I had a potential client approach me about a possible refinance. They said they had been getting fliers and phone calls saying they were eligible for low, low rates for a refinancing. Hmmmm, low, low rates? She said she thought she was unable to refinance. I asked two questions and knew she was unable to refinance. She had no equity in order to refinance, and a crazy story!
When people say you can do something, maybe they just want to see if you can do something. I’ll cut and paste the whole conversation, you may find it interesting and helpful the next time you get a flier in the mail or a cold call. Bottom line: stop shopping by price alone, get a referral, do research, and ask a lot of questions. Clearly the people this person was hearing from were simply marketers, cold callers, fleas on a dog trying to work a hot refi market, and they’ll close their doors when the easy money goes away. Below is the email we exchanged, it does not take long to see this person cannot refinance. Read it and learn, marketing is marketing, nothing else:
Let me ask you some questions and I’ll see if I can help:
1. When did you buy the home? July 2006…it was part of a CRAZY mortgage lending scam and the three of them, a dirty appraiser, real estate agent and lender are all in prison now. So basically I was the typical “Sub-primer” that shouldn’t have gotten a 100% financing on a stated income loan, but I did.
2. What is the current rate on the 1st trust mortgage? I was able to get both loans modified after years of writing letters. The loan for $115k was at 11%!! and is now STILL 11%, but they “forgave” $100,000 of it so I am only paying interest on $25,000, but I am not allowed to pay it off for a while?? Complicated. The other loan I had modified to 5%. So TOTAL, my mortgage rate a month is just under $2400 (which is being paid by my renters in there at the moment) My original mortgage payments before I wrote letters and got the loans modified was $4100 a month!
3. What did you originally pay for the home? $575,000..after I found out the appraiser inflated the rate by almost $75,000 and they all pocketed the difference in escrow
4. What do you believe the home to be realistically worth now? The property tax people have it at $460,000, but I think its closer to $500,000.
5. What is the balance of the loan amount/s? I have zero equity…well, maybe negative equity.
6. Is this home your primary residence, a rental property, or a vacation home? It was forced to become a rental property so I wouldn’t go into foreclosure. I originally was planning on living in it, fixing it up a bit and flipping it, when the height of the real estate boom was happening and everyone was doing it. I bought at the peak right before the bubble burst unfortunately.
7. What type of property is it, condo, single family detached, rowhome, 2 unit, 3 unit, or 4 unit? It is a really tiny log cabin style bungalow built in 1922 and it hasn’t changed since. It is cute to rent, but if someone bought the property it is DEFINITELY a “tear down”. The entire property is pretty much worth just land value and is surrounded by multi-million dollar homes and duplexes. The area is zoned for a duplex as well. If I were able to find a developer to take this place off my hands and make a little money I would. The deal is, I went through SO much hell to NOT become a statistic and to not go into foreclosure when this mess happened. I am determined to make money off this property after everything I went through. Now I am just sitting on it. I have been getting letters in the mail and random phone calls saying that I am prequalified to refi the place, so I thought it was at least worth looking into it. If there is ANYTHING you can do I would be forever grateful. Thanks!