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When will they offer refinancing to strong credit worthy people who has plummeted home values?

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December 17 2010 - Buford
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HUGD, that was funny.

Julia, there are a lot of loans for credit-worthy borrowers, even with equity challenges.  Use the links Frank gave you for Fannie and Freddie. 

There is no way to express what awful advice @suprememgmcollum gave:  Your servicer might be the worst source of advice possible. 

I don't call typically call an overseas call center for financial planning advice, but I certainly don't call the accounts receiveable department (that's what servicing is) to open up new credit or inquire about my options.  That's how so many people are getting misled into skipping payments for loan mods that never happen. 

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December 20 2010
Thier are programs out thier to assist people whose values have dropped.  FHA you can do a streamline refinance for a rate/term loan without an appraisal- loan to value is based upon your last FHA loan.
Both Fannie Mae and Freddie Mac have products available as well. IF you original loan has PMI or had lender paid MI you will need to go to the servicer of your present mortgage as they can get the MI reissued. I recently closed a loan for a borrower at 114% of todays market value thru thier original servicer lowered her ratecame down from 6.25 down to 4.75. That was before the rates increased over the last 3 weeks.  Alot of it depends on what your ltv was when loan was taken out, when the loan was taken out. To see if fannie mae owns your loan go to http://www.fanniemae.com/loanlookup/  for freddie mac go to
https://ww3.freddiemac.com/corporate/
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December 18 2010
Julia, do you happen to have a VA or FHA loan? If not, what is your balance and estimated value. BTW, where are you getting the estimated value from?
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December 18 2010
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December 17 2010
When values go up.  Why would a lender lend more that the security is worth?
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December 17 2010
julia,

Be careful... is all I can say. Home prices are not going up soon. A home is no longer an asset like it use to be. There are better places to put your money. I would not suggest pulling money out of the bank to get a lower rate on your mortgage in a refi.

It is not likely the bank will lower your mortgage to the current market value so your kind of stuck for now.
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December 17 2010
You can still get financing for refinances.  The issue is more when will home prices rise.  Banks will not lend a refi on a home where the loan would exceed the value.  in 2005 that was possible, but it doesn't look like those loans will come back.

You might do well to consider making up the difference.  Since stocks are languishing, you could get a guaranteed return by pulling some money out of savings and putting it into making up the difference in "loan-to-value".

For example, your home might be worth $300,000.  If your mortgage is $325,000, and you can refinance at 95% ($285,000), then you could pull out $40,000 in savings to make up the difference.

This all depends on your rates and where you have that money saved.  If you have a 6.5% loan and can get a 4.5% rate, then that generally exceeds what most banks are paying in interest rates. It also depends on whether you use that money for emergencies, as the money will be permanently gone. It's money you'll pay the banks anyway when the mortgage is paid down, so you WILL pay it eventually.

It's unlikely considering current foreclosure trends and a slow/no recovery from the recession that home prices will be at this level for several more years.  If inflation hits, then you will lose out on the opportunity for incredible interest rates!

Best of luck!
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December 17 2010
Call your servicer and see if your loan's investor is Fannie Mae or Freddie Mac.  If that is the case, there is a good chance you can qualify for a program that has been known by several different names - Making Home Affordable, Home Affordability Refinance Program, etc.  It is best if your current loan doesn't have mortgage insurance associated with it.  Your servicer should be able to tell you if you qualify or not.  Other lenders can also look up your address and see if Fannie or Freddie has it.  If it is a Fannie loan, you may be able to refinance with other lenders besides your current servicer using the same program. Freddie has started allowing other lenders to do the same, but I haven't heard of as many lenders doing that loan yet.
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December 17 2010
 
Related Questions
When will they offer refinancing to strong credit worthy people who has plummeted home values?
Profile picture for Chris Richter
Latest answer by Chris Richter
December 20 2010 | 8 answers
  • Asked by juliaddyer
  • In Refinance
  • December 17 2010
Mortgage Rates
 
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