What questions should I ask a mortgage broker when refinancing a condo in Wisconsin?
Its a huuuuuuuuuuuge topic, and to answer your question in full will require a book, with a small booklet of legal advice attached to it. I'm not going to write it here, but I'll give you some very specific points to start your research with: ARM/Baloon - big NO NO. Don't touch that. Get rid of those you have any way you can, and then never ever do it again. That's the kind of crap that got us into the housing bubble mess to begin with. Especially with the rates as low as now, the only future with ARM/Baloon is that you're going to pay more, way more, than your initial period payments. Rates - the rates now are very low. They were even lower 12-24 months ago, but are still extremely low. Make sure you get a fixed rate loan, in order to lock these rates in for the remainder of the loan. Any ARM loan will have higher rates in the future. So go with FIXED RATE. Period - fixed rate loans are given for periods up to 30 years. The shorter the period, the lower the rate. However, at the level they're now, you're practically getting money for free (the APR is comparable to the inflation) even for 30 yr/fixed loans. PMI - private mortgage insurance - since you don't have much equity, the lender is likely to require you paying PMI. This is a significant amount of money you pay until you have at least 20% equity. It changes from lender to lender, so shop around and compare. Government assistance - that's what the broker was referring to. There were programs allowing people refinance even under-water mortgages. Check what programs are still available in your area. Some banks will not refinance with less than 20% equity, but some government assistance programs may help you get a loan even if you don't have enough equity. Closing fees and points - that's the money out of your pocket. Shop around, these vary wildly. Generally, Credit Unions, being non-profits, are cheaper on this item specifically, while comparable to big banks on everything else.
There is another factor to consider when refinancing is the remaining term left on your loan.  If you have 20 years left, and you re-fi into another 30 year loan that extends the length that you will be paying off the house for another 10 years.  You are probably better off going with 20, or even 15.  If this is a new loan, that is less of an issue, although if you moving and buying a house in a similar price range it is still something to consider.  My goal is to have my house paid off before I retire (hopefully early semi-retirement around 55). The only way I've seen mezz work for more than one cycle is the hard money model.   Stay away from glory assets.  Maturities of a year or two max.  Have the stomach and wherewithal to foreclose quickly when the borrower defaults.  Keep the (C)LTV under 70, where the V is not aspirational.  Unitranche is generally better because it simplifies and, therefore, expedites things.    All that requires sitting on dry powder while your competitors are busy and then it will cost you relationships in your other funds/divisions when you ramp up. This is why most lenders succumb: they tie their managers' careers to the short term, which, to be fair, is much easier to measure.  This also applies the broader mezz market beyond RE. I am sorry for your troubles, but impressed with your problem solving skills.  Keep going, things will get better.   Your best hope is to find a place that does manual underwriting.  If they do computer generated stuff, then you will be kicked for sure.  If you can show 20% down, and have some savings, and have some history of paying bills, then you might be approved.   Here in Florida, RP Funding still does manual underwriting.  Another one that is mentioned is Church Hill mortgage.  Also you might check with local credit unions. Of course your best bet to be approved is to be open and state upfront the challenges.  You have to find someone that has the ability to think, has the ability to see passed the challenges, and has the authority to do so. yeah, i get that it's not optional. just sucks that nothing has changed substantially since i closed on the loan 11 months ago (same PMI, same HO, essentially the same property taxes) and now i have to pay more. seems like the closing docs could have taken into account timing of those payments so that i primed the pump with enough from the beginning. First, I don't think your parents are ripping you off, but you should get your agreement in writing. The fact that you never own more than 25% doesn't matter. If the condo's value is increasing, you are in fact building equity. Your share of the equity just doesn't increase, but it doesn't decrease either. For example, if the condo is worth $300,000 now, you have $75,000 in equity. Of course if the value is decreasing, so is your equity. If you are paying $500/month in interest (as OP clarified above), and you don't have a written