You should give Nate Lindsey a call. His number is (714) 394-0506. He works for Bankers Funding which is an affiliate of Wells Fargo Home Mortgage. He is the best lender I've ever come across and I've met a lot of them. I will put his website link in the Reference below.

Shanna, I believe your savior may be refinancing the first via FHA up to 97% and subordinating the second for a max CLTV of less than 125%. I've had a few borrowers in your situation and we were able to refi the first and subordinate the second even if you owe more than the house is worth. The big key is the second mortgage. We would need to make sure that the second is willing to subordinate. In most cases like yours they will agree to do so, especially if your in a 5/1, I/O, neg-am, or other type of loan program that lenders have been taking a loss on. We do have FHA loan limits in our system now, however we are still waiting for the new rates to take effect. Please feel free to contact me to review how the process works.

Good morning Shanna. The loan re-financing process can be difficult and confusing to navigate, which may be why you have received some conflicting answers.

With the tightening credit market and more stringent lending conditions, you will have a difficult time refinancing your home without any equity. The problem is that lenders now want to make sure that if their clients default on their loan, they will have something to take back in terms of the value of the home they are insuring. There are 100% loan still available. However, the interest rate is not as competitive as loans for only 80% of the appraised value of the home.

That being said, you may have an opportunity to get a lower interest rate for a jumbo loan before the end of the year with the passage of the Economic Stimulus Act of 2008. Under the Act, the Federal Housing Administration (FHA) has increased the limit on the loans it will insure to up to 125% of the area median housing price in areas where the median is between $271,050 and$729,750. These limits will remain in effect until December 31, 2008. Beginning January 1, 2009, the loan limits will return to the previous limit of $362,790.

The new FHA loan limits are based on the county in which the property is located. The FHA loan limit increase that will be in effect in Orange County through December 31, 2008, is $729,750 for a single-family residence. As you are only seeking a loan of $620,000, that amount would qualify for a loan that is guaranteed by the FHA if you secure it before the end of the year.

I hope this helps Shanna! If you would like to get an idea of the interest rate you qualify for on a re-finance of your home, please feel free to contact me and I will provide you with an individual rate quote.

Warmest Regards,
Amanda R. Wheeland
Real Estate Broker & Lawyer
(949) 697-4466