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post #1 of (permalink) Old 02-28-2012, 05:42 PM Thread Starter
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OT home refinancing

Hi,

Looking for tips and suggestions...

We have our house on a 3 year balloon...it's an "in house" loan that the bank has already that they always renew them provided that we make our payments...we do...both my wife and I have A+ credit ratings.

We want the stability of a 30 year mortgage with the low interest rates (currently at 5.5% advertised rates are now at 3.875%). This would save us $300 a month.

We are having trouble refinancing due to not being able to find "compareables." Our "unique" property includes a main house that we reside in with an attached garage. The attached garage used to be a separate house but we tore it down and built an attached garage. On the same property (read piece of land) we also have a "carriage house" that we use the garage portion for storage and rent out the living space above.

Does anyone have any advice for obtaining a 30 year mortgage with a low interest rate without lying to the bank and saying that the carriage house is just a detached garage?

Thanks!
Patrick

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post #2 of (permalink) Old 02-29-2012, 01:29 PM
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That's pretty tame, try getting an earth sheltered home and off grid solar power and a well for water to pass a loan board...

You will have to do your own homework,
Find you own appraiser, usually insurance companies are a good place to look, and get your own appraisal.

Once it's written out for them long hand, you will probably have to pay for the appraisal from the bank again,
but it will read just like what you submitted...
(ask me how I know that...)

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post #3 of (permalink) Old 03-01-2012, 08:06 AM Thread Starter
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So, if I get my own appraisal independent of the bank and bring that to the bank they may be more willing to use that...or have their own appraiser use my appraisal to place a value on the house (in which I would have to pay for two appraisals) and then be able to complete the refinancing and sell it to freddie or fannie?

we do tend to feel more comfortable with the local banks who are in good shape because they are more conservative with their decisions...but part of me says try a larger company that specialized in home mortgages...they may be more willing to take a "risk" even though we are pretty low risk credit and home wise...but we are pretty conservative in many of our financial decisions as well and therefore are leary of those bigger companies...

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post #4 of (permalink) Old 03-01-2012, 09:37 AM
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Mortgage lenders have a list of approved appraisers and can't accept an appraisal from an unapproved one. Also, in the mortgage broker segment of the market, they have to select appraisers from a pre-established list in the order in which they appear on the list - no exceptions. I don't know if that's true for all mortgage lenders.

Mortgaging a property without good comparables is difficult. My best advice is to explore two options carefully: A locally-owned bank, and a mortgage broker. A local bank can hold your mortgage instead of selling it, which allows them to not follow the guidelines of the national mortgage buyers like FNMA, FHA and Freddie Mac. Therefore they can be much more flexible in their lending, put more emphasis on your credit standing, roots in the community, past history, and all the things that used to matter when a handshake was good enough for many business transactions.

A mortgage broker or banker is limited to making loans and selling them immediately on the secondary market. Because of that they have to adhere to the national guidelines, but they have the advantage of having many purchasers to work with, and may be able to find one that can do what you need. Unfortunately that lender may be in the business of buying B paper which means high rates, but it won't cost anything to talk with them. And if you have an appraisal in hand when you go it, you should be able to get an idea of their capabilities pretty quickly.

There are several methods of appraising real estate. Comaparables is one, replacement cost is another, and with commercial property there is investment return. Residential appraisals focus on comparables and replacement costs. You may be able to get an appraiser to not do the comparables and just give replacement cost, which a lender couldn't accept, but would be a starting point and less expensive than a full appraisal..

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post #5 of (permalink) Old 03-01-2012, 09:37 AM
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Mortgage lenders have a list of approved appraisers and can't accept an appraisal from an unapproved one. Also, in the mortgage broker segment of the market, they have to select appraisers from a pre-established list in the order in which they appear on the list - no exceptions. I don't know if that's true for all mortgage lenders.

Mortgaging a property without good comparables is difficult. My best advice is to explore two options carefully: A locally-owned bank, and a mortgage broker. A local bank can hold your mortgage instead of selling it, which allows them to not follow the guidelines of the national mortgage buyers like FNMA, FHA and Freddie Mac. Therefore they can be much more flexible in their lending, put more emphasis on your credit standing, roots in the community, past history, and all the things that used to matter when a handshake was good enough for many business transactions.

A mortgage broker or banker is limited to making loans and selling them immediately on the secondary market. Because of that they have to adhere to the national guidelines, but they have the advantage of having many purchasers to work with, and may be able to find one that can do what you need. Unfortunately that lender may be in the business of buying B paper which means high rates, but it won't cost anything to talk with them. And if you have an appraisal in hand when you go it, you should be able to get an idea of their capabilities pretty quickly.

There are several methods of appraising real estate. Comaparables is one, replacement cost is another, and with commercial property there is investment return. Residential appraisals focus on comparables and replacement costs. You may be able to get an appraiser to not do the comparables and just give replacement cost, which a lender couldn't accept, but would be a starting point and less expensive than a full appraisal..

EVERYTHING's easy for the guy who doesn't have to do it.
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post #6 of (permalink) Old 03-01-2012, 11:33 AM Thread Starter
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Currently our mortgage is with the local bank...and just like you said, they took into account history in community, potential to be in the community for quite some time, credit score...my word and handshake type stuff you mentioned. And we certainly appreaciate their willingness to do that. However, all that they were willing to offer was a 3 year balloon note, which we took at the time knowing that we would refinance down the road...so we are really trying to do that now with rates so low and 1 year left before the note is due. The bank has said that they always renew the note if the lendee is paying it, which we are so we aren't really worried about what will happen when the note comes due...well, we do worry a bit in case my wife or I lose our job but...we just really want to lock in the low rate and save $300 a month...

