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Refinance Help!!!! PLEASE ADVISE

Hi,

Here is my friends situation and I need some advice on what to tell him.....

He is looking to refinance ASAP, here is as much info as I can give you, I will add more if possible.

Home is valued @ 550,000 and there is a mortgage and a Heloc on the property; the first mortgage is 234,000 fixed at 5.25% and the heloc is 199,000 (140,000 is variable at 4.5% and the other 59 is fixed at 6.99%. The total amount owed on the property is 433,000. This puts the property's equity at more than 20 percent which is good for the refi.

Income: 73,500 a year equaling 6,125/mo

Min Monthly Payments:

Mortgage 1,318
HELOC 983
Property Tax 85
HO Insurance 60
School Loan 215
Credit Cards 700

This totals 3360 a month, the high target back end debt to income ratio is 49% and currently he is at 55%

He doesn't have any money in reserves to pay down the credit cards, but does have enough to possibly pay down the existing 1st mortgage and HELOC to 417,000 to become conforming. (16,000).

Any ideas?????????????????

Thanks 

This is in CA

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September 27 2012 - US
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Answers (3)

DTI will be too high!
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September 27 2012
What county in CA?   FHA financing will allow ratios of 46.99 front end, 56.99 back end.   Might be able to make the numbers fit in that program, potentially can finance as high as 85% of property value if county limits allow (assuming loan would be over 417000).

The monthly mortgage insurance would be high, however the rate decrease would be substantial, and it might allow to consolidate the high rate/payment credit cards.

New payment ~2,600 principal and interest, including property tax, insurance and mortgage insurance (which would drop off after 5 years) could work well for your friend.    Would save ~600 per month from current budget, also would provide more stable financing.
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September 27 2012
Good Afternoon,

The DTI is calculated using the payment on the new loan, not current loan.  The new loan may result in a much lower DTI since his current first mortgage is well above prevailing rates.

Feel free to reach out to me for assistance; I'm i San Diego.

Thanks!!
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September 27 2012
 
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