Special VA Loan Help!

In 2008 we bought our first home.  The loan was financed with 80% at 6.25% and the other 20% interest free.  It was a great deal as we didn't have to put anything down and we do not pay PMI.  Now we would like to refinance or sell.  We would like to refinance the 80% loan to a 10 or 15 year loan so we can pay it off faster.  I contacted a bank and they said they would refinance as long as the mortgage holder would subordinate? (I hope this makes sense to someone).  But the mortgage holder said that they wouldn't and made it sound like refinancing at all was impossible.  Since we can't (still holding out that there might be a way) refinance, we were thinking of selling (probably break even) and try to get another VA loan for a new home, but the first VA loan must be completely paid off in order to get a new one (right?).  So would we have to sell, maybe move into an apartment for a few months until our VA loan shows completely paid off before looking for a new home?  Please help, this whole process is so complicated!
  • July 08 2012 - Springfield
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Answers (5)

http://riamwr.com/acs/JCOOK/Money/Money%2020070514%20IL%20State%20Veterans%20Home%20Loan%20Program%20Flyer.pdf

Here is a link to the program that we used to finance.  I called IHDA, the loan holders and they did confirm that this was a special conventional loan and not a VA loan, so I guess that helps out a little bit.  IHDA holds both loans.  Unfortunately I don't have the cash to pay off the second loan.  
  • July 09 2012
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Are you sure your first mortgage is a VA loan? If so, why did you get 2 loans ( an 80/20 ) instead of a VA loan for 100%? You also mentioned your 2ND mortgage is " interest free", what does that mean and who holds the 2ND mortgage?  Do you have the cash to pay the 2ND off? If so, what is the estimated home value and balance on the 1ST mortgage?
  • July 09 2012
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Profile picture for Connie Klemme
bump.
  • July 08 2012
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Is the VA loan on a different property than the home you are trying to refinance?
  • July 08 2012
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Profile picture for Connie Klemme

hopefully you can refinance.
as for moving, yes typically you can not get a VA loan a new home without having this one paid off first.

what I have seen is people put theirs on the market and not try to work out closing of old home and new home in same day or same week (with sale happening first) but I certainly don't reccommend this especially if there are children or pets involved because there are always great possibilities for unexepcted delays. 

as for moving- is the percieved inability to refinance the ONLY reason you wish to move? if that is the case, visit with the lender more- there could be more options

  • July 08 2012
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