To get the best rates in today’s general marketplace, your loan amount needs to be under $417k, have 740+ fico scores, and show a history of sustainable income (ratios). In this scenario, the rate will be somewhere in the high 4%’s. In other words your loan needs to be conforming.
If your fico is lower or your loan amount is a bit higher, you can still get attractive rates… just not the best ones.
If you have a relationship with a manager at a big bank like Wells or BOA where you keep your primary account… ping them for refi opportunities.
If this leads to a dead end, find one good mortgage broker you trust, and put your faith in them. They will be way more likely to help you save money if they feel you will be loyal to them for the hard work they are doing for you. Letting someone else shop for the best rate for you takes a leap of faith, especially in light of all the bad press brokers get. But I guarantee a good broker who wants your business for life will take better care of you, if you put your faith in them, than if you try to learn just enough about the mortgage business to be dangerous.
If your loan falls into the jumbo category (i.e. $545k+ in San Diego), the only places right now offering competitive rates are credit unions like San Diego County Credit Union. It may be worth opening an account there just to take advantage of there insanely low rates.
But if you are like 95% of the people out there, and have a loan amount under $417k, and equity of less than 15%-20%, there is simply no way to get a competitive rate… unless you bring cash into the deal to buy the loan back down to $417k or close to it.
If you can’t do this, then save yourself some energy and look elsewhere to optimize your budget, because it is not going to happen via refinance.
And a more relevant question may be: why bring cash to the deal, since having cash right now is the only way to prosper in this brutal economy? If you have lots of extra cash, then buying the loan amount down may be a good idea if the subject property is trading at or close to its intrinsic bottom… but if it has more room to go, I would recommend waiting for your lender to bail you out… which may take a long time, but hey they have as much to lose as you do, so if it were me, I’d wait and see what develops.
Some lenders like GMAC are just now beginning to voluntarily write down consumer loan amounts and extend low, long-term rates. We will likely see more of this in the coming months… especially since the lame alternative other lenders have been using so far is simply not working. 50% of all loan modifications made thus far are already in default! Click here to see why.
If you are getting approached from your lender to do this sort of “work out”, then make very sure it is coming from your genuine lender and not someone else who is perpetrating to call on behalf of your lender. As in health related issues, get a second opinion.
I would not recommend going through a “loan modification” specialist to negotiate on your behalf. Although it is standard protocol for lenders to not even talk with consumers until they are late on making payments… do not believe the hype that they would prefer to talk instead to some other specialist on your behalf. This protocol is stupid, and it is counter to common sense, and it is frustrating… and while it “is what it is” we are seeing lenders get pressured from all sides to make changes. I would recommend just being patient and that you keep making your payments if you can. If the lender is willing to talk turkey then do it yourself… you don’t need a “specialist” putting another finger in your pocket.
I eat, sleep and breathe this stuff… and I love helping folks figure out exactly where they stand. So for more info, feel free to ping me…