Refinancing is a hot topic for homeowners these days.  Given the condition of the market, many folks have decided not to sell their home but would really like to keep their payments down (especially when the value of the home has dropped quite significantly from a few years ago).  Here is a pretty common, generalized scenario and questions that homeowners are asking these days which I presented to two mortgage brokers. 

I bought my condo back in 2007 for $500,000 and have two mortgages on it. The first mortgage was $417,000 and my 2nd mortgage (HELOC) was $50,000. Recently, my Realtor told me that my condo is probably worth $400,000-$430,0000.  I don't want to sell it now but would like to refinance my condo.  How can I go about refinancing my home?  What kind of documents would I need to provide?  Do I need to send my own appraiser first before talking to a mortgage broker/lender? If I can't refinance , can I qualify for loan modification?

 

"You are not without hope.  Because your original loan amount was 417,000 in 2007 your loan is almost certainly owned by Fannie Mae or Freddie Mac even though you likely make you payments to another institution.  Fannie Mae offers the Desktop Underwriter Refinance Plus loan for borrowers whose loans they already own that have current loan balances which exceed collateral values.  Freddie Mac, not to be outdone by its big sister, offers the Freddie Make Relief Refinance and the Relief Open Access program for the same purpose.  You can check to see if your loan is owned by Fannie Mae at:  www.fanniemae.com/loanlookup.  Freddie Offers a similar tool at:  https://ww3.freddiemac.com/corporate/   The Freddie Mac Relief Refinance may not even require income qualifying if your mortgage adviser replaces the your loan directly through your current loan servicer and you have made timely payments.  Both programs will require you to have the second mortgage lender subordinate their lien to the new note but you mortgage broker or banker is very familiar with how to do this process.  You may also be able to obtain a simple modification of your loan terms (lower rate) by contacting your current servicer.  The key is to talk with someone knowledgeable and to explore your options BEFORE rates start to climb.  Get pointed in the right direction.  You have nothing to lose by asking.  Refinancing requires action on your part get started by asking for help.  No one expects borrowers to be able to navigate the system on their own anymore."  

Jeffrey Naughton
Northwest Home Mortgage LLC
[email protected]

 

 

"With interest rates at historical lows many homebuyers right now are understandably wanting to take advantage of these rates out there to lower their monthly mortgage payment. These are rates we may never seen again in our lifetime and it’s an excellent time to review your particular situation and see if you can benefit with the mortgage products that are currently available on the market. Unfortunately a lot of homeowners have a loan(s) that are higher than what the home would appraise for. We have all read the news and seen our own homes drop in value due to the biggest financial crisis since the Great Depression. So often times homeowners are disappointed to realize they can’t get qualified for a loan and take advantage of these attractive rates. 

However there are some great programs right now a lot of homeowners aren't aware of that they may be able to utilize. FHA Streamline loans are extremely popular right now in that if you currently have an FHA loan you can refinance with no appraisal needed and minimal documentation requested. It also has high loan to value (LTV) requirements so if you don't have much equity you can still refinance. This is an excellent product.

There is also the DU Refinance Plus product that eliminates the need for an appraisal (huge perk in this market with declining values). So if you originally last acquired your home loan and had 20% or more equity in the home then there is a chance you could refinance with no appraisal and no mortgage insurance needed even if your new loan to value exceeds 80%. This allows a homeowner to take advantage of these low rates without being penalized with their loan to value increasing through their house falling in value and having to incur monthly mortgage insurance.

Advice I can give to a homeowner wanting to look at refinancing is definitely talk to a mortgage professional first and foremost. Sit down with them in person and understand all the available options in the current marketplace. The industry is literally changing on a weekly basis with massive government regulation and overhaul occurring. The documentation requests from the underwriter to the borrower are extensive and often times a bit perplexing. Be mentally prepared as you will be asked for several items for loan approval. The pendulum has swung so far to the other side that the mortgage process these days is completely different than the process in 2004-2007. If you can't qualify for a refinance there is always the potential option for a loan modification. To do so you will need to contact the servicer of your current loan and explain your situation and prove your financial hardship. My personal experience with loan modifications for some of my clients has been frustrating to say the least. I feel at the very least it is important for everybody right now that owns a home to talk to a great lender who is local and see if they can benefit from any available opportunities in the mortgage marketplace. "

Ryan Niles
Cornerstone Home Lending
www.thenilesgroup.com