Your Questions About Mortgage Refinancing Options

John asks…

What are my mortgage refinance options?

I was hoping to do the Govt back refinance options that allows you to do 105% or greater but that is out of the question because my loan is not owned by Freddie or Fannie. I can’t do a standard refinance because I no longer have 80% equity in my home.

We have never missed payment, etc etc. We merely wanted to take advantage of the better rates that are available now.

Any ideas?

John answers:

If you no longer have 80% equity in your home, conventional refinancing is no longer a viable option for you.

You may however be able to convert to a FHA refinance at up to 96.5% Loan-to-Value.

Mandy asks…

Are there currently options for refinancing if you are upside down in your mortgage?

I took out a second and did home improvements to my home…just in time for the market crash. I’m now either barely even, or a little upside down. Are there any options to refi to a lower rate, or do I need to wait for values to climb again?

John answers:

Unless you’re planning on walking away from your home, the best bet is probably to wait until the market recovers. If you have little to no equity, no one is going to refinance you unless you put up additional equity at closing. You might consider such an option as throwing good money after bad, but if you’re going to be living in the home for a long time, and your current interest rate is high, it may be something to think about.

Robert asks…

Mortgage/refinancing professionals: what are good ref options?

Mortgage: from 7.11% fixed for 2 yrs. and just went to 8.63% adjustable this month.
My sister has a mortage for $79,000.00. and this month she will need to pay approx. 100.00/month more!. if it is a good idea to refinance, please explain what the pros and cons of refinancing are, and what she should be looking for. I believe the value of the property is supposed to be $110,000.00 now. So, the LTV=79K/110; cred score=560; income=2,700/mo (32K/yr). What would be a good deal for her? What should she look for in the professional that offers to assist her? What should she watch out for? Should she expect some sort of “hidden” fees or ” a catch”?

Thanks, in advance – She will need to make a decision within the next day or so – PLEASE HELP!!!!

John answers:

It’s never a bad idea to refinance, especially if you’re rate is adjusting. But there are hundreds of reasons to refi and thousands of programs.

With a 560 credit score, it might not hurt her to tap some of the equity and payoff old debt or consolidate current debt to improve the credit score. Also, that credit score isn’t going to get a much better rate than she’s at now, but she can fix it again for another 2 years while she works on the credit.

Don’t get in to closing costs too much. Very few fees are hidden. Most people consider “pre paids” as “hidden fees.” These aren’t hidden fees, they are things that must be paid, such as per diem interest, any escrow reserve, and taxes, if due. The best thing to do is ask the L.O. For a Good Faith Estimate, keep it, then prior to your closing, ask for the HUD Settlement Statment. If it is more than what is disclosed on the GFE, make your loan officer explain why. A good L.O. Will never have the HUD be more than GFE. And if it’s going to be, a good L.O. Will redisclose (revise) the GFE and forward you a copy with explanation.

Lastly, make sure your sister concentrates on improving her credit. You need an L.O. That is good at what they do and can reconcile her credit and recommend steps to take to clean it up.

Good luck and happy hunting!!

Paul asks…

Mortgage/refinancing professionals: what are good refin. options?

Mortgage: from 7.11% fixed for 2 yrs. and just went to 8.63% adjustable this month.
My sister has a mortage for $79,000.00. and this month she will need to pay approx. 100.00/month more!. if it is a good idea to refinance, please explain what the pros and cons of refinancing are, and what she should be looking for. I believe the value of the property is supposed to be $110,000.00 now. So, the LTV=79K/110; cred score=560; income=2,700/mo (32K/yr). What would be a good deal for her? What should she look for in the professional that offers to assist her? What should she watch out for? Should she expect some sort of “hidden” fees or ” a catch”?

Thanks, in advance – She will need to make a decision within the next day or so – PLEASE HELP!!!!

John answers:

She should make damn sure someone runs her through the Fannie Mae and Freddie Mac underwriting systems.

With that low of a loan to value, and if she doesn’t take any cash out with the refinance, unless she’s been late on her mortgage recently, she should be able to get a 30 year fixed rate conventional loan. She can wrap the closing costs into the deal, shouldn’t cost more than $3000-3500. If she doesn’t get an A rate, she should get an A minus rate, so she could get anywhere from 6.00 to maybe 7.25%, no prepayment penalty, no adjustable rate.

Problem is, most loan officers don’t think anyone with a 560 can get a normal approval, when sometimes they can.

Donna asks…

What are my refinancing options?

Here’s the story: I’ve got an 80/20 loan. 80% of the loan is a fixed 5.25% rate. 20% of the loan is an adjustable ARM which started at 6.25% and is now at 9.25%. The loan is set to recalculate in May. With what I can gather, the 20% loan is considered a second mortgage and apparently second mortgages are harder to refinance. The house is worth approximately $20,000 less than what I bought it for, so rolling to two loans together is out of the question. I have great credit, but a little too much revolving debt. What are my options?
P.S. Please hold off on the solicitations, I need answers, not someone trying to get me to get into another loan. I need to know what my options really are!

John answers:

Sorry, but you don’t really have any options as you owe more than the home is currently worth.

The 5.25% you are paying on the primary mortgage is a great rate, don’t screw that up! And 9.25% is not that high, some people (myself included) are paying upwards of 15% now (mine is at 12%).

I would say just try and make more than the minimum on your 2nd mortgage to get it paid off as quickly as possible. If the economy continues to tank the Feds will lower the prime rate and your interest rate should come down.

I am thinking about taking a second job just to send the money to my creditors. Short term pain equals long term happiness and all that.

Good luck

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