penalty's attached for early payment, some don't. Some will allow a bulk sum payment on the anniversary date each year. Something to think about if you plan on selling the home before the term is up.
A clarification too,  mortgage will be a 30 year mortgage but the term will be a 1, 2 3 or 5 year term, the intrest rates will go up if term is longer. then your back to the bank for new contract. I don't believe any finance company in their right mind would lock in at a low rate for 30 years.

Jonny - I'm not sure if you mean what I think you mean, but finance companies sign hundreds of mortgages across the country every day with 30 year fixed rates.

I believe he's referring to "right now" when talking about fixing a really low rate, and that's he talking about mortgages that have the interest calculated as if it was a 30 year loan, but the repayment period could be less.
 
[Edit:  I might have just thought of the bank's "angle" in all this.  They might be getting subsidized by the Government for each loan refinanced which not only could mean that the consumer gets a lower rate, but the bank actually gets a higher rate than they originally had.  Just a thought!]

Yeh, the business of applying the current escrow to the principle is confusing. You end up paying a finance charge on your own money. But it's optional; you can refuse it and add a couple bucks to your monthly payment due to the slightly higher principle.

I've researched this online (lots of chatter about it, too), then went to a local branch office to speak to a loan officer, then went to my credit union and asked them about it. It appears to be completely legit. But I had to figure out the bank's angle before I felt comfortable with it.

First, they secure existing customers who might be thinking of refinancing elsewhere. By targeting those with the best payment histories, they are improving the ratio of low- to high-risk mortgages. The rate reductions might also reduce the number of foreclosures.

Second, there is some incentive from the federal government. No one would spell out exactly what it is, but I'm guessing it has to do with strings attached to the bailout.

Third, by resetting the counter on a 30-year mortgage, they shift the interest-to-principle ratio in each payment. It means the amount of each payment that goes into their pocket is higher. However, a borrower can offset that by simply continuing to make the same payment as before, thus lowering the principle.

Fourth, the rates they're offering are slightly higher than one could get from another bank if they wanted to pay the fees and pay for an appraisal. The slightly higher rate (e.g. 5.25% versus 5.17%) more than compensates them for the waived fees.

bitflipper

I've researched this online (lots of chatter about it, too), then went to a local branch office to speak to a loan officer, then went to my credit union and asked them about it. It appears to be completely legit. But I had to figure out the bank's angle before I felt comfortable with it.

 
 
Do you need to purchase another title insurance policy?  To me that's the biggest form of legalized theft out there today.  First of all, you bought the title insurance the first time you got a mortgage on the property, so you need to do it again?  And you don't even get a second time around discount because the risk is substantially lower?  For most cases of refinancing, that's what you're stuck with (even if when refinancing with the same institution, in my experience).
 
Moreover, have you ever heard of anyone anywhere at any time getting money from a title insurance policy?  Owning a title insurance company is like having a license to steal.  I hate those #$%&-ers with passion.

OK... so it seems you have been doing your research. Very good.

Now, when you get this new things set up, If you haven't already read the book called The Total Money Makeover, written by Dave Ramsey let me know. Dave shows how to get on a plan that will have you out of debt, including the house in a very short time frame compared to what the bank wants you to do which is pay them for 30 years. I used a variation of this plan over 20 years ago to become debt free...before Dave Ramsey was talking about it.

PM me if you're interested.... I'll send you a copy of this book if you don't have it.

bitflipper


Alas, it is too late for me. I have been in debt since I bought my first house in 1975. I paid $43,000 for that place and it used to give me nightmares thinking about owing someone that much money. It was later refinanced to pay for a new roof and a remodel, so then I owed $90,000. My second house cost $212,000. That was refinanced, too, to buy a new roof and a remodel, so that now 15 years later I still owe $200,000. Along the way there were numerous cars; I've probably paid over a quarter million dollars over the years in car payments. And a $95,000 boat that I sunk $60,000 into before unloading it - and had to pay off $15,000 just to get rid of it.

So yeh, I have been caught in the trap all my life. But it's too late for any 20- or 30-year get-well plan. I'm approaching age 60 and my only hope is to sell this house and not buy another. That's my get-well plan.

Let this be a lesson for you younger folks. Debt is a sticky trap that promises everything but in the end only enslaves you to the banks.

If they're smart they'll listen to you David. I was in my mid-thirties before I woke up. I realized then that I would
probably working until I reached retirement age...back before they started raising the age....but I knew I didn't
want to be paying for a home when I retired.
I also knew that I didn't want to be paying taxes on a home that I owned....so I bought a home that is
not taxed. 
 
A note of interest....contracts can be assumed. There are contracts that people have on property that are
worth keeping. Should one be looking for a home it may be of great value to communicate with the sellers
about their contract before any "moves" are made.
It's a shame when a great contract on a property is overlooked and a new one is written just to change ownership.
 
Most of us when it comes to vehicle purchase are dealing with the vehicles that depreciate. I'd love to be able
to purchase in the market of appreciating ones....so I've always felt that there is no good deal on a vehicle...
I feel that the minute you buy one, you just got screwed and the only thing that matters is how much you enjoyed it.
 
The last car my wife purchased....I didn't drive it..we were on the way home from the dealership and I looked over at her...she smiled and said, " I know, I know...and I loved every minute of it!".
 
 
 

rsp@odyssey.net


I can understand your position on this Dave, but I can't agree with your statement about being "enslaved" to the banks. You've obviously taken good care of your credit, which is the key to getting money to buy the things we want and need. The only other alternative is paying cash. That would mean renting until you get enough saved up to buy a house for cash. Certainly that's not moneywise. Cars are another story, as they are a depreciating liability. Paying cash for those is always the best move. Don't get me started on boats.

When I bought my first house, and signed up for a 30 year mortgage, I too had the sleeples nights for a bit. I made the decision to start paying an extra 100 bucks a week towards principle and paid the house off in 10 years. Sure I paid some interest, but I still made money on the house when I sold it.

Randy

+1.  There's evil debt and there's benign debt.  Anyone not paying off their credit card charges in full every month is being taken royally.
 
On the other hand, mortgage debt can be at worst neutral.  You need to pay for a place to live in any case.  If you own your home, you have an inflation hedge and for the moment you have a tax deduction on the interest (which is almost all of your mortgage payment the first 20 years of a 30 year loan).  The recent financial turmoils have made it difficult for a home buyer at this time to unintentionally get in over his/her head.  Also, home prices are possibly at the lowest point that those who are young may see in their lifetimes.  So IMO, this is a great time to buy a home and take on mortgage debt if you can ante up the down payment.  You're not likely to see hella low rates and hella low house prices at the same time again for decades.

I have to add...When I wanted to become an independant Music Composer 20 years ago my wife forced me to save a years salary and rid of debt.  I too, buy everything for cash now.  Your purchasing power becomes greatly increased.  The old adage "Money Begets Money" is so true.   We have done nothing but save large amounts of money every year because of no debt.

The down side..my son went to college at USC and we qualify for NO monitary help,  so we have to foot every penny.  People who have not saved will not have to do this.  When i was complaining about this to my accountant last week he said, "yea it sucks,  but you do not want to be on the other side of the equation.  Keep saving,  trust me you are better off".

Anyway I just wanted to +1 Guitarhacker.

And by the way,  my wife was a Mortgage broker and she basically stated the same that others have said here.  It is probably legit,  due to Feds making banks loan,  but have a lawyer check it thru.  You will not regret his fee.