Is it possible to refinance with less than 20% equity?

[Anonymous]

We bought at $430k, and comps are going for $340k right now. We owe $305k at 6.25%. I wanted to refi and DH talked to one broker who said we needed to have 20% equity. Only debt is a car loan and HHI is $250k. We never submitted paperwork, it was only a conversation. Is this true? Should we call someone else?

[Anonymous]

I just refinanced with less than 20% equity but had to do a first mortgage for the 80% amount and then a second mortgage for the remainder. The second mortgage was about .3% higher than the first. We had no other debt and did it with our original lender, with whom we've had a 10 year relationship, including prior mortgages.

[Anonymous]

We just refinanced and ponied up $25k in cash to meet the 20% equity requirement.

[Anonymous]

We just refinanced and we did need the 20%. however, when they did the appraisal, it came back right at the minimum we needed. I thought that was a bit of a coincidence.

[Anonymous]

We also put up cash at our refinance to meet the 20%. It was only about $5k for us, though.

[Anonymous]

Anonymous wrote:We bought at $430k, and comps are going for $340k right now. We owe $305k at 6.25%. I wanted to refi and DH talked to one broker who said we needed to have 20% equity. Only debt is a car loan and HHI is $250k. We never submitted paperwork, it was only a conversation. Is this true? Should we call someone else?

With a high HHI like that, just save until you have the extra $35K. Interest rates won't go up much from here until at least the end of the year.

I'm sorry you lost so much value in your home. That stinks.

[Anonymous]

We refinanced last summer and were told we didn't need 20% equity. Our house had actually appreciated some since we bought it in 2008 (as a foreclosure) and we were feeling fairly confident that it would appraise high enough to get the 20% anyway, but in the end an appraisal wasn't even required. It's my understanding that we qualified for some kind of new Obama mortgage program but I don't know what it was called. We had pre-paid our PMI when we bought initially and the certificate carried over to the re-fi.

[Anonymous]

Yes, get an FHA loan.

[Anonymous]

Anonymous wrote:We just refinanced and ponied up $25k in cash to meet the 20% equity requirement.

Ditto but 12k here

[Anonymous]

I looked into it, and had no luck. Seems like lenders are sticking firm to that 20%.

[Anonymous]

Suntrust and Wells Fargo seemed willing to refi with us even when there was significant uncertainty over our equity (we put 20% down in 2006 but assumed we'd lost value). However, they'd only do a 30-year or 15-year, and demanded that both my husband and I be on the refi just as we were on the initial loan. Their rates also weren't so great, either. We passed on it.

[Anonymous]

When we did ours last fall and were uncertain where our house would appraise - the estimator service the lender used during the approval process (something like Zillow) produced such a low value that they would not lock the terms and send the loan to underwriting until we had our appraisal. But at the time, they told us that we could still re-fi, just the rate might be a bit higher and we would either need to bring cash to the table to meet the 20% equity or we would have to pay PMI. You may want to wait until after the spring selling season has finished to see if the comps in your area go up - we had great comps that put our value well above where we needed it because all our comps came at the expiration of the housing credit.

[Anonymous]

I think it depends on your credit score and your lender. We bought our home for $480 and refinanced 2x before market tanked, so we end up with close to $500k of home debt. We had a 5 year arm that was expiring and I was very concerned. Citimortgage owned our loan for the past 4 years and sold it to another lender. I was on the phone with them regarding a property tax payment and at the completion of the call asked me if I wanted to speak with someone about refinancing. I said, "I'd love to refi, but you won't do it." Long of the short, our home was valued at approx $385. We owe approx $65k on secondary mortgage and $360k on primary. They refinanced us at 5.25% for a 30 year loan and we didn't have to pay anything down. Our credit scores are high - mine is 795 and my husband's is 760. I guess they considered us a good risk.

[Anonymous]

Anonymous wrote:I think it depends on your credit score and your lender. We bought our home for $480 and refinanced 2x before market tanked, so we end up with close to $500k of home debt. We had a 5 year arm that was expiring and I was very concerned. Citimortgage owned our loan for the past 4 years and sold it to another lender. I was on the phone with them regarding a property tax payment and at the completion of the call asked me if I wanted to speak with someone about refinancing. I said, "I'd love to refi, but you won't do it." Long of the short, our home was valued at approx $385. We owe approx $65k on secondary mortgage and $360k on primary. They refinanced us at 5.25% for a 30 year loan and we didn't have to pay anything down. Our credit scores are high - mine is 795 and my husband's is 760. I guess they considered us a good risk.

So they gave you a $425k mortgage for a property that's appraised at $385k?

[Anonymous]

No. We have 2 mortgage holders on the house. They refinanced the primary mortgage, $360k, and had the secondary mortgage holder sign a subordination agreement.