Please allow me to address everyone's comments and share a few:
Thanks to all Veterans who have served our country well. You deserve the very best from Americans in serving you in return.
Q1: Who is MIC and what do they offer?
A1: MIC (Mortgage Investors Corporation, aka Amerigroup Mortgage Corporation) is a mortgage lender who only provides VA loan financing to Veterans with present VA loans who want to refinance. If you are buying a new home, or have a loan other than a VA loan, they can't help you. And they only offer a 3/1 ARM loan. Some Veterans may benefit from this type of loan and some will not.
(A company who recommends a one-size-fits-all concept to everyone is selling a program; they are not trying to match the best financing program available to meet their customers' needs.)
Q2: What does MIC charge to get a loan?
A2: MIC charges 3 points total (3% of the total new loan amount being refinanced), VA charges a funding fee equal to 1/2 point, and there are new title company charges for title insurance, closing fee, and other miscillaneous fees. MIC will finance all the charges, so your present mortgage balance will increase by 3.5% plus other closing costs. You may have to pay other fees depending on which state you live in plus deposit funds into a new escrow account to pay for property taxes and homeowners insurance.
Q3: What does it take to qualify for an MIC loan and can I get this type of loan anywhere?
A3: If you cannot qualify for other financing, the streamline program MIC offers does not require an appraisal, credit score, income verification, and only requires that you are current on your present VA mortgage (with no other liens against the property). However, other VA lenders offer streamline refinancing too, and they offer fixed rates too!
Q4: Are there better loan options for me?
A4: It is my recommendation that if you are considering refinancing your VA loan, see if you can qualify for other types of mortgage financing like FHA or Conventional financing. You can refinance with very little or no closing costs with some lenders.
Q5: What if I want to consolidate debts or get cash out for home improvements or for some other reason?
A5: MIC can't help you!
Q6: Is a 3/1 ARM a safe loan or should I get a fixed rate?
A6: MIC representatives will tell you it is a safe loan. However, since the interest rate is subject to an annual adjustment of 1% each year (to a maximum of 5% total), after the first 3 years, it very well could increase considerably over time. Nobody can predict what interest rates will be, but we can look at history. Copy and paste the weblink below into your browser to see what the rates have been between 1972 and the present:
You will see that the rates since 1972 were over 10% for 10 of 11 years (1979-1989), over 9% for 17 years, over 8% for 21 years, over 7% for 29 years, and over 6% for 33 of the 40 years through 2011.
This means rates have been traditionally much higher for the vast majority of the past 40 years. If you can get a 30-year fixed rate at 4.25% or a 15-year fixed rate at 3.75% (with 3 points) or at rates of 5% or 4.25% respectively (with no closing costs), why would you want to risk possible rate increases which are more likely to occur than not for a 3% 3-year rate?
Q7: What if the MIC representative is using high pressure sales tactics?
A7: If the recommended loan is really the best option for you, they should realize that if you went to discuss it with a professional adviser like a financial planner or a CPA, then your adviser would agree; therefore, do not sign anything until you get professional advice.
I am a licensed mortgage loan originator recommending to talk to other lenders, brokers, banks, or credit unions. Most of all, seek advice from appropriate and qualified professional advisers for all your financial planning concerns-NO DIY!
ST. PETERSBURG, FLORIDA -- So, we received a flier in the mail stating they offer a refinance sponsored by the veteran's administration at 3%. Both me and my wife believe in the old saying "If it sounds too good to be true, it most likely is". This was the case here as well. However, we had a representative come to our home. Smooth and fast talker. One of the first things he said that caught my ear was that after he presents the numbers, "We could tell him to leave and there would be no hard feelings or further time taken up".
Lie number one. Once we told him we were not interested (because what he showed us was a 3/1 Arm loan lie number two stated nowhere in the flier) he wouldn't leave. He kept pushing the issue. Then, when we thought he finally got the hint that we wanted no part of what he was offering, he asked if he could use our phone and call his boss. He said his boss was simply going to ask us if we felt the info provided was adequate. Lie number three. His boss was pushier than him. He even made comments to the salesman at our home like, “I can't believe they don't want to save all this money".
I finally had to get rude and tell him and the salesman they were NOW starting to waste my time and piss us off. He finally left. Be careful with this company. The only real savings is the first 3 years. But then BAM. They got you. This loan promised 3% fixed, the first 3 years ONLY. Then it could go up 1% each year after that but couldn't exceed 8%. Which with the market as low as it is now there is pretty much a guarantee 8% is where you will end up at from year 7-30.
Do the math folks. I ran a whole spread sheet of my current 5.75% fixed versus their offer. OUCH. Add them hitting me with about $11,000 in upfront costs (added to my existing loan balance) and the for sure 8% rate from years 7-30 and I would be getting screwed. Plus I heard they sell your loan fairly quickly and the new company typically doesn't honor the same terms and want extra monies. I guess the first indicator should have been the little comics in his presentation of a monster he referred to as "the principal monster". Cute tactics but I'm not 10 years old.
FLORIDA -- I recently encountered a scam that mortgage investors corp offer refinance VA members only for VA members period, which they say they do thousands of these refinances. They say they have saved thousands of homes for vets. Unfortunately, this is a scam and I hope vets like me have not went through with this.
Let's say for instance, my mortgage is 199,000 they offer a adjustable rate mortgage 3/1 arm for 30 years, they tack on another 12,000 to your principal balance. You pay a 3.5% P/I for 38 months good deal right, no it's not. Yes it's true you'll save 22,000 in two and half years, then they jack up you interest rate. This mortgage corp. is taking advantage of one of biggest scams ever and they're saying the US gov is the host of it all. How am I saving money and paying down my house balance?
After 2 1/2 years if I'm right back to where I started. I would warn vets of this not to do it, my evidence lies in their scam, the paperwork. They offer the vets 22,000 dollars, subtract 12,000 dollars, it leaves you 10,000. After 38 months subtract that from your P/I 112,000, it leaves you 102,000 dollars after 2 1/2 years then they raise your interest rate up. Let's say I stay where I'm at 5.5% VA 30 yr fixed - yes, I'll pay 30 thousand in interest in 2 1/2 years but my balance will be at 191,000 not 102,000. Please tell me the gov doesn't have anything to with this scam.