Refinancing Second Home

Guest

Good Morning all,

I am looking to refinance my second home (inherited property) to reduce payments and borrow enough to pay off some other debt ( I actually just have a signature loan with the property as collateral not an actual mortage). I owe 136,000.00 and the property appraised for $249,000.00 in July of last year. My credit score is around 640 and I am looking to borrow around 170,000.00. Income may be some issue due to debt ratio. I have no late payments or collections, etc. on my credit. Will it be possible to qualify especially being a second home and not my primary residence and would I possibly have to put any money down? Thank you!

gmakerley · Posted: Fri Dec 04, 2009 9:18 am Post subject:

last july's appraisal may be way off at this point, but that's not to say you can't get a refinance transaction done. it's certainly possible to refinance a second home, but you'll be somewhat limited due to its not being your primary residence.

if you are asked to "put money down" then you're in a losing proposition. since your desire is to cash out, you'd be doing exactly the opposite in that case.

keep in mind also that you'll pay a pretty hefty penalty for a score of 640ish, in terms of points charged.

also....a signature loan with property as collateral? did they not file a mortgage deed? your property cannot be collateral unless there's a mortgage. what kind of lender are you currently dealing with? you've apparently been sold a bill of goods on that level.

i don't think things look all that promising in your quest to refinance, to be honest.

raymond · Posted: Fri Dec 04, 2009 9:20 am Post subject:

A refinance sounds very doable for you. Like you said, the only bump you may encounter is the income requirement.

The interest rate for a NOO (non owner occupied) is a little higher then a primary residence, but with an LTV of 68, you're not going to have to put any money down. Check out the "mortgage quote" section of this website, and good luck with your refinance.

eric1 · Posted: Fri Dec 04, 2009 9:21 am Post subject:

Raymond,

He/she is also looking to cash out. So, most likely an additional hit to the rate.

gmakerley · Posted: Fri Dec 04, 2009 9:52 am Post subject:

i see bumps for score and for cash out, and the score is the worst of it, eh?

Guest

I just pulled my loan papers and yes it is just a promissary note. The original loan was done in 8/2008 with a balloon payment in 2013. The lender is just the local bank. So this is not how it should have been? I am a little concerned. I am not really worried (yet) about the appraisal this property also includes 65 acres of land with many extras. We just spent about 5000.00 remodeling so I hope it would not go down too much. My gross monthly income is 4300.00 w/2700.00 debt. 1400.00 of that is the current loan on the property.

gmakerley · Posted: Fri Dec 04, 2009 11:28 am Post subject:

your debt ratio is currently 63%. how much do you anticipate the new mortgage payment to be? is the local bank the lender again? i'd hope so, because all the other lenders won't abide a 63% ratio. that's where i'd be more concerned at this stage - not necessarily value, etc. but can the loan be made at all?

as for the note - all notes are promissory notes, but if there was no mortgage filed, then the bank is way, way, way out on a limb. that's not to say you're a bad borrower, but doing a loan like that on a signature note is just plain bad business. if they keep doing business like that, they'll shortly be "the bank that used to be here."

Guest

Thank you. I am pretty sure there is no mortgage filed. I have estimated the monthly loan to be around 1100.00, then I planned (with the extra funds) to pay all my other debt (credit cards, two small loans) which would save me around 1300.00 per month. At this point I have to do something, but I don't want to ruin my credit since I have been down that road and worked hard to repair. It is just a tough time since my husbands business has been slow. I guess I will work with the current bank and see what I can get them to do.

gmakerley · Posted: Fri Dec 04, 2009 1:42 pm Post subject:

forgive me...i guess i forgot that you had begun this by saying that you were planning to consolidate. i was looking at all of your indebtedness and being skeptical.

and i agree that your local bank - as wacky as they may be (and i reserve the right to be wrong here) - would be the best people to deal with. they already know you, they know your track record and they know what they can do to accommodate your needs and wishes.

i hope it all goes well for you.

Guest

Thank you! I will post my outcome.

jveenstra · Posted: Fri Dec 04, 2009 3:53 pm Post subject: Refi

Good luck.

We know your income and are looking forward to the outcome

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