Can I refinance if my property value has decreased?
by Mortgage Rates on Sunday, November 14th, 2010 | 3 Comments
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If you owe more on your condo than it is worth, you will not be able to refi. You do need to find out how to get out of your ARM ASAP. When the economy rebounds, interest rates will climb and your rate will start creeping up until it reaches the maximum rate (typically around 12%). This will cause your payment to increase around 50%.
You can not refi if your loan is more than what your property is worth. Typically you need at least 10% equity to refi. Maybe less if you have great credit.
Solution: A lot of people think that loan modifications are only for people in foreclosure. NOT TRUE. It all depends on your lender.
One of my clients just had his loan modified without missing a single payment. You can talk to your lender to see what program would work best for your situation. That is your only chance at a fixed rate mortgage with your loan to value ratio.\
Good luck!
Freddie Mac offers a program called a Relief Refinance for just the situation you are in. It offers refinance loans up to 125% LTV. There are certain requirements to be met, but basically if your current loan was sold to Freddie Mac, then you could very well qualify for a refinance. I don’t know if Fannie Mae offers the same thing, but I imagine they have some sort of similar program. Get with your current lender and see if your loan was sold to one of these entities. If so, that may be the answer for you.