A few days ago I called my bank and ask them what will take to refinance my primary home mortgage. They said that advertised lower interest rates are only available for new clients and they don't recommend me to refinance.
My mortgage has an interest of 5.87% which is very high compared to their advertise price. A real estate friend, recommended me to miss 2-3 payments of the mortgage, and that will trigger loss mitigation department at the bank to offer me a lower rate without the closing costs.
I am not sold on the idea for various reasons:
(1) I have cash in saving accounts, so the bank first reaction will be to check my bank balances.
(2) I have excellent credit score - I will probably take a big hit
(3) It does not seem right
On the other hand, the bank is telling me to keep paying this big rate, while my house is undervaluation. For them is a win-win, but for me is a lose-lose.
House Value: 139,000
Original Loan: 144,500 (because house value was a lot more)
Current payment: $900/m
Loan Type: Conventional without PMI
Term: 30 years
Start of Loan: 03/18/2005