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Can you refinance your home for a lower interest rate if the Loan-to-Value is 100%?

We would like to refinance our town home for a lower interest rate and payment. The problem is that we believe we may owe more on it than it will appraise for. If the appraisal comes in too low, then we will not refinance. Do we still have to pay for the appraisal if we choose not to proceed with the refinance? Zillow.com has the estimate on our town home almost $15K less than what we owe! What should we do? How can we find out the real value on our home and if we are able to refinance? 
  • June 15 2010 - Lennox Village
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Answers (2)

Click on this link Making Home Affordable Loan Look-Up and see if your current loan is held by Fannie or Freddie.  If it is, you may be eligible for the HARP refinance.  Any lender can go to an LTV of 105% and your current lender should be able to offer you an LTV of 125%.  The only thing is there is a big hit to pricing for an LTV over 95% so depending on what your current rate is the savings may not make it worth it.  In addition, if you currently pay PMI it will be tougher...your current lender will probably be your only choice.

If an appraisal is completed on the property and you choose not to move forward with the appraisal (or the appraisal comes in so low you can't) you will be required to pay for the appraisal.  Unfortunately, this is the only way to truly find out the value the lender will use.  Just don't order one on your own...the lender won't be able to use it due to new appraisal guidelines.
  • June 16 2010
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There are options for you even though you may owe more than what the home is worth.  There are programs that will allow up to 105% of the value and some up to 125%. 

An appraisal will be needed in most cases.  If your current loan is an FHA mortgage, you may be able to avoid needing one wth a Streamlined Refinance.  You will have to pay for the appraisal wether the value comes in where you need it to or not.

I know these are not very specific answers, but without knowing the whole situation, I hopeyou can use them to get you on the right track.

I would start with your current mortgage servicer.  There could be refinance options with out needing an appraisal.  If not, I would be happy to discuss other options with you.  Please feel free to contact me with any questions.  You can find my contact info on my profile page.

Good luck, and I hope you can save money soon!

  • June 16 2010
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