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Need to refinance

Bought in 2007 for $275K with 5% down.  Loan is an 80/15 with a 10 year balloon.  Currently owe $243K ($27K of which is due as a balloon @8.375).  I can't refinance because current value is $259K acc to Zillow.  Great credit (Over 700) and never a late payment on a $1900/mo. mortgage. Bank says I need to be at 80% LTV, I can pay off 10K on the principal. Need options
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April 17 2009 - Richmond
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FHA
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April 17 2009

Get a real appraisal Zillow is an estimate not the value. Look at homes alike to yours in age style and size. The closer the better that have sold recently.

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April 18 2009
You have 2 options. #1)The new Making Home Affordable refinance. You just need to be in a Fannie or Freddie owned mortgage.#2) Go FHA.

Both options will require resubordination of the 2nd mortgage. #1 is the best choice, because you can avoid the FHA funding fee&mortgage insurance.
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April 18 2009
Start with Chip's plan and if none work you can look into a loan mod.  But it doesnt sound like you have a hardship in your case. 

If you have a general idea on a loan mod you can check here.

Also your 2nd mortgage, check with the lender to see about the subordination, that will probably make or break your refinance opportunity. 

Good Luck!
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April 18 2009
Unfortunately, because you did not buy in with at least 20% down, you are not eligible for Fannie's "DU Refi Plus" (Making Home Affordable Program) that'll allow you to refinance your current Fannie loan into another conventional conforming loan up to 105% LTV with no mortgage insurance. In addition, you would be required to subordinate your 2nd...Having a balloon due in 10 wouldn't make sense to take advantage of this program even if you were eligible..."Mr. Loan Modification" is currect in that the Zillow estimate is just that, an estimate; however, do not spend the money on getting an appraisal. Contact a Mortgage Professional in your area and have him/her do some due diligence on determining your properties value based on surrounding area comps. A good Mortgage Broker should have access to property profile programs as well as Real Estate contacts that should be able to give you a closer approximation as to your actual appraised value. As long as the value comes in below 97.75% LTV, than I would recommend consolidating your 2 mortgages into 1 FHA mortgage. With the Government constantly buying up mortgage backed securities in bulk so as to free up liquidity in the secondary market, the Fed's are essentially artificially deflating government insured rates thereby making FHA rate pricing just as enticing and almost as competitive as conventional rate pricing. I would recommend NOT look at a conventional insured loan if your LTV is 95% or less. The monthly PMI is almost twice as much (and in some cases triple if your credit rating is poor) than FHA MI and the rate again is really not any more competitive due to potential "hits to pricing" if your credit score is below 720.
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April 18 2009
Mike W. the guidelines disagree with your advice. It doesn't matter if the borrower put down 5%or20%. Down payment doesn't disqualify someone from refi plus or the Freddie Mac version. In this case scenerio the only thing that matters is that the first mortgage doesn't exceed 105%. Sticking with my plan conventional mortgage plan avoids MI all together. After all, MI is only tax deductible through 2010, so people need to avoid MI if they can.

FHA is the most costly way of doing this&maynot even be beneficial after the funding fee & monthly MI. Just depends on the current 1st mortgage rate.
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April 18 2009
I guess it would be beneficial to check with a mortgage professional in your area to see what the lenders MI eligibility requirements are. My investors only offer the MI Code 95 and MI Code 97 program which requires your existing 1st lien to have a delivery date UPB and origination date value of 80% LTV or less.
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April 18 2009
Mike W.--

Your lenders need to follow the guidelines. It does say original, but also says that if MI was cancelled then they still pay no MI on the program. Just trying to help you make a case Mike. Here are the guidelines on MI. See the bottom of page 2.

https://www.efanniemae.com/sf/mha/mharefi/pdf/refiplusmatrix.pdf
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April 18 2009
Chip,

You're right, but I'm talking about the situation at hand. With the subject having bought the property 2 years ago with 5% down, there is no feasible way that the MI could have been removed unless the principal balance was paid down to 78% LTV. My lenders follow the same guidelines as yours under the Fannie Mae selling guide; however, while Fannie sets the guidelines, it is the servicers who ultimately make the final determination as to the product guidelines so as to insure that they will have no issues selling the loan as an MBS on the secondary market back to Fannie. Understand that while Fannie is working with the MI companies and lenders to develop recommended operational procedures for same-servicer and different-servicer refinances. There are no assurances that these efforts will be successful or, if successful, uniformly adopted. The servicer that originates the refinance will be held responsible if the MI coverage on the existing loan is not successfully continued on the new loan.  How many servicers do you know that want to be stuck continuing MI coverage on the existing loan?  As a result, my lenders only offer the MI Code 95 program.
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April 19 2009
 
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