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Can you refinance a rental home if the value is less than what we owe? apprx. $20k less.

We have two homes, one is a rental home and the value of the home is less than what we owe, approximately $20k less. It is being rented out for less than the monthly payment. We would like to refinance the loan amount, can this be done?
  • May 20 2009 - Campbell-Grant
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Answers (8)

Profile picture for spoiledgirl
Thank you for all the replies...I should have clarified:

This was purchased as an owner occupied, conventional loan.
  • June 25 2009
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Profile picture for SunTrust
see this link: Fannie Mae guideline, 105 LTV.

https://www.efanniemae.com/sf/refmaterials/eligibility/pdf/eligibilitymatrix.pdf

hit link and then go to page 4.

Freddie Mac has a similar guideline.
  • May 22 2009
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Hello,
 
  The answer is no.  Your best option is to wait for the market to pick back up a bit.  Values will soon begin to increase, listings are starting to get multiple offers.  Daniel is correct 90% is the highest LTV avaliable for investment properties under Fannie Mae guidelines.

Best Regards,
Edward Guidry
  • May 22 2009
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Profile picture for SunTrust
I knew someone would ask that. ;-)

If the loan is already FHA or VA(maybe the home was bought owner occupied) then you can do an FHA streamline or a VA IRRRL.
  • May 22 2009
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Profile picture for Chris Corica
Timothy - since when does FHA/VA do investment properties?
  • May 21 2009
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Profile picture for SunTrust
Just to pipe in on the prior responses, since they conflict.
The answer is yes if..the current loan is Fannie Mae held, Freddie Mac held, an FHA loan or a VA loan.For Fannie Mae or Freddie Mac you can go to 105% of the appraised value. If the loan is  FHA or VA, there won't be an appraisal so the value won't come into play.
  • May 21 2009
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If your current mortgage on the home is held by Fannie Mae or Freddie Mac, then yes there are options. Feel free to contact me for more info.
  • May 21 2009
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As an investment home, no. You need at least 10% equity or a 90% LTV to qualify for a refi. Unless the property somehow became owner occupied, you requested a loan modification from the bank, there is no possible way to refinance. 
  • May 20 2009
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