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Minette's Blog

By Minette Goldsmith | Mortgage Broker
or Lender in Tucson, AZ

You may be able to refinance without equity in your house

Did you know that even if you have no equity left in your house, if you are current on your mortgage, you might be able to refinance your existing first mortgage at the low rates available now – with no mortgage insurance. Even though the Refi Plus program has been around for over 2 years many people don’t realize it exists. This program is for the people who can make their mortgage payments but have lost equity in thier home.  Many mortgage companies, including Fairway Independent Mortgage, can refinance qualified borrowers to 105% of their home’s current value. Your servicer may go up to 125% but I understand they rarely are willing to do so. Freddie Mac has a similar program, but the rate is not quite as attractive.

Of course, you have to be able to qualify for the mortgage.  Although tedious, it is not so hard as the news would have you believe.  We just finished refinancing someone who originally had a stated income loan (not available now) because he is self employed.  Now, still self employed, he could document income to qualify for the mortgage and will save about 1.25% on his interest rate.  The savings add up.

I have had borrowers pay down their home loan to get to the 105% maximum because the savings were significant enough and they felt they were building equity in their home and their money was not making much money elsewhere at the moment. Obviously by reducing your mortgage loan amount when you refinance, you further lower your monthly mortgage payment amount.

The new loan can only cover the existing first mortgage plus closing costs. The point of the transaction is to allow people to take advantage of the low mortgage rates and improve their cash flow.   See: http://tucsonresidentialmortgages.wordpress.com

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