Has anyone been able to renegotiate from a good position?

[Anonymous]

We're in a fairly solid position with our house but interest rates have dropped in the last 4.5 years and we're looking to save some money.

I've heard rumors of people being able to approach their existing lenders and renegotiate a lower rate (maybe not quite as low as they could get in a true re-fi) without paying a lot of fees; basically offering the lender an opportunity to continue to make money on the mortgage (no late payments) - a little more money than they could get loaning out to a new customer, in fact - while saving us money in the process.

We've got about a $430k balance on our note, and the closing costs would run over $10k last time we checked.  Not terrible, but I'm working to pay down the mortgage fairly quickly so the additional lump sum hurts.  It should save us money even at that point, but if we could get a half percent higher rate with no (or almost no) fees, we'd actually be in a better position.

Regardless, I'm going to approach citiMortgage about it, but I'd like to see if anyone has succeeded.  I don't want a government-backed modification that goes on our credit, don't want to reduce principal, just want to get a lower rate than we currently have.  Any suggestions?  Is it better to go in person, write a letter, or make a phone call?

Or am I just SOL and would be better off just starting refi discussions with someone else?

[Anonymous]

I should have added some details - good income, stable jobs, credit scores in the mid 700s for my wife and myself.

[Anonymous]

Just to clarify, if you have the ability to get a refi, they will not lower the rate or modify your loan.  They only take these actions when someone has no other options.  What you are asking about is getting a loan modification.  Whether it is through a gov't program or internally done, it is still a loan modification and will reflect as such on your credit score.   It sounds like you want to refi but avoid the closing costs.  In the words of Dallas (well know member here) "you can't have your cake and eat it too".  Either you will have to refi and pay the costs involved (or if you can get them rolled into the loan which makes no sense if you are trying to pay off early...), or you go for a loan modification and you take the points/credit hit.  Although there have been cases of what you described hapening without it getting reported as a loan modification, that was more at the beginning of the mess when banks were struggling how to define stuff and some people got lucky in how their situation got reported.  Even in those cases, at any time the bank could decide to update the credit file to show that the loan was modified and that is quite possible for this to hapen once the banks get through all of this mess. 

[Anonymous]

Fair enough.  It just seemed like this would be a win-win ... lower costs for us, plus a continued customer for citi at rates higher than they would get for a new loan from someone else and no significant internal costs (and they know we're good payers).  As opposed to paying off their loan then they'd have to go and advertise to acquire a new unknown customer at lower interest rates.

Oh, well... 

[Anonymous]

Some other points...

This is not something you can do in person at all or by letter.  You have to call your main servicing phone number and as to speak to someone.  A local branch can not modify or change your loan.  All they can do is modify it.   They also do not start such proceedings without talking to you, so no letter.

Last, prior to doing this, they are going to want to see financials.  In any type of loan modification, they are going to want to see that you can not achieve the required results on your own.  SO if you qualify for a refi then they will make you do that.  If you do not qualify for a refi, they will want to see if you have enough liquid assets to lower the balance or pay down the loan generally before considering a loan modification.

So another factor to consider is that they often times will require you to take some $ hit prior to a loan modification so that would offset a good protion of the 10K in closing costs you are worried about.

[Anonymous]

Well, in their books it would be a lose lose.  Right now they have a well qualified buyer with good payment history locked into what is probably still a historically low (although not as low as current rates) but fairly good rate for them.  If you were to refi with them, they get some extra closing costs and re-lock you in.  If you refi with someone else, then they get the principle returned to them (loan paid off).  If they modify, they are lust accepting less money from you without getting the closing costs, etc.  It also makes them question your financies as to why you "need" a loan modification as loan mods are really only for those in some sort of trouble.

[Anonymous]

I guess I didn't see them getting the principal back as a "win" for them - they're going to go out and re-loan it to someone else (that's what they do, after all), incurring expenses to get that customer and then getting back a lower APR than we'd be paying them.  Good to understand more about how they'd see it though.

[Anonymous]

Just an FYI - Chase actually approached a lot of people in good standing with streamlined refinances. My parents were one of the lucky people who got to take advantage of this. They were originally with WAMU, which of course became Chase, and have good equity in their home. Chase randomly contacted them a couple of months ago about refinancing to a rate about 2 points lower than they were currently paying. There were no fees, and no documentation from my parents was required. Chase sent over simple docs to be signed and the refinance was done. My dad (always paranoid) thought that maybe in the WAMU takeover his loan docs might have been lost so Chase offered the refinance in order to get signed documents from them, but I think Chase told him that there were government subsidies involved that made it worth it for them. I remember reading on the boards that my parents are not the only people approached with this offer from Chase.

[Anonymous]

Mank, you are dead right on that.  Some banks are actively approaching people for refi's and are being pretty good about the costs involved.

That said, there is a big difference on their end when you approach them for a refi,  and when they (via some internal process) choose and approach you.  Alot of the refi approaches are done specifically in areas that the bank wants to limit any more exposure to default, in declining areas, or to certain "buckets" of clients they feel in need of addressing.   

OP should most definitely call the lender and see if they will do a refi, but as the OP said, he tried that and they wanted 10K in costs.  I think he was trying to get the benefit of the rate without either paying the closing costs or taking a hit for a loan modification.  It would be worth the OP checing into a streamline refi, but that also depends on the loan type as not all loans are elligible for a streamline refi.   

[Anonymous]

Actually I haven't called the current holder yet - just talked to my credit union and got their rate quotes and fee estimates.  After realizing how high the fees were I started thinking about approaching the current holder instead, but I know a lot of the time its all about the language you use in the initial contact.  I'll do more searching with the 'streamline' phrase, thanks