Quick question on refi's

dabster · 01-30-2008, 11:22 AM

I was chatting with a friend over lunch who got an 80/20 ARM a year or so ago. He asked if it was possible to just refi the "first" - the 80% and not the second. So, get a fixed 30yr on the first and leave the second as-is. He still doesn't have much equity since he bought not long ago, but he's less concerned about his payments going up on his second then he is on the first.

Plus, with the Fed rate going down, the possibility of a rate freeze on ARMs, etc. he's not sure when he should do this or when to talk to his mortgage company. If he calls and asks about whether they are doing the rate freeze, he doesn' t want it to be a red flag to the company that he might be in trouble (he's not).

I had no idea so I figured I'd ask the pros...

** edited to add ** With property values going down he's also concerned about getting 100% financing which is why he's also considering just refinancing the first since their liability would only be the 80% and may not take the second into consideration since they're the first and will get paid first if anything were to actually happen.

TIA

jlynn · 01-30-2008, 12:01 PM

I can't answer you, just wanted to ask How the heck are ya? Long time no see.

Hedwig · 01-31-2008, 04:10 AM

I think you can, but I'm not sure. Maybe one of the mortgage pros will see this and jump in here.

And welcome back--stick around this time!!

dabster · 01-31-2008, 04:36 PM

Hey guys. Yeah, been really busy and haven't had time for most anything. I'll try and visit more often...

Loan Doctor · 02-11-2008, 04:30 PM

Generally this is not difficult, just recently a bit of a problem.

The method is that you get a new 1st and have the older of the existing 2nd "re-subordinate" their loan from the current holder of the first to the new holder of the first.

The problem comes in when the value of the home has gone down. Lenders that have the 2nd's don't want to have the new CLTV (Combined Loan To Value-take the first and add in the second for the combination) be over 100% of the total value of the loan.

There is typically a 300-350 fee charged by the holder of the 2nd.

Charles

Quote:

Originally Posted by dabster

I was chatting with a friend over lunch who got an 80/20 ARM a year or so ago. He asked if it was possible to just refi the "first" - the 80% and not the second. So, get a fixed 30yr on the first and leave the second as-is. He still doesn't have much equity since he bought not long ago, but he's less concerned about his payments going up on his second then he is on the first.

Plus, with the Fed rate going down, the possibility of a rate freeze on ARMs, etc. he's not sure when he should do this or when to talk to his mortgage company. If he calls and asks about whether they are doing the rate freeze, he doesn' t want it to be a red flag to the company that he might be in trouble (he's not).

I had no idea so I figured I'd ask the pros...

** edited to add ** With property values going down he's also concerned about getting 100% financing which is why he's also considering just refinancing the first since their liability would only be the 80% and may not take the second into consideration since they're the first and will get paid first if anything were to actually happen.

TIA

thomasz · 06-09-2008, 01:31 AM

I hope you will answer all question to customer.

Loan Doctor · 06-09-2008, 10:45 AM

Hi Tomasz,
Absolutely, I will answer any question. If I don't know the answer I will let you know and find out and get back with you.

Following is a general response to a PM someone sent me Sunday (don't work that day) that I answered this morning. This PM had some rather personal information, so this reply does not address his situation exactly, just general answers.
----------
RE: Your Residence.
Depending on your Debt to Income Ratio (DTI), you should be able to qualify for an FHA loan on your personal residence. You can figure that by taking your minimum credit cards payments, add to that your car payments & installment loan payments, then add in your home taxes and home insurance.
Lastly-this is complicated- but necessary to learn to do for the final figure to add in. The paper income/loss from your rental.

You figure in your net allowable income from the rental in the following manner.
You add up your payment including the HomeOwners insurance and taxes.
Then figure 75% of the income.
You are probably at a break even figure, or a slight loss.

Add/subtract that to the previous calculation. That is your debt.

Take your debt and divide it into your pretax income.

So lets say that your income is 1,000 per month and your expenses/debts are 400 per month. That gives you a 40% DTI.
Perfect is 43% or less.

Re your rental home refinance.
This is going to take your getting to a minimum FICO that a mortgage person gets (Or from MYFico.com) of 620. For the best programs, generally lenders are looking for a 36% DTI, for an 80% LTV (Loan to value-if your home is worth 100K, then 80% LTV would be a loan for 80K.

If you are at 80% or less, you may qualify for a program with a 580 min score. I don't have enough experience with the new FannieMae approval system to tell you for sure.

Charles

kevinp · 09-22-2008, 10:17 AM

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