Can I refinance with less than 20% equity (without coming up with the cash to hit 20% at closing)

[Anonymous]

PP re: HARP II - I think they both went through mortgage brokers, but I know that Capital One was participating in HARP II, becauase that was my former loan servicer who let me know my loan did not qualify. You can also go through Amerisave.

[Anonymous]

We refinanced last spring with less than 20% equity (bought in 2005 and home value had dropped about $80k). Our loan was not owned by Fannie/Freddie so the gov't program was not an option. We went through a broker and paid cash to hit 10% equity (also could've done 5% equity but we wanted to do 10%), then paid PMI in a lump sum up front. Yes, it was painful, but the lower interest rate and reduction in the principal together lowered our monthly payment by over $800.

[Anonymous]

We're refinancing now with 12% equity. We went with a mortgage broker who gave us several options (30 year fixed with PMI, 30 year fixed without PMI, 5 year ARM, 7 year ARM, etc.). We decided to do a 30 year fixed and pay about 1% of the the loan "upfront" to avoid PMI. The total cost for our refi including prepaids is about $8,000. We are rolling it all into our mortgage, but will continue to pay our current amount each month until we've "paid off" the cost of the refi (in less than two years). After that, we'll enjoy the new lower payments. For us, the interest rates are so low that it was worth it to refinance.

FYI--we didn't qualify for the government backed refi programs since our loan is not owned by Fannie or Freddie.

[Anonymous]

Anonymous wrote:We refinanced last spring with less than 20% equity (bought in 2005 and home value had dropped about $80k). Our loan was not owned by Fannie/Freddie so the gov't program was not an option. We went through a broker and paid cash to hit 10% equity (also could've done 5% equity but we wanted to do 10%), then paid PMI in a lump sum up front. Yes, it was painful, but the lower interest rate and reduction in the principal together lowered our monthly payment by over $800.

Is there any benefit to paying the PMI upfront instead of spreading it out over the loan? Also, do you mind sharing the interest rate you got? thanks

[Anonymous]

Anonymous wrote:We're refinancing now with 12% equity. We went with a mortgage broker who gave us several options (30 year fixed with PMI, 30 year fixed without PMI, 5 year ARM, 7 year ARM, etc.). We decided to do a 30 year fixed and pay about 1% of the the loan "upfront" to avoid PMI. The total cost for our refi including prepaids is about $8,000. We are rolling it all into our mortgage, but will continue to pay our current amount each month until we've "paid off" the cost of the refi (in less than two years). After that, we'll enjoy the new lower payments. For us, the interest rates are so low that it was worth it to refinance.

FYI--we didn't qualify for the government backed refi programs since our loan is not owned by Fannie or Freddie.

Do you mind sharing the name of the broker you used? The broker I've worked with in the past doesnt seem to have as many options as this. Thanks

[Anonymous]

Anonymous wrote:

Anonymous wrote:We're refinancing now with 12% equity. We went with a mortgage broker who gave us several options (30 year fixed with PMI, 30 year fixed without PMI, 5 year ARM, 7 year ARM, etc.). We decided to do a 30 year fixed and pay about 1% of the the loan "upfront" to avoid PMI. The total cost for our refi including prepaids is about $8,000. We are rolling it all into our mortgage, but will continue to pay our current amount each month until we've "paid off" the cost of the refi (in less than two years). After that, we'll enjoy the new lower payments. For us, the interest rates are so low that it was worth it to refinance.

FYI--we didn't qualify for the government backed refi programs since our loan is not owned by Fannie or Freddie.

Do you mind sharing the name of the broker you used? The broker I've worked with in the past doesnt seem to have as many options as this. Thanks

Sure, here is his info. He is in Waldorf, MD. I got his name from a family member who has worked with him.

Steve Boyce
FitzGerald Financial Group
A Division of Monarch Bank
240-320-8036 Office
443-336-5266 Cell
SBoyce at MonarchMtg.com

[Anonymous]

You can refinance with less than 20% equity using two methods:

1. pay mortgage insurance in a lump sum or as a monthly payment - typically the lump sum is the better option as you can finance the sum and your interest rate is not affected.

2. Use two loans to avoid mortgage insurance - commonly referred to as an 80/10/10 scenario. This requires 10% equity, 10% second loan 80% first loan. - this typically is the best option from a monthly payment and cash needed stand point.

If you'd like more information, please contact me at [phone] or [e-mail]. I work for MetLife Home Loans and have helpd many DC Urban Moms & Dads. I am not a broker but instead work as a direct lender for MetLife Bank.

RD

[Anonymous]

Anonymous wrote:

Anonymous wrote:We refinanced last spring with less than 20% equity (bought in 2005 and home value had dropped about $80k). Our loan was not owned by Fannie/Freddie so the gov't program was not an option. We went through a broker and paid cash to hit 10% equity (also could've done 5% equity but we wanted to do 10%), then paid PMI in a lump sum up front. Yes, it was painful, but the lower interest rate and reduction in the principal together lowered our monthly payment by over $800.

Is there any benefit to paying the PMI upfront instead of spreading it out over the loan? Also, do you mind sharing the interest rate you got? thanks

Our broker advised us that paying it upfront would be cheaper in the long run, if I recall correctly. Plus, we wanted as big a monthly savings as we could get, and we would have paid $300/month for PMI (of course it can drop away eventually). We paid it in cash with the other cash we brought to closing. Given the amount of cash we had to come up with just to hit 10% equity, plus closing costs, the extra $9600 or some such for PMI did not make a huge difference for us, when comparing it to the monthly savings. We refinanced at 5.0%, but, again, this was last March so rates were higher overall at that time.

[Anonymous]

Anonymous wrote:You can refinance with less than 20% equity using two methods:

1. pay mortgage insurance in a lump sum or as a monthly payment - typically the lump sum is the better option as you can finance the sum and your interest rate is not affected.

2. Use two loans to avoid mortgage insurance - commonly referred to as an 80/10/10 scenario. This requires 10% equity, 10% second loan 80% first loan. - this typically is the best option from a monthly payment and cash needed stand point.

If you'd like more information, please contact me at [phone] or [e-mail]. I work for MetLife Home Loans and have helpd many DC Urban Moms & Dads. I am not a broker but instead work as a direct lender for MetLife Bank.

RD

What kind of rates are available in the 80/10/10 scenario for the 10% second loan for something around 30,000?

[Anonymous]

Yes if you meet the requirements that were talked about by PPs. I'm doing this now. Find out if your loan qualifies for the new HARP program. I had to pay off the 2nd mortgage and then am doing a refi under the new program (called either DU or DU plus).