Mortgage adjusting up / Refinance question?
overthinkover asked:
Hypothetical situation I might find myself in down the road….
Hypothetical situation I might find myself in down the road….
Let’s say my ARM was about to adjust up considerably beginning this month. And I want to refinance.
I have an interest only ARM on a $750K home. So after paying for some years, my remaining loan balance is $750K.
Home values have dropped and my home has been appraised at $660K.
I have $45K to use as a down payment.
What are my refinance options?
Please help me understand specifics and help me do the math.
ARMAND
JOHNATHON
You cannot refinance more than 97% of what the home is worth (100% financing no longer exists and you definitely can’t do more than that) and for such a large loan most lenders would probably require 10% equity in the home if in a declining market. For this example we’ll say 97%, if it appraised at 660, your max loan amount would be $640,200 so you’d have to pay up front $109,800 to payoff the original mortgage in order to refinance. This is the reason why there are so many foreclosures for jumbo loans people took out ARMs they would eventually not be able to afford the adjustment and with no equity cannot refinance.
ALONZO
Pretty simply, you’re not in a good situation. If the home is appraised at $660K, that’s what the bank will loan you. If you owe $750K, and have $45K, you will still need to come up with $45K to pay off your original loan ($660 + $45 + $45 = $750).
Good luck. See a lender ASAP. Or, just pay the higher payments until your home imporves in value.
ROYCE
You owe more than the house is worth. Which means IF (and that is a big if) you could refinance 100% you could only get $660.00 – you would need $90,000.00 plus closing costs brought to the table at closing. It is pretty much impossible to get 100% financing now. More likely is 90% if your credit is good- so that makes your new loan amount $594,000.00 with you having to bring $156,000.00 plus closing costs to the table.
I would try refinancing with your current lender since they have more incentive to work with you on 100% financing since otherwise you may end up losing your home. But even 100% is not enough to pay your existing loan off. Sorry news is not better! Good luck!
ROBBIE
Dont gamble if this is the road you will indeed head down. You do not want to find yourself upside down in your home with an adjustable rate. I am employed by one of the largest mortgage brokers in the country. We work with over 350 lenders to bring you the best rates and programs. I welcome the opportunity to help. Please feel free to shoot me an email anytime with any questions you may have.
WILSON
honey, you keep posting the same questions over and over, you really need to talk to someone , I know we have had our little talks on here, options change daily and you asking down the road what you can do NO ONE knows what will be available tomorrow let alone in 3 years when you loan will actually adjust. You asked about paying down your second, you ask about if you should refinance. You need to be talking to a real professional that gives you the answers you need. I would be happy to help anyway I can to show you options for today however anyone who gives advice for down the road is NOT being accurate as there is no way any mortgage professional can tell you what the future holds.
SANDY
If the house is appraised at $660K, you may only be able to refi $594K (90%).
You would need to come up with a check for the difference in order to refi.
Your options are:
1) Make the higher adjusted payments
2) Write a check for $156,000 and refi 90% in a new fixed-rate mortgage
3) Sell the house
4) Get foreclosed on.
—————–
FOR EVERONE, in the future, don’t buy a house unless you’ve met the following 4 goals:
1) Cash on hand for emergencies (6 month’s expenses)
2) No other debts (not even a car note)
3) 20% cash down payment
4) An affordable house (2 years salary)
————–
It was the banks and their loose underwriting that allowed housing prices to inflate in the first place.
Now that credit is tightening up, housing prices are going to have to deflate back down to affordable levels.
And that means the people who have $750,000 houses with an interest-only mortgage and only a $120,000 income will have to get foreclosed on.
————
A recession is like a forest fire.
Some people do get burnt.
But a lot of deadwood gets cleaned up,
And the whole forest is healthier as a result,
CHRIS
looks like your refinance options are very slim unless you have around $150K to pay off the rest of the loan. you should call your bank and ask to speak to the loan modification department – and make sure they don’t transfer you to someone who is going to try a refinance because we already know that won’t work. Banks are now willing to work with consumers to come up with a payment and loan modification that will keep you out of foreclosure . This would probably be your best bet until the value of your home goes back up.
CRUZ
Try using to get refinance quotes from the top lenders. It only took me a few minutes.
DAMON
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