Pissed off and Pissed On asked:
I am looking to refinance my home loans. I purchased my condo with an 80/20 interest only loan a year or so ago. In about a year, my first position loan will start adjusting. Seeing as how rates are fairly low, I think it would be wise for me to refinance before too long. I’ve just recently been told that banks will no longer sell 100% LTV loans. How screwed am I? Is there any way for me to refinance?
OLLIE
I am looking to refinance my home loans. I purchased my condo with an 80/20 interest only loan a year or so ago. In about a year, my first position loan will start adjusting. Seeing as how rates are fairly low, I think it would be wise for me to refinance before too long. I’ve just recently been told that banks will no longer sell 100% LTV loans. How screwed am I? Is there any way for me to refinance?
OLLIE
GARTH
You may not be at 100% LTV anymore. If your area is like 99% of the country, you’ve lost about 8% of last year’s value and now you’re upside down. If you happen to be that rare case where you didn’t lose value, and maybe you bought so far under market that you still have a tiny bit of equity, you could look at the FHA program. FHA and VA will give you the highest possible LTV’s to work with. Other restrictions apply, but start by talking to a knowledgable mortgage broker in your area. Good luck.
Comment by Tony D — February 19, 2010 @ 7:19 am
ELISEO
Wow! 80/20 AND Interest only! Try Countrywide, although I think you will find that you are hard pressed to refi. Most banks have tightened their lending criteria so much so, that it is going to be really difficult for you. Who talked you into that loan anyway? If property values in your area are still climbing and you have some money saved up, you may be able to refinance, but you will still probably have to pay for MIP til you get to about 82% LTV. I would have talked you out of that loan if you had closed through my title company. Both loans are interest only? I have been telling people for years that these are not good loans to get into, because you have nothing to show at the end of the month. You are no closer to homeownership with interest only – its worse than renting, if you ask me. You took the loans because the payment was lower and fit you debt to income ratio and probably bought out of your price range. I really hope you are not a first time homebuyer. Depending on the are in which you live, if you had been at the time, you could have gotten first time homebuyer assistance from your city, county or state. I’m assuming you used a mortgage broker that set this loan up in the first place. Did they own the title company too?
To answer your question, I would say that you are ok as long as you can manage the payments. I hope its not adjustable. You need to do yourself a big favor and start sending in payments in for principle only along with the inerest only payments that you are required to pay. This will start to knock down that 100% LTV. If you can swing $333 in principle only payments a month, by all means do so – this will drop your prinple by $1000 every 3 months (send more if you can afford it) on the first mortgage, so if you owe $70000 on the first and $30000 on the second, you pretty much need to pay in $15000 – for anything decent and real consideration at this time.
There should be refinancing boons right now with rates this low, but there aren’t because of the tight lending criteria. Good luck, and pray for the best.
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SALVATORE
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CALVIN
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Comment by Jennifer — February 25, 2010 @ 2:22 am