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May 4, 2009

Despite Low Interest Rates, Few Refinancings in New York

With long-term interest rates bouncing around near record lows for the last several months, it's been a great time for home owners to refinance--unless they live in New York, that is. According to stats from Inside Mortgage Finance, while there were 92 percent more mortgage refinancings nationwide in the first quarter of 2009 versus the same period a year earlier, the increase in New York State was only a modest 6 percent. The reasons? First of all, New York has a lot of high-priced real estate, and the best rates are only available on conforming loans ($417,000 and under); if there's enough equity in your house and your credit score is high enough, competitive rates are available for so-called agency-jumbo loans ($417,001 to $729,750). Secondly, New York State has a painfully high mortgage tax of 2.05 percent, and it's become harder and harder to avoid in the case of refinancings. Has anyone refinanced a jumbo or agency-jumbo loan in the last few months? What kind of rates and fees did you encounter? What are the best banks to go to in this category?
New Yorkers Miss Refinancing Spree [NY Times]

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1.8% mortgage Tax. The lender pays the .25% difference.

Posted by: Adam Dahill at May 4, 2009 9:37 AM

I haven't looked into refinancing since I don't have a mortgage. And since NYer's are less likely to move than national average
-we have a lot of long time owners that don't have mortgages.

Posted by: Petebklyn at May 4, 2009 9:44 AM

Adam...I thought you said that the mortgage tax could be circumvented with a refi?

Posted by: daveinbedstuy at May 4, 2009 9:47 AM

forgive me for not bothering to look it up, but i thought they raised the ceiling on conforming loans a while ago?

Posted by: Jimmy Legs at May 4, 2009 9:51 AM

you can get around the mortgage tax. however, i'm in month 3 of trying to get my re-fi done because they are swamped.

Posted by: wine lover at May 4, 2009 9:58 AM

Loan limits, mortgage rates and taxes are irrelevant right now. You can't refi if you don't have equity. I suspect the large number of 80/20 loans that were commonplace in NYC will leave these same homeowners unable to refi for quite some time.

Posted by: Colonel Steve Austin at May 4, 2009 9:58 AM

We refinanced in January (were able to pay down our jumbo into a conforming loan) and had no problem obtaining a CIMA (CEMA?) from Citi, our old bank. That's the part of the article that confused me - has the CEMA situation changed since January/February?
Even though we avoided the mortgage tax w/ the CEMA, the closing costs were still way higher than what my sister is paying for her refi in California.

Posted by: petunia at May 4, 2009 10:00 AM

Tax is only on the cash-out portion of a cash-out refi. If the loan amount of the refi is the same as the existing mortgage, there is no additional tax.

Posted by: FatLenny at May 4, 2009 10:06 AM

I am in a waiting period to refi under new conforming amount of $729k - I already qualify but was told the exact "rules" for the new conforming loans should be ready this week so nothing can happen until then. Is that true?

Posted by: mbw at May 4, 2009 10:10 AM

Not sure I agree that "loan limits, mortgage rates and taxes are irrelevant right now." A lot of people in expensive markets are gonna benefit from low rates and rise in conforming amount. Would argue that small percentage of total homeowners impacted by recent purchases being low on equity. But begs question, what percentage of homeowners with mortgages bought in last 3 years? 20%?

On refi, going through this now. Conforming amount is 729 I believe. But for 2 fam it's higher - 'bout $800. Slow process but will save a bundle.

Posted by: Johnny at May 4, 2009 10:23 AM

Yes, MTG tax can be circumvented by doing a CEMA. You still pay Mtg tax on any of the "new money" as well as additional closing costs for the lawyers and recording.

HSBC and Wachovia only allow a CEMA if you refinance with them. You are forced to use them and can not shop around to find the best deal. That is unless you don't mind paying 1.8%

The new limits went into effect this past Friday.

Steve Austin- Most of the people refinancing did not do 80/20s. A lot of NY's didn't do 80/20 because their condos/coops would not allow them to. A great deal of the loans that I am refinancing are at 50%-60% Loan to Values. You would be suprised at the amount of equity in brownstone brooklyn. A lot of 1.4 - 2 million brownstones with loan amounts under 650k.

