We fought 4 months to refinance our house. Until the very end, it
looked like we would prevail. Then the FHA underwriter killed the whole
deal. She demanded the following:
1) A second appraisal on the
house. The first appraisal showed a value of $690,000 US. A second
appraisal would have shown a value of $650,000 US.
2) She demanded a credit report on me to look at my debts. That is not relevant as I was not the owner of the home.
All people seeking to refinance are caught in a trap. Their houses are
dropping and any new loan can only be made on the current value of the
property.
In our case, we would have had to put up $100,000 US
to get a loan. At the end of the process we would be paying the banks
for their irresponsible lending practices.
People getting FHA loans should also consider all the fees involved. Let us look at our case as follows:
FHA insurance premium: $10,700.00
Lender Payment $ 8,000.00
Loan Brokerage: $ 6,000.00
Subtotal: $24,700.00
What lenders do not ell people is that they pay another 3% of the price
of the loan to the company that brings in the loan. In this case, it
would have cost us an additional $21,000. We are now up to a total of
$45,700.00 in fees. The total cost to refinance our house would have
been in excess of $145,000 US.
Fortunately our adjustable rate
mortgage only adjusted upward $240.00 US per month. If we get big
upswings in the future, we can go to Bankruptcy Court to get the terms
of the loan changed. It is a lot cheaper than getting a new loan.
Life takes us in many strange directions and wonderful discoveries. It never turns out the way we thought it would.
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