Refi A wachovia pick a payment number crushing

morovis96 · Joined: 27 Mar 2008 Posts: 3 2.95 Dollars($)

Hi all,
I am new in these forums.. I found the site while researching Wachovia COSI mapped loans.

My wife and I have a Wachovia Pick A payment loan currently @ 7.9% rate. Our by-weekly payment is around $750 this is for principal, interest, and escrow for property insurance(900/year) only. We cover our own property taxes. Our original loan amount was $223k funded April 27th 2005. Our current loan balance is 182k as we reduced some of the principal over the past 3 years.

Right now it is a bit harder for us to come up with the current monthly payment as my wife is no longer working. The payment is about 37% of my gross monthly income.

Since 30 year fix rates are looking very attractive I have been shopping around for refinancing. So far the best deal I have is from Bank of America.. just today they are offering me.. a 188k loan that includes closing costs (high estimate)of 6k
6% rate, 6.161 APR,
payments of $1,202 that includes principal+interest+escrow(900/year)

This is a difference of 300 bucks from my current loan payment. I guess what I am trying to figure out if this is a good deal? Since we already lowered our principal by 41k our payoff on the current loan will be sooner than 30 years but I have not run those numbers yet.. What would you do/suggest if in the same scenario/situation? I am trying to weight in all variables.. I can affort my current payment but probably not if rate goes to cap of 11%.. sure this is not likely in the near future.. etc.

just looking for your comments, numbers, ideas,etc

thanks
C.

larry · Joined: 27 Jun 2007 Posts: 2473 327.54 Dollars($)

Hi morovis,

Welcome to the forum.

If you are currently paying @ 7.9% rate and you can refinance it at 6% rate 30 year fixed then I think it is a good deal. Your monthly payments will also coming down. So I think you should go for it.

Feel free to ask if you have any further questions.

Best of luck,
Larry

morovis96 · Joined: 27 Mar 2008 Posts: 3 2.95 Dollars($)

Hi Larry,
Thanks for the input.. I guess I am trying to weight my best option. We have some savings that perhaps we should use to pay off the current principal and shred off some years of the loan. I could use the lower payments of refinancing now but not like I can't afford the current payments. Some of the thoughts going thru my mind.. "should I lower my current payment or instead of paying closing cost lower my current principal by that amount" for example. My wife is not working now but she may return to the labor force in 3-4 years when kids go to school. I am also expecting a promotion this year (5-6k raise) so we should be more financially comfortable in the years to come. We also have some savings pending the next "great" investment opportunity but I rather pay off my house than invest in gold LOL
.
I guess I will have to take a quick crash course in amortization tables, tight up a bit the spending belt until my wife goes back to work, and slowly making additional payments to principal.

thanks

larry · Joined: 27 Jun 2007 Posts: 2473 327.54 Dollars($)

Hi morovis,

Welcome back.

I think your current mortgage is an ARM and it is going to be up in future and also the monthly payments. But if you refinance that one to FRM at a rate of 6 percent then it will not go up through out the loan period. So I think it will be helpful for you.

ARM is only helpful only if you are planning to stay for a shorter period of time. But now you are staying here for the past 3 years and I think you are going to continue to stay here. If so then it is may be the best time to refinance for you and turn to a better rate and terms.

Feel free to ask if you have any further questions.

Best of luck,
Larry

Guest 0.10 Dollars($)

i think you should try another lender.

I got same rate with lower fees.

Email me and I will give you number.

"pvtmtgbanker@gmail.com"

[Deactivated email address as per forum rules. Thanks.]

0.10 Dollars($)

I belielve I'm correct on this that this is the same as Countrywide's Pay Option ARM and other lenders had this same program. Many have done away with the program. It give you 4 payment options each month, minimum payment, Interest Only or Principle and interest based on a 15 or 30 amortization. This was one of the most popular program on the East and West coast for the past several years. you could purchase a $500,000 home and have a minimum payment of around $1,800. If you didn't read the fine print or if it wasn't explained to you, your minimum payment does not cover the interest accrued in a month...therefore you could go negative on your balance if you just made minimum. The concept was good with the appreciating values, but it coming back to bite people in teh back side today. Refi to a fixed rate mortgage and have some stability.

Jessica

Hi Morovis,

I can understand what you're trying to ask. The question that's on your mind is, whether you should pay down the principal and reduce the loan term or refinance now into an FRM.

Well, the way the FED has been acting upon rates, you can have higher rates any time. It depends entirely on how the markets shape up. By the way, when is your next rate reset date?

Though a 30 year FRM is preferable and rates are slightly above 6%, yet it makes sense going for it when you are staying in the property for at least 8-10 years. Do you have any plans to abandon property within a short term period?

Considering the frequent rate changes, I suggest that you refinance into a 30 year FRM and then if you have enough cash at hand, make extra payments and reduce the loan term. This way, you'll be safe with your monthly payments and it will also help you reduce loan term by paying down more of the principal.

Now, before you refinance, get an idea as to Why and When you should refinance . When you get some knowledge and proceed, it always makes things easier!

Regards,

Jessica.

chrisburns · Posted: Fri Mar 28, 2008 7:42 am Post subject:

You have to be careful about the no closing cost loan scenario's. I saw a man last week lock his loan at 5.5% on a 30 year fixed cash out refinance. Yes he had to pay closing costs, but over time he will save money by having the lower interest rate versus his closing costs paid.

0.10 Dollars($)

thanks everyone for the input.. I had my wife call wachovia and they said they could lower our current rate to 6.5 and lock it for 3 years for $550 bucks. The catch is that the pre-payment penalty (2% of balance) will also carry over for an extra 3 years. We already did a 1 year rate lock with them last year so that extended(not aware) our pre-payment penalty until April 09.
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I am tempted to take the offer, keep the current loan, lock in lower rate and payment, and go from there. Perhaps have a goal to decrease the principal another 15-20k in the next 3 years and then consider refi.

morovis96 · Joined: 27 Mar 2008 Posts: 3 2.95 Dollars($)

that was me on the last thread. lol

gmakerley · Posted: Mon Apr 07, 2008 11:06 am Post subject:

not quite sure why you think "locking in" for 3 more years and continuing the existing prepayment penalty is a favorable idea in comparison with locking in (forever) at 6% to refinance to fixed payment and fixed rate.

it appears you enjoy your dealings with wachovia so much you want to extend them. prepaying your principal balance is certainly a valid thought - i simply prefer the thought of refinancing, i guess.

lisascherzer · Joined: 04 Jan 2008 Posts: 575 66.11 Dollars($)

As long as your confortable with the higher payment, I would suggest refinancing into a lower rate. Since you mentioned that you had a savings, I would not pay down the mortgage, but rather keep it as a cushion to help with the higher payment if needed. Again, with a lower interest rate and extra payments, you can pay off the 30 year mortgage even sooner. I wouldn't worry about that part.

wbmcsull1975 · Joined: 15 Apr 2008 Posts: 3 2.00 Dollars($)

Hi there. If you are looking to lock in at 6% with $6000 in closing costs then feel free to email me. Depending on your loan to value and credit scores we can refinance your loan without prepayment penalty for $1500 with similar rates.

gmakerley · Posted: Tue Apr 15, 2008 12:45 pm Post subject:

wbmcsull1975....please review the Forum Guidelines.

advertising or promotion of your services is not allowed per the guidelines. Please refrain from making statements such as you did above. This forum is set up for an exchange of ideas and opinions, and advertising is not in line with that philosophy.

If you wish to join as a community lender, please feel free to do so; there are benefits to reap as such.

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