agreement, you are probably unable to claim that payment as mortgage interest if you itemize your deductions on U.S. federal or state tax returns, thus you may be losing out on a legal tax deduction (assuming you earn enough to itemize). They will need to give you each year the proper IRS form for mortgage interest (Form 1098). And, they have to claim the $500/month as interest income on their tax returns. Having a written and signed contract eliminates confusion and potential for heartbreaking misunderstanding the future--and it sounds like you are already experiencing some doubt and confusion now. Your rate seems within market rates for an interest-only loan. Let's say you wanted to buy out your parents' share of the condo right now. Would you pay $115,000 or would you have to get an appraisal to find out what the condo is worth now? If you can't answer that question, you need to get that in writing so that you won't have an argument over it someday. If the condo has appreciated significantly and all you have to pay is the $115,000, then that's a sweet deal for you, because you'd be buying out a much more valuable property for much less than it's worth. If that is the agreement, and the property is appreciating (no guarantee, especially with condos), then you are essentially building equity. If the property is declining in value and you do wish to sell it, then you won't have to pay $115,000; they'll just end up with their 75% share, which will be less than the $115K they invested. Both of you would lose some of your investment, but you would have had all the benefits of living in a nice condo all those years and they wouldn't. They are definitely taking more risk than you are. Second, if you had $40,000 cash saved up, your parents probably raised you with some good financial sense and work ethic, so I'm optimistic they have good intentions for your future. Operate from that frame of mind when you go to ask for a written agreement. Next, read up about Equity Share Agreements. There are many models that will help inform your decisions. But, you should engage a real estate lawyer to help you draw up a fair agreement for both parties.  I was in an equity share agreement for my first townhouse. It's a common practice, and it won't cost all that much to get one created. It's worth the money to get it done properly. "First, one would 'not' want to be the guarantor as it would likely appear as a debt on their credit. In some cases this can be good, but not always.  I'd suggest a homeowners meeting. A reverse auction where you say ""Would anyone like to get the condo fee waived for 12 months in return for guaranteeing the loan?"" If no hands go up, you have an issue. But if even one hand goes up, you have the guarantor. Then you ask if there are any objections. Anyone who objects is welcome to bid fewer, say 10 months. Ideally, you see a dozen hands go up, and you just count down until one one remains. When I lived in a condo the fee was $250. If I were one of the older residents who planned to stay, I'd do it for one or two month's fees." Sorry, this isn't terribly helpful and I would post this as a comment but I'm new and apparently can't.  Some considerations: 7% seems awfully high.  Check SoFi and see if you can't refinance at a rate low(er) enough rate so that you won't be paying so much interest. How does reinvesting 10k into the company compare to paying off loans?  1.5 years in, you've paid down a lot of interest already... We would need a lot of particulars to give you specific advice, probably more than you're willing to give over the internet.  Who does the financials for you business?  They should be able to give you advice, or at least build the models specific for your situation to help you make a decision. Let's say you owe $200K (since you didn't mention balance. If you do, I'd edit my response), and can get 4.5%. You'd save 1.5% or about $3K/yr the first few years. If a $12K paydown is all that's between you and and refi I'd figure out a way.  There are banks that are offering refi's under the HARP program if your current mortgage is owned by FNMA or FMAC which permit even if under water. So, the first step is research to see if you can refi exactly what's owed, failing that, shop around. A 401(k) loan will not appear as a loan on your credit report, that may be one way to raise the $12K. The best thing you can do is put all the savings into the 401(k) to really get it going. It seems like you are asking two different questions, one is, how do I know if I can afford a house? The other is, how do I know what type of mortage to get? The first question is fairly simple to answer, there's plenty of calculators out there that will tell you what you can afford, but rule of thumb is 30% of income can goto housing. Now what type of mortgage to get can be much more confusing, because the mortgage industry makes money off of these confusing products. The best thing to do in my opionion in