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What options do I have on refinancing a home that has now appraised less than the remaining mortgage

I purchased my townhome in August of 2006.  The original financed amount was $368,00.00.  The current amount left on the mortgage is $330,000.00.  The home at the time of the original mortgage was apprised at the mortgage value.  With the change in the housing market, the appraisal may be considerably less- I do not know this for sure.  What are my options for refinancing at a lower rate and would it be worth doing so knowing I would have to expend a great deal out of pocket.  The loan rate on my home now is 6.358%.  Thank you
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May 04 2011 - Orland Park
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Answers (5)

The answer depends on who owns your mortgage.  As Ms. Levinson mentioned, if you have an FHA mortgage, you can check into a no appraisal - streamlined refinance.  They will use your current mortgage and the purchase price to determine your LTV.  With FHA rates in the 4s, that should be a piece of cake.

If you have a conventional loan, like most people received in 2006, you need to know if Fannie Mae, Freddie Mac or a bank own your loan.  If Fannie Mae or Freddie Mac do, your bank is still servicing it, but the bank doesn't own it.  You can check at the below sites to see if your home is owned by Fannie or Freddie.  If either one of them own your loan, you can check into HARP.  Your lender should be able to see if you would qualify for it without any cost to you upfront.  (these programs do have appraisal waivers sometimes in the approval findings). 

If the bank owns it, you will need to go to them and ask what your options are to refinance.

If the links don't work, then please google Fannie Mae lookup or Freddie Mac lookup
Good luck to you!

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May 04 2011
You have several options.  If you have a financial hardship that has made things a challenge financially for you, then you can approach it from that perspective.  Speak to your current lender and see what thay can do for you, and there are a few non-profits that will do the fighting for you if you are not up to it.    If on the other hand there is no real hardship other than you are "underwater" on your mortgage, it will be harder to refinance, since there is not any equity and lenders typically require equity to refinance.  Many homeowners have gone from one category to another, where they didnt originally qualify for help, they then found that their financial problems compounded with other economic issues, and then fell into the hardship category.  Best of luck to you as you make your decision.
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May 04 2011
If you have a FHA mortgages no appraisal is needed for their Streamline program.
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May 04 2011
Your in the same situation many people are currently in. I would call up a few different lenders and see what options they offer.
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May 04 2011
You need to have a few agents do a market analysis to see what the value might be. If it is below the mortgage balance no one will refinance unless you pay down the mortgage balance to significantly under the value. It is not an exageration to say that EVERONE who bought in 2005/2006 is under water. 2006 was the statistical peak of the bubble. I see lots of property bought in 2004, 2003 and 2007 that was also under water.
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May 04 2011
 
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