Rate Term Refinance

kofi · Joined: 27 Nov 2007 Posts: 1 1.62 Dollars($)

I am trying to do a Rate/Term refinance and I am paying off an existing 1st and 2nd, however the 1st was refinanced a few years ago, when we took cash out and subordinated the 2nd. My lender is trying to say that paying off the existing 1st constitutes a cash out since we took out cash when we refinanced the original 1st. This does not seem to make sense since FNMA seems to allow you to pay off the 1st without regarding it as a cash out regardless of whether you did an earlier cash out or not. this only came up in trying to show that the 2nd was a purchase money 2nd and therefore paying that off should not be considered cash out? Any input or thought would be appreciated

uptightmortgageguy · Joined: 25 Nov 2007 Posts: 21 Location: WV 8.00 Dollars($)

Who is your lender? I would suggest you talk to others for various viewpoints and possible programs. I am curious to see if this is an internal policy or otherwise.

banker0679 · Posted: Tue Nov 27, 2007 9:08 pm Post subject:

most lenders wont allow this as a rate/term refinance.

remember that MOST lenders follow FNMA BUT have their guidelines as well.

What is the Loan to Value? or what is the appraised value..and the loan amount?

evolovik26 · Posted: Wed Nov 28, 2007 9:24 am Post subject:

You are probably under a year out of that last refi and most lenders need 12 full mon of payments (not the closing date) before its a rate /term again.

jasonredding · Posted: Wed Nov 28, 2007 2:35 pm Post subject:

I would look into other lenders this seems to more like an internal policy, or your mortagge proffessional is just not talking tothe righjt person in the company. If you don't want to pay that .75 or .5 hit for cash out then look into different options

rick · Posted: Wed Dec 05, 2007 11:00 am Post subject:

I agree with Eugene above. My experience with most lenders is that thye consider 12 months as the cutoff to be classified as Cash Out. That means if you've taken cash out within the past 12 months, the new loan is considered cash out. However, there are lenders who, under the right circumstances, i.e., loan to value and FICO score, may not penalize you for Cash Out, so check with other mortgage brokers.

shane · Posted: Wed Dec 05, 2007 4:04 pm Post subject:

Usually there is only a hit for cash out if it's 70% LTV or above.

chrisburns · Posted: Thu Dec 06, 2007 4:08 am Post subject:

This is a standard Fannie Mae guideline. If you obtain 2nd lein financing after the original loan OR if you subordinate a 2nd and refi 1st then the 2nd lein is not counted for purposes of R&T refi.

It will always be cash out no matter how long you wait.

The other options people are talking about are submprime loans. Just deal with the cash out rates, it will be your best option.

By the way FHA carries the same guidelines on this subject as fannie mae.

banker0679 · Posted: Thu Dec 06, 2007 7:06 pm Post subject:

that is not true...every lender may have their own guidelines as well, and they put it in their portfolio.

For Example, Senderra Funding allows this to be rate/term if the cash out was taken over 12months ago. It's one of their niche products

chrisburns · Posted: Thu Dec 06, 2007 7:11 pm Post subject:

How many portfolio lenders are there out there that would consider this scenario R&T instead of cash out?

World Savings, Chevy Chase, Senderra is not a portfolio lender.

banker0679 · Posted: Thu Dec 06, 2007 8:45 pm Post subject:

i was making a point. Disclosing every lender that does it wouldnt add to what I have written.

"It will always be cash out no matter how long you wait." Is false.

lisascherzer · Joined: 04 Jan 2008 Posts: 755 1.07 Dollars($)

It is a fannie mae guideline and for the best rates out there thats what all the lenders go by. You have a couple different options, first, you can just pay off the first mortgage and subordinate the second mortgage as you have done before and then it is not considered cash out. Or you can look at an FHA mortgage that will go 95% of your homes value even with the second mortgage. FHA is slightly higher by maybe .25% in rate which might still be a good way to go if you have a high rate or adjustable rate on your second mortgage.

lisascherzer · Joined: 04 Jan 2008 Posts: 755 1.07 Dollars($)

Wanted to add one more thing. Fannie mae allows cash out up to 90% and most lenders will as well with a hit to pricing. You should still be able to get an interest rate in the 5's.

banker0679 · Posted: Sun Jan 06, 2008 8:10 am Post subject:

lately the FHA rates have been better than the conventional rate.

With FHA you're allowed cashout up to 95%

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