Richard Harmon, senior vice president for mortgage lending and residential construction at Security Federal Bank, answered reader questions Tuesday in a live chat on AugustaChronicle.com. The following is a transcript of the chat.
Tim Rausch: Good morning. We're chatting about the mortgage and refinance market in the Aiken-Augusta area. We've got Richard Harmon with us this morning. He's a senior vice president at Security Federal Bank.
Tim Rausch: Morning, Mr. Harmon.
Richard Harmon: Good morning.
Tim Rausch: I'm the business editor at the Chronicle and I'll be moderating the chat. We've already got some questions lined up, so let's get rolling.
cajunnana2000: Is there a set period of time from closing your loan before you can refinance,and is it better to do so with the original lender?
Richard Harmon: Normally there is no time requirement before refinancing, however there are different rules depending on the type of transaction your current loan was closed as. Often your current lender will give you a break on some fees but you may want to shop around.
chi chi: I am still waiting on my mortgage company to determine if I am eligible for relief under the stimulus. i am current on my payments, but it's getting harder to stay that way. They just raised my payment due to escrow shortage. I have been told I could be eligible to refinance at a lower interest rate (current rate is 8.25). should i wait for my mortgage company to reply or go ahead and start the refinance process.
Richard Harmon: If you current mortgage holder is not responding as quickly as you would prefer, I would suggest contacting another lender to inquire about your prospects for getting a lower rate. Most lenders can quickly determine what they could offer you with little or no expense involved in the initial inquiry.
shay520: I have a number of properties and my credit is great, but I have one that is a loan that is interest only and I wanted to refinance, but noone will take my loan. I have never been late on anything. What can I do?
Richard Harmon: If you have more than 4 properties financed, most lenders are not able to sell a new loan to Fannie Mae or Freddie Mac. You may want to inquire about a "Portfolio Loan" which would not be sold to Fannie Mae or Freddie Mac. Your best bet for such a loan would be a local bank or credit union.
Reality: Can you build a house that will have a VA mortgage?
Richard Harmon: You can. It works best to have your builder obtain the construction loan and sell you the house upon completion. If that is not feasible, you can obtain the construction loan yourself but there are some restrictions on the amount of the loan. If you do get the construction loan, when the house is completed you would then obtain your VA loan to pay off the construction loan as a refinance.
storiesihaveread: I have 2 mortgages same house. I would like to refiance at a 15 yr mortgage I am now paying 8% 1st mortgage 10% 2nd. I have been in the house now for 15 years. Question can I combine the 2 into one? Lower my rate to the 15 yr rate? If so what is the 15 year rate? Will I have have to pay all closing costs get the house re-appraised? Thank You
Richard Harmon: You may be able to combine the two loans into one. The total debt as compared the the value of the house will be the primary factor in determining what would be available to you. It would certainly benefit you to refinance since current rates are well below what you are now paying. Depending on a number of factors such as loan to value and credit rating, a 15 year fixed rate today would be in the 5% to 5.5% range. There would be closing costs associated with the new loan, however you may be able to finance them into the new loan.
JimMorrison: What would be the lowest rate where refinancing would make sense now?
Richard Harmon: While I find that you normally need to get a rate at least 1% below your current rate, that is not always the case. If you plan to sell the home within the next 2 years, the closing costs are probably going to offset you interest savings. On the other hand if you plan to stay in the house for a long period, you may benefit by refinancing. I would suggest getting estimates for closing costs and interest rates then seeing how long it takes you to recover the closing costs with the lower payment. You may want to also consider lowering the term of your loan (say from 30 years to 20). The interest savings can be dramatic.
Tim Rausch: I'll pass along a question that was handed to me. This is about a new mortgage, not a refinance. Are there any mortgages out there for people who are not yet 2 years post discharge on a bankruptcy ... but they want to take advantage of today's buyer's market and low interest rates.
Richard Harmon: It depends on the type of bankruptcy. If it is a Chapter 7, most lenders will require at least 2 years from the discharge date. If it is a Chapter 13, the borrower may be able to get a loan after 1 year of making payments while still in bankruptcy (subject to the approval of the bankruptcy court).
Tim Rausch: OK, we're getting close to the end of reader questions...
fighterzack: Will you sell your loans? My mortgage has been with Suntrust for 6 years and never been sold.
Richard Harmon: Security Federal Bank does sell its fixed rate loans. We do retain the adjustable rate loans we make.
TRUDY09: I want to refinance my home to a lower interest rate ..currrently my rate is 6.75 1st mor and 9.25% on 2nd mort ...i was told by citi i didn,t qualtify under the new stimilus plan
Richard Harmon: The loan to value ratio (1st and 2nd total loans divided by the value of your home) could be the issue. I encourage you to call a local lender to discuss your options.
Tim Rausch: I'll ask the last question ... How robust is the mortgage and refinance market right now? Are there a lot of people coming in to get loans?
Richard Harmon: Mortgage activity has been very strong since the first of the year, however the recent increase in rates has made it less attractive for people whose current rate is in the 6% range.
Tim Rausch: That's all the time we have for this chat. Thank you Mr. Harmon for sharing your expertise with us this morning.
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