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Can I refinance?

Posted on: 18th Nov, 2007 02:53 pm
i have a 2year arm that is going to adjust in jan 2008. i called my lender and they told me that the rate is going up aprox. 3% so that can bring my interest rate up to about 9-10%. i absolutely cannot afford that increase, so they told me they would send me a hardship package.

i wanted to know if i could refinance and they basically told me i need three things: 1. working 2. equity in the home 3. good credit. we work and we have good credit, but because of the market my home has lost value. so they told me i probably wouldn't be able to refinance.

i got to thinking and the loan that i have is a 80/20 loan and the only one we need to refinance is the 80 loan which is for about 330,000. i purchased the home for 416,000 and the value of it now is probably around 375,000-400,000.

so my question is, would i be able to refinance the 1st mortgage (80) since it isn't more than the value of my home.

i hope i haven't confused you. i really need some advice because i want to avoid a forclosure at all costs

thank you
Hi Rew,

Welcome in this forum.

First I would like to say that you have put your question in a very organized manner. So thanks for that :). You work and your credit is good. So I hope you have not yet make any late payments. So there are no questions of foreclosure.

Your interest rate is going to be higher. That is why you are willing for refinance. Ok, you can refinance on your first mortgage and may get a comparatively lower interest rate but for that you need to shop a bit of the mortgage. This community has a lot of registered lenders and I think someone of them will surely help you. You can try to contact them.

Posted on: 18th Nov, 2007 10:23 pm
Hello Rew,

I think you will be able to refinance your first mortgage and also avail a lower interest rate if you have a good credit. You may refinance it into a fixed rate mortgage to avoid any further complication.

It will be better if you talk to your lender and consult him.
Posted on: 19th Nov, 2007 12:52 am
there is some things missing in this scenario but here is what you can try to do. if your credit is good enough and you have enough income to support the payments you can qualify for a 100% rate term refi loan. this means you can get a loan up to 100% of your current home value. so if what you owe for your home is less then the current appraised value you can get a 100% conforming loan at a decent, fixed rate. you can also attempt to subordinate your second mortgage but if the value is not there i doubt they will do it.
basically contact a reputable lender as soon as possible so you know what your options are and you can also have your lender check into how much your home will appraise for today.
if you have any more questions contact me or ask in this thread.
Posted on: 19th Nov, 2007 08:05 am
Most lenders still require that all liens on the property are less than 100% of the current value. So most lenders will not refinance the first mortgage for this reason. I would see if your lender can temporarily hold your rate for another year or two. There are a lot of lenders doing this. There may have been a bill passed that is requiring them to do so but im not sure if this is in effect or not. I would suggest doing some research on this bill to see if there are any rights that you can take advantage of in this respect.
Posted on: 05th Jan, 2008 11:04 pm

I recently got engaged and the woman I engaged owns a town home. She bought this town home at the peak of the boom and over paid for it. Now the values in her area have dropped significantly (20 to 40K). Her loan is for 160K and the value is around 120 to 140k.

What are her options?
Posted on: 30th Dec, 2008 12:22 pm
She is currently employed and has good credit.
Posted on: 30th Dec, 2008 12:23 pm
We do not know the location of the subject property. If you are in a high cost county, you may be able to do an FHA loan for the first mortgage and subordinate the second mortgage because FHA may not care that the combined loans are over 100% of the value.
However, the second mortgage lender may care and may not agree to subordinate. Then again, they may agree because they have a better chance of getting paid if your first mortgage payment is lower and more affordable.
If property is not in a high cost county, FHA does not work and I am not aware of any other lenders that permit the combined loans to be over 100% of the value.
Posted on: 30th Dec, 2008 01:08 pm
another option might be to keep the home and, if you're not planning on residing in it, consider renting it out for the income. the mortgage of $160000 is not that steep (again not knowing where is key), and we can presumably count on values to increase once again down the road a ways (who knows when and how quickly/much?).

if it's not a burden to carry it, and a reasonable tenant could be found, that's a viable alternative, i'd think.
Posted on: 30th Dec, 2008 01:48 pm
I live in Saint Paul and my home value is $40k less then what I bought it for 4 years ago. I work, have made my payments on time, good credit but I don't qualify for anything per Bank of American to refinance to a fixed rate. I want to get a fixed rate and rent it out, my goal is to get a different house in a different area, any ideas or suggestions to get a fixed mortgage rate?
Posted on: 18th Oct, 2010 05:46 pm
Hi Sue!

Welcome to forums!

As you don't have any equity in your property, you won't be able to refinance your existing mortgage into a fixed one. You can try to sell off the property by listing it in the market.

Feel free to ask if you've further queries.

Posted on: 19th Oct, 2010 12:38 am
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