Jjddkk, Home Owner in West Rogers Park, Ch...

I want to refinance my investment condo but I'm afraid I won't make 75% LTV. A few other comparable units have foreclosed in my building.

Asked by Jjddkk, West Rogers Park, Chicago, IL Sat Aug 27, 2011

Advice? I have great credit and have taken out a mortgage in 2005 with 100% financing - no down payment. Now my rate is 7.375 and I've moved in with my partner to save money, and I have paid off quite a chunk of the mortgage (from 145K down to 112K today).

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Are your mortgages owned by Fannie Mae or Freddie Mac? If so, then you could be eligible to refinance into the Making Home Affordable loan program.

You can read the government’s info on it at http://www.makinghomeaffordable.gov/pages/default.aspx but basically it’s a loan program that allows someone to refinance up to 125% of their home’s appraised value – but with the caveat that your current loan needs to be owned by Fannie Mae or Freddie Mac in order to be eligible. http://www.fanniemae.com/loanlookup/ is Fannie Mae's loan lookup page & http://www.freddiemac.com/mymortgage/ is Freddie Mac's. The other is that your loan must have been originated before June of 2009. You also cannot have any private mortgage insurance (PMI) on your loan, or else obtaining new mortgage insurance is very difficult… if your loan-to-value started off at 80% or less when bought the home, then you should not have any PMI on your loan.

Even though the loan program goes to 125% of your home’s value, the only lenders seemingly going that high are your existing mortgage lender, because it’s a pretty high risk. When you go to a new lender, most are just going to 105%. Further, not many lenders are offering this program on rental properties either, just primary residences or second homes. However we offer it on investment properties, but cap out at 105%.

The regular rental property refinance programs by Fannie Mae & Freddie Mac (when your mortgage isn't currently owned by them) cap out at 75% which is why you are getting the resistance. It's possible that there would be non-conforming programs (meaning programs that do not conform to Fannie & Freddie guidelines) that would permit 80% LTV on a rental property, but I am not aware of any as usually the non-conforming loan programs are more restrictive than conforming programs when it comes to investment property financing.

Shane Milne | Loan Officer in Orange County, CA | NMLS #81195
Direct local #'s: 949-273-4161 or 646-257-4842
Lending in all 50 states, all types of mortgages
0 votes Thank Flag Link Sat Aug 27, 2011
like the mortgage brokers suggestion.. being afraid is a waste of time.. its like a rocking chair-something to do but gets ya know where- I think thats how it goes.. anyway.. call your mortgage broker of choice - the one who your friends and family use or i will se you up with a great one and let them decide.. basically they will evaluate you and see if its worth their time to risk a loan application as they only get paid if it closes..the risk goes from you to them..
Web Reference: http://www.joeschiller.net
0 votes Thank Flag Link Sun Aug 28, 2011
Thanks for the clarification.
0 votes Thank Flag Link Sat Aug 27, 2011
Anthony, it is for primary residences, second homes & investment properties.
0 votes Thank Flag Link Sat Aug 27, 2011
But regarding Shane's suggestion, I would ask him: Isn't the Making Home Affordable program only for owner-occupants?
0 votes Thank Flag Link Sat Aug 27, 2011
Sorry, Truilia felt the links were spam. If you google those programs they will guide to the spot to see if your property qualifies.
0 votes Thank Flag Link Sat Aug 27, 2011
There is a way! if your loan is currently Fannie Mae or Freddie Mac serviced (see links below to find out) you can refinance your property up to 125% of the value, even on investment loans. Some Fannie Mae properties are even waiving the appraisal. Rates are still in the the low fours so it is something I think you would want to look in to. The condo part will make it a little more difficult, but it is definitely possible. Google : "Freddie Mac's open access" or "Fannie Mae's D.U.refi plus" and you can see whats the program is all about. If you will wish to call or email feel free to do that as well, best of luck!
0 votes Thank Flag Link Sat Aug 27, 2011
JJ, the first thing I would recommend is to have a realtor who knows the area look at your unit, and find out what the likely value an appraisser would put on your unit. You can easily search area sold condos on my website, which is http://earlruthman.listingbook.com , if you give me a call or email I would be happy to look and give my opinion of value. Banks are also looking at the buildings financials these days, so it is very smart for you to gather the condo budget for 2011, condominium meeting minutes for 2011, have the management company contact info handy. Also have some sort of idea if there are owners in the building who are behind on their assessments, and what percent of the units are currently owner occupied. It's a lot of paperwork to refinance or sell these days, having a guide who knows the process will make all the difference in the world. Contact me, I can help.
0 votes Thank Flag Link Sat Aug 27, 2011
Your in a very tough position that a lot of people are in these days. All you can do is call up some various lenders and see if you can qualify.

If it gets to the point where its just too much still, you may have to consider a short sale.
Web Reference: http://AmericorpRe.com
0 votes Thank Flag Link Sat Aug 27, 2011
You are in the same position as millions of other folks. Have a few agents do a market analysis to see what the value might be these days. RP has been one of the worst hit neighborhoods.
Speak with a few smaller banks, not BOA, CHase etc and see if they might have more flexible terms.
0 votes Thank Flag Link Sat Aug 27, 2011
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