Lower Your Mortgage Interest Rate With No Refinancing
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Here's your Money Briefing. I'm J.R. Whelan at The Wall Street Journal in New York. Do you think your mortgage interest rate is too high? Some banks will lower your rate with no refinancing necessary. All you have to do is ask. We'll have details in a moment. First, some money and market news you should know. The IRS says it's not getting every dollar it's due.
How can a bank lower my mortgage rate without refinancing?
The agency's latest report for 2011 through 2013 says Americans only pay about 86% of the federal taxes that are owed. leaving a $381 billion gap every year. And while the IRS uses tools like audits to keep taxpayers honest, the number of individuals audited has declined for seven consecutive years, last year less than 1%. The IRS has seen its staff cut by a quarter since 2011. And how about some dental insurance with your 24-pack of paper towels? Starting next month, Sam's Club Warehouse chain members will be able to buy bundles of health care services. The pilot program will start in three states and include discounted dental care, free prescriptions for some generic drugs, and telehealth consultations where people can be diagnosed through an automated assistant.
The program won't replace health insurance. It's intended to supplement health coverage and reduce out-of-pocket costs. The fees will range from $50 to $240 for up to a family of six.
Let's say you want to refinance your house. A blizzard of paperwork and a mountain of fees usually follow. But what if your bank would just lower your interest rate with no refinancing necessary? They can through a loan modification. And Wall Street Journal reporter Katie McLaughlin is on the line with us to explain. So Katie, what are the big differences between a loan modification and a traditional refinancing?
A loan modification is a much simpler process. This is for loans that a lender has on their own book. So they own this loan and they basically just go in there You know, they make sure you meet a couple of their criteria. They go in there and they lower the rate and then you pay that rate for the rest of the life of your loan. Let's say you were five years into paying down a 30 year fixed and you had locked it in at four and a quarter. But but now rates are down to three and three point seven five. They just lower it to that. And then you pay that from here on out.
So the loan does not reset to 30 years.
No, you're just really the only thing that's changing is the rate that you're paying. All the terms of that loan remain the same. A refi is a really different deal. A refi is basically getting a new loan, right? You retire the old loan that you had. You take on a new loan. It has a new rate. Hopefully you get a lower rate, um, It might have some different terms. You might pick a different type of loan. But it but you would start from day one and you'd start that amortization table from day one. There's also you have to qualify for the loan. So they have to scrutinize all of the stuff that they scrutinized, you know, when you originally got a loan on your home and they charge for it. You know, as you know, if you've ever looked into refinancing, there are lots of fees attached to it.
And then sometimes you pay points and it can get kind of pricey.
Now, you mentioned there are criteria involved. What sort of qualifications are involved to have a loan modification?
So the different lenders I talked to, those who were willing to talk to me about doing this, because it can be a little bit of a kind of stealthy, almost slightly secretive thing that they do. But the lenders I talked to, they talked about, well, you could do it once a year. That was in some cases, lenders limited to doing it once a year. Other lenders said they have to make sure that they are doing the modification in a place where property values are not tanking. They don't want to kind of get into deeper business with somebody whose property is actually going south. They're looking for people who pay the bill. If you're not paying your loan on time, they don't want to keep you. They don't want to...
give you a loan modification.
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