Refinancing your mortgage can save you a lot of money in interest and lower your monthly payment - when the numbers makes sense, that is. But there are times when a seemingly money-saving move like a refinance can backfire. In short, there are times when it doesn't pay to refinance.
On home mortgages, a large payment to principal reduces the loan balance and with it the fully-amortizing monthly payment, or FAMP. FAMP is the level of monthly payment required to repay the mortgage fully over its remaining term. Many borrowers would like a mortgage on which the monthly payment would drop to the new, lower FAMP following a large payment to principal and are disappointed when they find they don't have one.
Q: Our home was foreclosed by our first mortgage lender several years ago, leaving the second mortgage unpaid. After we got back on our feet financially three years ago, I began trying to reach out to the second mortgage lender to work things out. The lender would not speak to me about it, other than to say the loan was charged off. Because the debt was still on my credit report, I kept at the lender and finally negotiated a settlement, paying a reduced amount. Still, the debt shows up on my credit report as settled for less than the full amount owed - and that's preventing me from getting a new mortgage for three more years. Is the lender liable for blowing me off all that time?
As a federally insured reverse mortgage program under the Federal Housing Administration, the home equity conversion mortgage program is not designed to help the wealthy. In calculating maximum draw amounts, the highest property value it will recognize is $625,500. If your house is worth $1 million or $10 million, you can't draw more than the amounts available on a home worth $625,500. Further, although higher value properties reduce the risk of loss to the FHA, the mortgage insurance premium is the same for a property worth $1 million and one worth $625,500.
Q: The irrigation system in my area of our community has not worked for several months. I had new landscaping put in around the time it broke. I pay our homeowner's association dues every month, and those include the irrigation system. My water bills are sky-high from having to water the plants every day. Can I make the association fix it, and can I get reimbursed for the hike in my water bill?