Financing in Queens>Question Details

24homebuyer85, Home Buyer in New York, NY

Can I refinance under the new Obama Plan?

Asked by 24homebuyer85, New York, NY Wed Oct 26, 2011

I have an FHA loan, where I put down the 3% as down payment. My rate is 4.75% paid half a point at closing. My LTV is approx. 80-90%, my credit is not as great any more (mid 600s). I would like to refinance and pull some equity (if any) to consolidate my credit card bills and lower my mortgage rate.

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24Homebuyer-

No you would not be eligible for the 'Obama Plan' as it is spefically designed for conventional loans (fannie mae or freddie mac). Since you have an FHA loan you would be eligible for an FHA streamline but at your current rate it is doubtful you would benefit from that program.

And at your present LTV a cashout refinance is pretty much impossible. Sorry I do not have better news for you.
2 votes Thank Flag Link Wed Oct 26, 2011
Nic pretty much nailed it - with what you are looking to do (cash out to an LTV above 80%) you'll need FHA financing, which caps cashing out to 85% LTV. You will also need to have owned your home for 1 year before an appraised value higher than the purchase price can be used. Your rate is OK, may be able to get a lower rate but for the refinance costs & how the annual MI has increased by .25% since you got your loan, you may not see much savings at all.

However if you have 20% equity, then you may want to look into a conforming mortgage refinance, as you could then eliminate the monthly MI you are paying right now. Mid 600's won't get the best interest rate with a conforming loan program, it may be higher than what you are currently paying, but since the monthly MI is pretty significant (you are probably paying about .85% or .9% per year) then it is something you may want to look into (you could always pay points to buy the rate down).

The new "Obama Plan" (which I suspect you are referring to the expanded program guidelines from FHFA) is explained at the link below, along with a copy/paste of the eligibility requirements:

http://www.fhfa.gov/webfiles/22721/HARP_release_102411_Final.pdf

Which borrowers may be eligible for an enhanced HARP?
In general, borrowers must meet the following criteria:
- The mortgage must be owned or guaranteed by Freddie Mac or Fannie Mae (check at the http://www.fanniemae.com/loanlookup/ or http://www.freddiemac.com/mymortgage/ websites)
- The mortgage must have been sold to Fannie Mae or Freddie Mac on or before May 31, 2009.
- The mortgage cannot have been refinanced under HARP previously unless it is a Fannie Mae loan that was refinanced under HARP from March-May, 2009.
- The current loan-to-value (LTV) ratio must be greater than 80%.
- The borrower must be current on the mortgage at the time of the refinance, with no late payment in the past six months and no more than one late payment in the past 12 months.
1 vote Thank Flag Link Wed Oct 26, 2011
You can not take out cash under any of the government bail out plans. But you can refinance under FHA to 85% cash out. I am sorry I am not licensend in NY, if I were I could do this for you. I am not aware of any other options that meet your goals.
0 votes Thank Flag Link Thu Oct 27, 2011
You can use the new Obama Plan
1- You do not have a FannieMae or FreddieMac
2- You did not close before June 2009
3- You are looking for a cash out refinance
Since you have your mortgage for a year, you can do a cash out FHA refinance up to 85%. What was your original LTV? Do you still have a copy of your appraisal?
You need to find a mortgage officer familiar with FHA and NYC (we have the highest closing costs) to go over the numbers with you to see if it makes any sense since you would be paying a higher monthly MI and most of the closing costs again. It may make sense to do a streamline FHA refinance which means no cash out.
0 votes Thank Flag Link Wed Oct 26, 2011
The mortgage broker I used really did not explain anything to me, and honestly I should have not signed the documentation in the first place. But, what's done is done...I bought the house in Nov. 2010 and starting paying the mortgage in jan 2011. I guess I can go back to him, but he's a jerk.
0 votes Thank Flag Link Wed Oct 26, 2011
Not enough information to offer valid guidance, how did the loan officer do when you purchased the home? Helpful, observant, offer advice? If your purchase was recent they may still have your file in the office. Only by reviewing the entire picture can anyone tell if this is possible. Cash out refinances are not easy by nature, so having someone that knows your situation is very helpful.
0 votes Thank Flag Link Wed Oct 26, 2011
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