So it's frustrating, but we are also thankful for what we have been able to do...

Anyway...that was more rambling than anything...

Thanks!

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post #7 of (permalink) Old 03-01-2012, 01:04 PM
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Quote:
Originally Posted by OIIIIIIIO View Post
Currently our mortgage is with the local bank...and just like you said, they took into account history in community, potential to be in the community for quite some time, credit score...my word and handshake type stuff you mentioned. And we certainly appreaciate their willingness to do that. However, all that they were willing to offer was a 3 year balloon note, which we took at the time knowing that we would refinance down the road...so we are really trying to do that now with rates so low and 1 year left before the note is due. The bank has said that they always renew the note if the lendee is paying it, which we are so we aren't really worried about what will happen when the note comes due...well, we do worry a bit in case my wife or I lose our job but...we just really want to lock in the low rate and save $300 a month...

So it's frustrating, but we are also thankful for what we have been able to do...

Anyway...that was more rambling than anything...

Thanks!
You will find in most places, the same appraiser is used for insurance and bake notes, especially locally.

My bank wouldn't take the independent appraisal for my insurance,
But when their 'Approved' appraiser (different guy, same company) came back with his report they did accept, it was identical at stating the 'Improvements' to the land and the qualities of the home,

And since I'd done the homework on my odd ball home, the same comparisons were in the appraisal that I provided the first guy, and NOT the second guy.
They also had the same pictures from the first guy that I submitted to the bank.

The first appraisal was $175 while the bank version cost me $1,200 which was kind of a pain in the butt, but at least I got the 'Mortgage', which cut my taxes and insurance down considerably.
Tax credits on a 'Mortgage' over a personal loan are considerable.

On the second part,
Since they want to keep you paying that $300 extra a month, the WILL throw up road blocks to keep you paying the higher rates.

I went to the local savings and loan with the first appraisal, the interest rates were about one point higher the the TV offered low interested fixed notes,
But the mortgage was kept local, and they did charge me $1,200 loan application and closing costs, but I dropped from 10.5% to 4% by switching banks,
The bank I had the loan with was doing the same thing you are seeing, they just didn't want to refinance at a lower rate...
So I went someplace they would,
THEN when I told them to get the up to day pay off total ready, I was coming into pay it, they tried to MATCH the deal I got at the savings and loan instead of loose the business (Didn't work, they don't have it anymore).

Savings and loan has been a dream to work with, since they own the mortgage locally, when I want to get some more money for new shop/garage, they forked it right over, refinanced for a flat $300 processing fee, and kept the same 4% flat interest rate.

No trying to amend a note someone else owns, no having to do a personal note to build the garage (between 10% and 13% with a lot of fees) then trying to refinance again including the garage to get rid of the personal note, none of that still stuff...

I'm on a hand shake basis with these guys,
When we bought a car, we called from 60 miles away, said we were buying a car (on a Saturday morning no less) and they faxed the car dealership a line of credit while we were on the phone,
Told me to come in on Monday or Tuesday and sign the papers.

We didn't use savings & loan credit.. for a car loan is pretty high interest rate about 7.5%,

But that easy line of credit actually lowered the interest rate the dealership financing company was willing to give us,

We would up just under 3% with the dealership financing, so for 3%, they can have it! No incentive to pay that off really early with only a 3% note!
Savings & Loan rates were like 7.5%, but the quick credit offer was the deciding factor in the dealership dropping from 6.5% to 2.99% to get the business...

When I called about $12,000 for a boat, the same thing happened,
Line of credit on the spot, no questions asked...
We didn't buy the boat, but it's nice to know it was that easy if we had gone through with the purchase!
Can't do that at any bank I know of anymore or I'd still be with the banks...

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post #8 of (permalink) Old 03-05-2012, 11:57 AM Thread Starter
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Hi

What type of individual would I want to talk with (lawyer, accountant, relator, appraiser, etc..) to figure out the financial pro/cons of splitting the property into two with one being a single family residential and another single family rental...things like costs savings of having two mortgages (one being a traditional fixed rate for residential and the other being a much smaller mortgage for income), potential savings on property taxes (again, the more valuable property being single family residential vs single family income property) to the upfront costs of getting the property split, etc....

Thanks!
Patrick

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post #9 of (permalink) Old 03-05-2012, 12:48 PM
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People in the mortgage business will best be able to answer those questions. In this area loans on commercial property usually have balloon notes - five to seven years of amortization on a twenty-year schedule, and the balance due on the balloon date. With rates as low as they are now you probably want to lock in a low rate for as long as possible. The practices may well be different in Wisconsin.

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post #10 of (permalink) Old 03-05-2012, 09:00 PM
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Home mortgage here is 4%, and you get tax credits, Home Mortgage Credit, Homestead tax credit, ect.

Commercial loans are around 10% or 11% and steadily going up,
Plus you get no tax credits, and are taxed on a higher base rate for commercial property.

When we moved from town to the country,
I got a 'Home Mortgage'...
Had one (last 2 years still happening) and they WOULD NOT let me have two home mortgages... PERIOD,
One had to go, so we paid off the home in town instead of trying to fool with a 'Commercial' load and all the tax issues that go with that,

I'd say Jim_Lou is correct, see your mortgage broker or one of the local Realtors, they will usually talk to you for free or very cheap, and they know the laws/rules also.

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