I just ran into this program recently and thought I would discuss what I know about it so far.
Consumers with Chase mortgages have started receiving Fedex packages on their door offering them the ability to refinance their existing mortgage into a lower rate and payment, with no closing costs. Obviously, you think there is a catch to the offer, as I too would, but after investigation, you find that it’s not. Let’s take a look at the "Chase Rate Reduction Program" as it is called.
Chase is offering in effect, a no closing cost mortgage for customers that have equity in their houses, and have been making payments with no late payments; don’t know how far back their history goes, but if it’s been a while since you had a late payment, it may be worth looking into. This is a screaming deal because the offer comes to you and you don’t have to go hassling with mortgage brokers and banks looking for the best deal, unless your adventurous and like hunting for the deal.
So this is how it works, you receive a Fedex package in the mail from Chase with a number to call and reservation number. You call the phone number and bam, your moving along. Chase is doing this from what I see, you have a week to respond. The process seems pretty painless too because they are looking for a 1 page authorization form and proof of your homeowners insurance and BAM! New mortgage with a lower payment!
Once you fax in your forms, you’ll receive a Good Faith Estimate, or a GFE, with everything outlined and instead of having to send anything back to Chase, you get a call to schedule your closing and hello new mortgage with no costs! This sounds like a KILLER deal right now, but I’m with Wells Fargo right now.
If you haven’t received the package yet, don’t fret. People are reporting they called asking about the program and one person stated that Chase called back with a ‘new offer’ that did decrease his interest rate and his payments! The phone number to call is 866-818-7033. Another number that may be associated with this program is 800-550-7485.
Now if I was a Chase customer that fit this profile, I would get on it, but I’m not, but I would like to share the word with people and get the word out about this program. Does Chase have the best deal out there? Maybe they do, and maybe they don’t. There could be deals out there that is better than Chase’s, BUT, Chase’s deal is pretty simple and painless. Who wants to dig out their pay stubs and tax forms and hope the appraisal comes up with a value that will allow you to refinance?
From my analysis, the interest rate that you are offered is based on what the rate is when they mail out the letter to you. I don’t know if you can haggle on the rate, but, I would like to know if it’s possible or not.
Another plus on the deal is that if you do an autopay for your mortgage, they will give you 1% cash back. I’m unclear if they give that money to you or if they apply it to the mortgage. It’s definitely not very much money, but it’s a little extra. I also am unsure if you have to autopay from a Chase deposit account or if you can autopay from any account.
Now to the why they are making this offer to existing customers, well, a couple possible reasons the way I see it.
First, this is the part where they can show to the government how they are helping the homeowner, and this is benefiting those of us who are still making payments diligently and doing our part for society.
Second, they don’t want all of these high quality loans to get refinanced with other banks and then they lose out on their ‘A’ mortgage paper and this is a way for them to keep your mortgage on their books.
THIRD, I’m smoking a crack pipe and somebody thought they would do of their customers.
Now some things that will disqualify you from this program/offer from Chase.
- It cannot be an investment property.
- You probably can’t have any late payments, or at least not in the recent past (I don’t know how far back they may go.)
- You need to have equity in your house, probably a good portion of equity too.
- You can’t have another loan on your house like a Home Equity Loan or a Home Equity Line of Credit; HEL or HELOC. This may be OK if the loan is with Chase, but if the second loan is with another bank, the answer is no.
Regardless, this is an AWESOME deal; first because of the ‘no closing cost’ refinance characteristics and because it’s simple and easy, remember, authorization form and proof of homeowners insurance.
Now that I’ve talked it up, let me bring some downers to the table otherwise it wouldn’t be fair now would it.
First, your going to reamortize or redo the loan for the new length of the mortgage. The negative is you could potentially pay more in interest for the lower rate. The fix to that is to continue making the old payments and pay off the loan sooner. If your monthly payment savings are substantial, you could potentially pay off your loan much sooner than if your payments were lower.
Second, if the mortgage you are refinancing is a purchase mortgage, or you used the loan to purchase the house, your mortgage now becomes a recourse loan. Some states, California is the only one that comes to mind right now, do not allow the lender to come after you for any difference between the auction price of your house if you are foreclosed and the amount you owe. If however, you refinance the loan, it now becomes a recourse loan and the lender, in this case Chase, can come after you for the difference between what they auctioned the house for and what you owed.
In simple terms, if you owe $100,000 on your loan, and they auction your house for $75,000, the lender can then come after you for the $25,000 difference.
The Chase Rate Reduction Program has the following conditions:
* you are employed and/or have a steady source of income along with sufficient assets to close on your new loan
* you do not currently have a second lien mortgage held by a company other than Chase (other options are available if you have a second lien mortgage at another financial institution - call us for details)
* you have no bankruptcy, foreclosure, judgments or liens
* borrowers on the new loan should remain the same as the original loan (some changes in borrowers are allowed with the new mortgage, call if you have questions)
* your property is a detached single-family residence (other options are available for co-ops and condos - call us for details)
* your property is not held in trust
* you current mortgage loan does not have mortgage insurance
* there is a net benefit to you such as reduced principal and interest payment, a lower rate, or converting to a more stable product (such as moving from an adjustable rate to a fixed rate)
* you will sign the required closing documents
Folks with Chase mortgages, there you have it. I’m fairly certain this is applicable Nationwide so go forth and take advantage of a good deal if you can.
I’d like to hear back from you if you’ve gone through the program and hear about your experiences. Just add comments below.