Refinance (lender) question

aarondotson · Joined: 07 Apr 2008 Posts: 1 2.01 Dollars($)

Hi, this is a great forum. Here is my situation. I have a 5/1 arm due to adjust to a one year adjustable in September of this year. I just went through the approval process with a lender. I could not get the loan I wanted because my house is in a "declining market". I was trying to get a cash out refinance to pay off a second mortgage. 1st mtg. had a balance of $187,700 second mtg. had a balance of $57,129. The appraisal came in at $280,000. I wanted to do a cash out refi for $250,000 (all fees included) at 90% LTV. All finances are in order, both my wife and I have good paying jobs and this was our only debts. The lender came back and said they could only do a 85% LTV because our house was in a "declining market". Would it be worth shopping around or will I find this the case with all lenders right now? I can sit tight, do nothing and still make my monthly payment regardless of what it adjusts to. Any advice would be appreciated.

gmakerley · Posted: Mon Apr 07, 2008 1:36 pm Post subject:

with fha loans, you can borrow up to 95% ltv on a cash-out, so the declining market issue should be negated by the higher allowable loan amount.

in truth, i think you will find that the overwhelming majority of lenders are going to concern themselves with declining markets and that restrictions, if not already in place, will occur soon.

if your lender offers fha loans, that ought to have been their suggestion, i would think. it appears they dont have that product available. yes, indeed - you ought to check around to see who will help you with an fha loan. interest rates are quite competititive and fees are comparable and, sometimes, better.

Niicss · Joined: 03 Oct 2005 Posts: 1047 156.15 Dollars($)

Welcome,

You can do cash out refinance to pay off the second mortgage. Shop around a bit for lenders as gmakerley has also suggested you.

You can also do a No-obligation free consultation from the rated community lenders by filling up the form at http://www.mortgagefit.com/

Let me know if you have any more queries.

Samantha

Hi Aaron,

I think you should look out for more lenders because you're at least getting a loan worth 85% of the LTV, if not 90%. So, a lillte more shopping may give you positive results. After all, the appraised value is much higher than the combined loan balance. So, you have a chance here to get a loan worth more than 90% if it's an FHA loan and may be a little less if it's a conventional loan provided you have good credit and financial standing. And it seems you have good credit or else the lender wouldn't have offered 85% LTV.

Hope this helps...

God bless you.

Samantha

evolovik26 · Posted: Wed Apr 09, 2008 7:03 am Post subject:

Well depending on what your qualifications are and the state you are in 85% might be all you can get on a conventional side. Or you might have a broker that doesnt work with lenders that do offer the program that you want. Another program you may want to look at as its been mentioned is an FHA program. It allows higher LTV (to 95%), ignores the deterioriating markets, and is not credit driven. You do need to have stable work history and qualify based on full income documentation. At higher LTVs nowdays FHA often has much better rate and terms then a conventional loan whould. Just be prepered for 1.5% upfront MI and a looong waiting time to get things done. But in the end you will have a cheaper/better 30yr fixed loan.

lisascherzer · Joined: 04 Jan 2008 Posts: 599 69.58 Dollars($)

Hi aarondotson,

All conforming loans will reduce the amount you can borrow by 5% which is 85% of the home value for a cash out refinance in a declining market. Don't waste your time with calling lenders, they will tell you the same thing. Instead, work with a broker that knows of lenders that do not reduce your borrowing power. There is one lender that comes to mind that still offers good rates, and no pmi insurance in declining markets and will even go 95% cash out.

0.10 Dollars($)

i can't say i am enthused by your recommendation, lisa. as a lender and not a broker, i make it a point never to tell someone "don't waste your time with calling BROKERS" and i really think, frankly, that using that kind of admonition to a borrower smacks of unprofessionalism.

if we break it down, calling someone for information is never a waste of time. do you have any idea how much valuable information can be obtained from calling a lender who has his pulse on precisely what his company can and cannot do? i know of brokers (and i am sure you do as well) who are no-nothings reliant on hearsay and not much else.

gmakerley · Posted: Fri Apr 11, 2008 7:15 am Post subject:

yes, indeed...this last post was mine...so here i am getting due credit:

i can't say i am enthused by your recommendation, lisa. as a lender and not a broker, i make it a point never to tell someone "don't waste your time with calling BROKERS" and i really think, frankly, that using that kind of admonition to a borrower smacks of unprofessionalism.

if we break it down, calling someone for information is never a waste of time. do you have any idea how much valuable information can be obtained from calling a lender who has his pulse on precisely what his company can and cannot do? i know of brokers (and i am sure you do as well) who are no-nothings reliant on hearsay and not much else.

chrisburns · Posted: Fri Apr 11, 2008 7:25 am Post subject:

ouch can't we all just get along? Laughing

As a professional mortgage broker I must say that I rely heavily on advice and market knowledge of contact I have at lending institutions. If you are unlucky enough to get an unprofessional or industry ignorant PERSON at either a lending instituation or a mortgage broker business then the information and advice from EITHER would be suspect.

It is important for a consumer to be educated about who they are dealing with. There are some really steller retail banks out there. There are also some very educated and consumer centric mortgage broker businesses in operation today.

Overall the advice I see given on this forum is 90% good advice and I see it coming from both camps. To advise a consumer for seeking advice from someone you see as a competitor is ill advise and makes the person making such claims appear to be more concerned with their own benefit than the consumers.

To the original poster I would have to cast my opinion on seeking out an FHA loan as it seems to fit your situation best right now. There is only one lender imposing declining market criteria on FHA loans. All others still allow up to 95% LTV cash out regardless of market stability. Rates are actually quite stellar and mortgage insurance premiums are FAR lower than would be foudn on the conventional side, assuming you can find it at all right now Laughing

gmakerley · Posted: Fri Apr 11, 2008 7:35 am Post subject:

Well put, Chris.

Jessica · Posted: Sat Apr 12, 2008 4:25 am Post subject:

Well explained Chris and George. What I firmly believe is, whether it's a broker or lender, if he's the person honestly dealing with you and helping you choose the right loan, better sign the deal with him.

All times are GMT - 7 Hours

Page 1 of 1