refinance 80-20 mortgage

Guest 0.10 Dollars($)

I have a 80-20 with the 1st a IO for 3 yrs at 6.8% and 2nd fxd at 10.79%. Got the loan just in Sept. 06. With all the talk about mortgage market becoming tighter & being flat/declining, what are my options...I need to know if it can be possible to refinance with a fha. I got this loan as I was looking at cheapest payments at that time. Loan is for $247,000. May be it is too early to ask as the loan has a 3 year prepayment penalty. fyi. it was a full doc loan. what I want to know is about fha for the refinance, is it going to work?

miller_st · Joined: 17 Jan 2007 Posts: 917 168.82 Dollars($)

Prepayment penalty may be calculated as 6 months of interest. Do you have an estimate of how much your house will appraise for right now?

If the value of the house is not $247,000 plus the prepayment penalty and closing costs for the refinance then you may have to bring in money to complete the transaction. You need to calculate on the basis of your house value if it would be appropriate to refinance right now.

Miller

Guest 0.10 Dollars($)

You can refinance to a fha if the mortgage limits set for your county is not crossed. You will also need to have 3% equity in the house to get a fha refinance loan.

Guest 0.10 Dollars($)

I would say that you wait for the penalty period to be over before going for a refinance. When the rate change will occur for the loan that time only it will be useful to go for the refinance. Also its not even a year you have the loan.

larry · Joined: 27 Jun 2007 Posts: 3328 473.40 Dollars($)

Hi Clayton,

The greatest drawback to refinance could be the prepayment penalty on your present mortgage. During the penalty period, when the interest rates falls, you can refinance then. Such penalties can usually be negotiated while refinancing. But you need to do it with the lender with whom you have your present mortgage. Tell the lender that you want to go for a new loan as you don't want to get stuck with paying the penalty fee.

jenkin7 · Joined: 04 Jun 2007 Posts: 939 140.77 Dollars($)

Hello Clayton,

If you have never refinanced through FHA, and are planning to refinance, you can. The FHA offers a low 3% down payment which is not applicable for other loans. Other loans require 20% down payment. One advantage of the FHA loans is that the money for down payments can come from a family member, owner of the firm where you work or charitable society. Several other loans don't allow this.

For further information, you may also refer to the FHA Refinance Process mentioned

Caron · Posted: Thu Jul 05, 2007 4:10 am Post subject: RE: fha refinance

Hi Clayton,

Welcome to the forums.

Going for an FHA refinance loan may work out well for you since you have a combination of two loans and the FHA too offers somewhere around 100% financing. But check out the rates available currently because until and unless you get a rate lower than that of your existing loan rate, it's no use refinancing because that's what will help you to save.

Good luck

Samantha · Posted: Thu Jul 05, 2007 4:32 am Post subject: RE: 80/20 refinance

Hi Clayton,

If you are looking to refinance an 80-20 loan that too the first one being an interest-only for 3 years, then I think it will be better if you refinance after 3 years. This is because for the first 3 years, you will only be paying the interest on the first loan. So, instead of managing the first loan, if you refinance it, you may not get an interest-only option. This implies that for the remaining 2 years out of the total 3 years, you will be paying interest as well as payment towards the principal. But if you refinance after 3 years, then you will be saving the payments towards principal for 2 years at least.

Hope this helps..

God bless you.

Samantha

Guest 0.10 Dollars($)

Hello Clayton,

If the appraisal value of your home comes to a higher amount, then it is worthy to refinance with FHA loan as it allow for 95% of the current market value of the property with lower interest rates.

All times are GMT - 7 Hours

Page 1 of 1