REFI - PRE Pay Penalty

Guest 0.10 Dollars($)

Since the rates are getting lower. Is it possible to refi to a lower rate to get a lower payment. I dont need cash out.
I think my current rate is aroun 9% with Beneficial.... Not only did they charge me 5 points to do this loan they put in a prepay penalty. balance is around 209 for a house worth 225k. Not much equity. My payment currently on the loan is around 1700. I wouldnt even mind an I/O product. I would just like a lower payment. I also have a VA certificate, however I didnt use it on this house.

banker0679 · Posted: Sat Jan 26, 2008 6:05 pm Post subject:

when does the prepayment penalty end? when did you get this mortgage?

lisascherzer · Joined: 04 Jan 2008 Posts: 746 93.70 Dollars($)

Hi Sean,

With good credit you should be able to qualify for a loan up to 95% of the value of your home. The rate on a 30 year mortgage is 5.50% with zero points as of Friday the 25th. With such a substantial rate decrease, it is definately worth refinancing but it just depends on the amount of the prepayment penalty. If the prepayment penalty is 6 months interest as it used to be then you won't have enough room in the new loan to pay off the mortgage without coming out of pocket for the difference. I know beneficial had some issues regarding their prepayment penalities and may have reduced them. You will want to look at the final paperwork to find out how much it is and when it will end. If it is only 1% of the loan balance then it looks like you have enough room to pay this off as well as include the closing costs in the new loan at 95%.

Guest 0.10 Dollars($)

I dont have good credit. I am around a 620-630 range. I just got the loan in May of 2007. I know when I first got the loan it was an arm. Then I get a letter in the mail a few months ago saying "CONGRATULATIONS, your ARM has been converted into a fixed rate 30 year term" Like I won the lottery or something!

banker0679 · Posted: Sun Jan 27, 2008 7:38 am Post subject:

VA will be a good option......

You should thank Bush for the 'rate freeze' program.

When does the Prepayment expire?

livinginnky · Posted: Sun Jan 27, 2008 11:22 am Post subject:

Guest 0.10 Dollars($)

No, I did not initiate that. About 2 months after I closed, they sent me the letter saying they converted it into a 30 year fixed rate.

sara · Posted: Fri Feb 01, 2008 2:29 am Post subject: RE:

So, did you ask them about it? I mean without even informing you how could they convert it into fixed rate mortgage.

evolovik26 · Posted: Fri Feb 01, 2008 7:31 am Post subject:

He might have hit the ceiling on his loan so it cant go higher so now it is fixed.

ckalvesmaki · Posted: Fri Feb 01, 2008 7:53 am Post subject:

One other comment.....a lot of the ARMS where written so that the rate could never drop BELOW the start rate.......so a few lenders just went ahead and changed the loans........however.......i would think that.....a new note would have needed to be signed and recorded.

livinginnky · Posted: Fri Feb 01, 2008 11:14 am Post subject:

Guest 0.10 Dollars($)

The rate they started and the rate they locked me into are the exact same. 9 percent. What happened is a company called BNC Mortgage did the loan and immedialtey sold it to Chase Bank. Chase Bank sent a letter stating that the adjustable rate would stay fixed at 9 %.

Caron · Posted: Thu Feb 07, 2008 4:27 am Post subject: RE:

Ok sean, That means it is an ARM only and it might stay fixed for a certain period of time. I mean yours is an hybrid ARM. Check the loan doc and the letter as to whether they've mentined for how long the ARM would remain fixed. Just in case you wish to know more about Hybrid loans, have a look at the information available on this topic.

Good luck

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