FHA loan

Asked by Amber, San Diego, CA Fri Apr 25, 2008

I am interested in purchasing a new home and wonder if you would be able to advise me on a problem I am running into. I currently have a condo and owe around 320,000 with an FHA loan. I have applied for permission to rent the condo in order to purchase a larger home and it was denied. It appears that my condo is worth considerably less than my loan amount. Currently I have quite a bit of funds remaining after my current mortgage each month and have been putting away these extra funds for 5 months. My main goal is to purchase a larger home. Do you think its worth paying for an appraisal to see how much I would need to pay down my current mortgage in order to refinance? Or should I hold on to the extra funds until there is a market change? Or are there any other ways you can suggest for me to get either into a larger home or on my way toward that goal? Thank you for your time.

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4
Rob Weber, Mortgage Broker Or Lender, Plainfield, IL
Sat Dec 27, 2008
Amber,

If you haven't found a solution to your financing by now, you'll need to put the brakes on doing anything until you can pay down your current home to a 70 or 75% loan (depending on how you're trying to finance the new home). Fannie, Freddie & Ginnie Mae (conventional and government investors) now require equity in your existing residence that you live in to be able to buy a new residence. This is to prevent what is now commonly known as "buy and bail" practices. A buyer would buy the new home and state they'd rent the old one out only to walk away from the "departure" residence after closing on the new home and let it forclose.

If you haven't purchased your new home, the only option left is to do a FHA Streamline refinance. You could essentially lower your rate without being subject to the appraised value of your home. You'll need some of that stashed cash to close as you most likely won't be able to roll those costs into your new loan. On a 300k+ loan, if you dropped your rate from the mid 6's to the mid 5's, you could save ~$250/mo. Long term. You could then take that savings and make principal reductions every month and pay your loan down fairly quickly, hopefully putting yourself in a position to buy that new home in a few years.

Rob Weber
Wells Fargo
312.274.4136
rob.weber@wellsfargo.com
Web Reference:  http://robweber.com
0 votes
Tony Grech, Mortgage Broker Or Lender, Southfield, MI
Sat Dec 27, 2008
Hey Amber
I was poring over some of the old questions here and came across yours again. I'm surprised no one mentioned the FHA streamline refinance. If you have an FHA loan presently and you still occupy it as your primary residence and you are current with payments, I can refinance your loan with no appraisal or credit check required. If you are still looking for a solution, then feel free to call me. No obligation, just a 10 minute phone call to get some basic info. Give me a call if you are interested.
Tony 313-622-7383
0 votes
Tommy, , Fort Lauderdale, FL
Wed Dec 17, 2008
You maybe able to refinance with your current lender for 90% or less of todays appriased value under the new FHA Hope for Homeowners programs.
http://portal.hud.gov/portal/page?_pageid=73,7601299&_da…
0 votes
Elizabeth Ti…, Agent, Detroit, MI
Fri Apr 25, 2008
Amber-
You will have to weigh the difference in costs for sure in what you owe and what you have to put down to refinance. But I am not sure if that is the best situation right now. You have a few options; 1: talk to a mortgage lender and get the advice on refinancing to be sure that that is a viable option or if even a bridge loan is possible for you. I would only do this if your condo has good sellability within a reasonable short period of time. 2: get in contact with a real estate agent in your area that can do a CMA for you on the current selling and listing conditions in your area. If your condo association won't let you lease your place out and you are still intent to get a larger home you should go through the proper research with loans and the selling market.
Web Reference:  http://www.lizindetroit.com
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