How can I refi with less than 20% equity?

[Anonymous]

My house, no longer being worth what it was, is not underwater but, does not have 20% equity either.

Is it even possible for me to refi without meeting that criteria?

It makes no sense that the lender I am ALREADY with can't refi for me.... It's not like it's a new risk.

I have good credit, good job history, good income. Any ideas? Thanks.

[Anonymous]

If you start to work with a lender and get an appraisal, you'll know for sure. The unfortunate part is that you pay for the appraisal...but, you'll get your answer there.

[Anonymous]

You probably can't. We were in the same situation and couldn't get an appraisal to come in even though we bought a few years ago and put 20% down. So frustrating. We can make the payments and have always made them but just wanted a lower rate. You would think we would be a safe bet -- banks don't think so. Sucks!

[Anonymous]

We're refinancing with our current lender, even though we only put 10% down when we bought 2 years ago (we pay PMI). Our goal is to get the appraisal, put down whatever we need to to get rid of the PMI (if we can, based on the appraisal), and then do the refi with 20% equity. However, the lender is allowing us to refi even if we don't plunk down the chunk of cash. We'll see what happens.

[Anonymous]

10:54 here again. If you put down 20% when you bought and don't pay PMI, I can see how the lender would not be willing to do the refi. It's probably our PMI that's enabling the refi without the 20% equity.

[Anonymous]

Bring cash to the table. That's what we did, and we were underwater. You can contact a broker and try to do a refi with more than an 80% loan to value ratio. The one we did was 95% so we had to bring less cash to the table than what would've been required to establish 20% equity. We chose to pay the PMI upfront--it was much cheaper that way. We have excellent credit so we still got a good rate--4.9% last spring.

[Anonymous]

I ref'd a 2007 3% FHA loan last year--my appraisal was basically equal to what I paid for the house--into a 3.5% FHA. I had to bring a few grand to the table (not much, less than 5K) but my payment each month is $500 cheaper. I do have PMI (around $130/mo) that will automatically end after 3 yrs. The refi was worth it to us, even though we couldn't afford to increase the equity.

[Anonymous]

We're going through the bank where we have our checking/savings/broker/IRA accounts.

[Anonymous]

Anonymous wrote:Bring cash to the table. That's what we did, and we were underwater. You can contact a broker and try to do a refi with more than an 80% loan to value ratio. The one we did was 95% so we had to bring less cash to the table than what would've been required to establish 20% equity. We chose to pay the PMI upfront--it was much cheaper that way. We have excellent credit so we still got a good rate--4.9% last spring.

We've refi'd twice, and each time had to pay down our loan significantly (15k plus each time) to do so because of declining value. Thank goodness we were able to do it. The savings in rate (now 3.99%) was worth it to us.

[Anonymous]

Do you have at least 3.5% equity? Then you could refi into an FHA loan, but then would have to pay monthly PMI so you would need to see if you saved on the monthly payment. Otherwise, you could refi with 10% equity and take an 80% loan with an additional 10% loan. In this scenario you can get rid of monthly PMI and pay just the upfront PMI funding fee at closing - resulting in a lower monthly payment. However, with both situations, you need to pay the upfront fee at settlement, so you are looking at about 3% in closing fees. You really need to have the lender run the numbers to see if you are saving money.

[Anonymous]

It's so frustrating. If I didn't pay my bills, or didn't put 20% down when I bought my house 3 years ago the options are limitless. However since I now only have 14% equity due to the ever declining market, I'm stuck at 5.125% even though what I'm really trying to do is re-fi to a 20 year rather than the 30 I'm in. I'm not even trying to decrease payments, but I'm not going to increase them for PMI, that's for sure!!!!!!!

[Anonymous]

Have you asked for a loan modification as opposed to a refi? Might help bring the rate down some.

[Anonymous]

Anonymous wrote:Have you asked for a loan modification as opposed to a refi? Might help bring the rate down some.

Does a loan modification impact your credit score?

[Anonymous]

New poster here... I'm in a 30 yr fixed FHA at 4.3% We do not have 20% equity, but do have good credit, no late payments, etc. Our original mortgage holder said it wouldn't make sense to refi until rates hit at least 1 point lower than what we have now- so we'd have to wait until 3.4%. Does this sound right?

[Anonymous]

I did, harp 2.0