Posted on: 15th Jan, 2008 02:51 pm
i am trying to refinance a first and second mortgage into one loan. the second was for a pool and we received a check and paid contractors with those funds. we are being told that we cannot do a normal loan because we took a cash out home equity loan. the second is almost six years old. i am trying to get a 15 year fixed and they say i can only do a 30.
Hi Paul,
Welcome to the forum.
I think you have taken a right decision to combine the two loans into one through refinance. If you get lower interest rate and better terms, then you should go for it as you can able to save a certain amount of money every month. See it is not necessary that you will have to refinance from the same lender from whom you owes the mortgage now. You can shop for lenders and see who can provide the best rates and terms.
Feel free to ask if you have any further questions.
Best of luck,
Larry
Welcome to the forum.
I think you have taken a right decision to combine the two loans into one through refinance. If you get lower interest rate and better terms, then you should go for it as you can able to save a certain amount of money every month. See it is not necessary that you will have to refinance from the same lender from whom you owes the mortgage now. You can shop for lenders and see who can provide the best rates and terms.
Feel free to ask if you have any further questions.
Best of luck,
Larry
Dear Paul...
Who is telling you that you cannot have a "normal" loan? And what do they consider "normal"? There are lots of folks to help you in the lending industry so please don't take one lenders word for it...say....NEXT PLEASE & talk to at least 2 other lenders and compare what they will do for you - make sure they give you a Good Faith Estimate so you can compare, if they won't then I would move on to the next one...
There are some good ones here...give us a try!
Who is telling you that you cannot have a "normal" loan? And what do they consider "normal"? There are lots of folks to help you in the lending industry so please don't take one lenders word for it...say....NEXT PLEASE & talk to at least 2 other lenders and compare what they will do for you - make sure they give you a Good Faith Estimate so you can compare, if they won't then I would move on to the next one...
There are some good ones here...give us a try!
I am trying to refinance a first and second mortgage into one loan. The second was for a pool and we received a check and paid contractors with those funds. We are being told that we cannot do a normal loan because we took a cash out home equity loan. The second is almost six years old. I am trying to get a 15 year fixed and they say I can only do a 30.
Are you in TX? The reason I ask is because TX does have some weird cash out rules......I should no......and once you do a cash out refi in TX your home is always considered a TX equity property.......In any other state it shouldn't matter that you did a second but guidelines for several years have required that any non-purchase money second be treated as a cash out refi.....but thats just a loan pricing and rate thing...it shouldn't be a big deal unless there is an equity issue. What do you owe on the house and whats it worth........and yes you can get a 15 year fixed.
Are you in TX? The reason I ask is because TX does have some weird cash out rules......I should no......and once you do a cash out refi in TX your home is always considered a TX equity property.......In any other state it shouldn't matter that you did a second but guidelines for several years have required that any non-purchase money second be treated as a cash out refi.....but thats just a loan pricing and rate thing...it shouldn't be a big deal unless there is an equity issue. What do you owe on the house and whats it worth........and yes you can get a 15 year fixed.
The biggest issue that can happen is this is going to be concidered a cashout loan which usually means that your rate will be 1/8 to 1/4 higher then current rates being offered. This should not be a problem. Talk to a diferent lender.
Thanks everyone who responded I pulled off a deal today and got an excellant rate. No problem
Congratulation Paul :). It is really great that you have got what you want and also an excellant rate.
Hope you will keep on perticipating here as a community member :)
Best of luck,
Larry
Hope you will keep on perticipating here as a community member :)
Best of luck,
Larry
Glad to hear a happy ending for once!
Hi Paul,
I think the problem may be that you owe more than 90% of what your home is worth. A conforming mortgage will only go to 90% cash out. The reason your loan is considered cash out is because of the second mortgage. Fannie Mae and Freddie Mac (the main backers of mortgage loans) state that paying off a second mortgage is considered a cash out transaction. You may have some options though. FHA does allow up to 95% cash out and does have low rates as well. Maybe the lender you were talking with does not offer FHA so this wasn't an option.
If you owe less than 90% of your homes value, then you should qualify for a conventional mortgage. As far as them not allowing you to go 30 years just doesn't make sense. The only thing I can think of is that maybe they are making more money by forcing you into a 15 year since the rates are lower than a 30 year mortgage. If they told you the rate would be the same then thats definately the case. There is absolutely no reason that you should not be able to qualify for a 30 year mortgage if you qualify for a 15 year.
It sounds like this lender is just giving you a bad deal all the way around. Right now you should be able to qualify for a rate in the 5's for a 30 year mortgage weather it be conforming (Fannie Mae) or FHA.
I think the problem may be that you owe more than 90% of what your home is worth. A conforming mortgage will only go to 90% cash out. The reason your loan is considered cash out is because of the second mortgage. Fannie Mae and Freddie Mac (the main backers of mortgage loans) state that paying off a second mortgage is considered a cash out transaction. You may have some options though. FHA does allow up to 95% cash out and does have low rates as well. Maybe the lender you were talking with does not offer FHA so this wasn't an option.
If you owe less than 90% of your homes value, then you should qualify for a conventional mortgage. As far as them not allowing you to go 30 years just doesn't make sense. The only thing I can think of is that maybe they are making more money by forcing you into a 15 year since the rates are lower than a 30 year mortgage. If they told you the rate would be the same then thats definately the case. There is absolutely no reason that you should not be able to qualify for a 30 year mortgage if you qualify for a 15 year.
It sounds like this lender is just giving you a bad deal all the way around. Right now you should be able to qualify for a rate in the 5's for a 30 year mortgage weather it be conforming (Fannie Mae) or FHA.