Posted by: Adam Dahill at May 4, 2009 10:25 AM

Just refi'd my primary on an agency jumbo at 4.875% 30 year fixed with no points. the mortgage is for $729,750 which is the upper bound of the agency conforming level. had no trouble getting it done as we have $1MM in equity in the house per the latest appraisal and excellent credit. i think without this the rates tend to suffer. there were 3 banks that were offering to underwrite - astoria federal, suntrust and fifth third, all of which were found using a mortgage broker (which i highly recommend). did a CEMA with my old lender (Citi) to avoid the mortgage recording tax, also no problem but depends on the lenders in each case.

Posted by: bklyndoug at May 4, 2009 10:26 AM

I have clients that are cutting their payments by 1k per month. That is some serious savings.

Posted by: Adam Dahill at May 4, 2009 10:26 AM

bklyndoug - what did you pay for closing costs (in total) to refinance?

Adam Dahill - is 4.875% still the current rate on a loan of $729K? Do you expect the rates to rise or fall going forward?

thanks!

Posted by: Splenda at May 4, 2009 10:37 AM

Well how many of you think home mortgages are going to be close to 4.5 percent for the next 30 years. I am no math genius but I don't think so.

Posted by: hannible at May 4, 2009 11:08 AM

I know that the feds increased the conforming limit to $729K for high-value markets like NYC. But at least at Wells Fargo a couple of weeks ago, they were sticking to the existing $625.5K conforming limit, because that was the limit that Freddie and Fannie would repurchase mortgages. Has there been a change? Which lenders are actually using $729K now to write paper?

Posted by: bibini at May 4, 2009 11:39 AM

Original loan/home bought January '08. Just closed last week on a 30-year fixed conforming refi with Wells Fargo, who held existing notes on our three-family home. Combined current mortgage and home equity loan (not a HELOC) with enough money to pay for total closing costs of about $22,000 -- including a point and half to get a 5% rate. New loan amount is just under $850K and saves us $600/month.

Posted by: chuck at May 4, 2009 12:28 PM

As I said above the 729k limit started last Friday. All the lenders should be using that number now for the conforming JUMBO limits.

1 unit 729,750
2 unit 934,200
3 unit 1,129,250
4 unit 1,403,400

FHA loans have been using these limits for about 2 months but Fannie/Freddie just started up again 3 days ago.

4.875% no points is a good rate for 1 unit properties. That of course is if you have excellent credit and sufficient equity in the property. LOW LTVS.

Bkyndoug- How did you close on 729k already? Did you do an FHA loan? The Fannie Limits started on Friday of last week. Did you just start the paperwork?

Rates were at bottom last Tuesday on fears of the swine flu but have moved higher since then. They are holding pretty steady compaired to the Treasuries which have sold of significantly with the 10yr hitting 3.14%

Posted by: Adam Dahill at May 4, 2009 12:32 PM

closing costs were around $5K with the CEMA if I remember correctly.

Posted by: bklyndoug at May 4, 2009 12:33 PM

adam -

i was about to close in march when my broker told me that the loan limits were going back up to 729 (at the time they were 625). i had gotten killed in the market so i was looking to preserve some rainy day cash, and so the higher limit was appealing. we were able to lock the old rate through to may to protect against the rate creeping up. when the new limits came through the rates remained the same so we went with that. we have not yet closed but we since we were about to do so in march the appraisals and the CEMA are already in place (same lender).

Posted by: bklyndoug at May 4, 2009 12:37 PM

Good Deal bklyndoug. It pays to keep your head and see these things through. I had a couple of loans for fellow brownstoners that we have been working on since Jan that are just starting to close because of subordination and CEMA issues. My clients have also been very patient and we relocked them in on one of the good days. I have been waiting for the new limits for a while telling my other clients to be patient. Now it's time to finish everything up.

The CEMAs have additional fees but it's much better than dealing with 15k in additional taxes.

Chase is 1100
Wells is 750 plus another 450 for their lawyer
I'd have to check the other banks to see what their schedules are.

Plus the additional 250 in recording of the CEMA docs.

Posted by: Adam Dahill at May 4, 2009 1:44 PM

Adam what is your e-mail address and phone number. I am looking at refinancing. Thanks

Posted by: Aussie at May 4, 2009 9:41 PM

Loan limits are still temporary and may be decreasing back down at the end of this year. So take advantage of the rates while they last. Banks are definitely backed up, but if you can lock a good rate and save money it's worth the wait

Posted by: Brian Scott Cohen at June 6, 2009 2:22 PM

« Open Thread St. Joseph's Going Back to Drawing Board on Gym »

May 4, 2009

Despite Low Interest Rates, Few Refinancings in New York

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