situations like this is to keep it simple. You need to be careful buying a house. So much money is changing hands and there are so many parasites involved in the transaction I would be extremely wary of anybody who is going to tell you what mortgage to get. I've never heard of a fee only independent mortgage broker, and if I found one that claimed to be I wouldn't believe him. I would just ignore all the exotic non-conforming products and just answer one simple question. Are you the type of person that buys an insurance policy or that likes to self insure? If you like insurance, get a 30 year fixed mortgage. If you like to self insure, get a 7 year ARM. The average lenghth someone owns a house is 7 years, plus in 7 years time, it might not adjust up, and even if it does, you can just accelerate your payments and pay it off quickly (this is the self insurance part of it). If you're like me, I'm willing to pay an extra .5% for the 30 year so that my payment never changes and I'm never forced to move (which is admitedly extremely unlikely, but I like the safety). I don't like 15 year term loans because rates are so low, you can get way better returns in the stock market right now, so why pay off sooner then you need to. Heck, if I had a paid off house right now I'd refi into a 30 year and invest the money. In summary, pick 30 year or ARM, then just shop around to find the lowest rate (which is extremely easy). That's the nice thing.  You can read the details and even ask the requester questions just as a loan officer would.  You can also filter based on criteria.    For me, I filter out wedding expenses, trips, home improvement (not repair), vacations and most major purchases.  I tend to invest in refinancing (carefully), business expenses, renewable energy project, and educational expenses.  That's the nice thing about it, I can support the initiatives that I choose to support. If you are not planning on living in your condo for at least 10 years don't do it. For about 5 years your mortgage will be more then rent, after 5 years you start to break even and may start paying less. On the other hand, if you plan to be there for 10 years or more it might be a great savings tool, I'm of the belief that you should always put 20% down.  The lower interest rate will save you thousands over the life of the loan.  Also PMI is no different then burning that much cash in the fireplace every month. From Wikipedia Lenders Mortgage Insurance (LMI), also known as Private mortgage insurance (PMI) in the US, is insurance payable to a lender or trustee for a pool of securities that may be required when taking out a mortgage loan. It is insurance to offset losses in the case where a mortgagor is not able to repay the loan and the lender is not able to recover its costs after foreclosure and sale of the mortgaged property. You are basically paying money each month for the bank to be insured against you not paying your mortgage.  But in actuality the asset of the condo should be that insurance. Only you can decide if you are comfortable with having $50k in liquidity or not.  It sounds like a good cushion to me but I don't know the rest of your expenses. "Short answer: It depends :) It should generally be cheaper to get a loan directly from a bank, but often a mortgage broker can find you deals that you might not be able to get with a local bank.  If you are refinancing, the cheapest option of all is usually to go through the bank that holds your existing mortgage. As for how mortgage brokers make their money, there are two ways.  The first is on the ""front end"" through fees (origination fees especially) that go directly to them.  The second and less obvious is on the ""back end"".  This is where they make money by giving you a loan at a slightly higher rate than the lender was willing to give you.  So, let's say they find a lender that will give you a loan at 5.25%.  They offer that loan to you at 5.5% and pocket the extra .25% when the bank takes it over." If you can deal with phone calls instead of a face to face meeting, for the average person with an average refinance online tools just offer another way to shop for deals. For new mortgages, I think having a person you can meet face to face will avoid problems, but for just a simple refi, online is one of the places you should check. Compete your current mortgage company, your bank (hopefully credit union), a local broker or two and the online places. The more competition you have, the more power you have in making a good choice. Does it cost money to refi? I know there are quite a few deals out there, I refi'd in June for $500, not bad. But sometimes can cost couple grand. If so, you have up front costs, plus the cost of the personal loan, that probably would break even at some point after your refi, but at what point? Will you sell before then, or even think about it? Or would you break even next year, then its a no brainer. As mentioned by others, do the numbers.