Trying to refinance but underwater

Asked by Daniel Fink, Delray Beach, FL Thu Jan 15, 2009

Is there anyway to refinance while being underwater or close to break even? i live in coral trace and believe my place is worth maybe 215-230k, i owe 224 and bougth in Jan 08 for 239. Want to refinance and get rid of PMI but seems impossible without dropping 60k into the mortagage to get it 80% to value, but I don't have that kind of money. Any suggestions? Thinking I may just have to save for 3 years or so, wait till I get a little equity built up, then drop a big payment to put ourselves at 80%.... I'm hoping I might be eligible for a modification from our lender, does anyone know the criteria to get this done? we're current on our payments, have a combined base income of 83k (although I made close to 45k in commissions last yr, not sure if that would count), my monthly mortgage is 2200. Hoping for at least an interest rate reduction, anyone know the criteria to qualify (my lender is wells fargo)

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Jack Wilson, , Florida
Wed Feb 29, 2012
WHAT IS A FLORIDA HARP REFINANCE? Originally started in April 2009, the Florida Home Affordable Refinance Program AKA (HARP) is a Florida mortgage refinance program designed to assist underwater Florida homeowner’s with conforming / conventional home mortgages. However, under the old HARP setup, restrictions on Loan to Value of 125% and large interest rate adjustments for refinances over 100% LTV meant that many underwater Florida homeowners were not eligible to refinance.…
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Ron Beebe, Mortgage Broker Or Lender, Downingtown, PA
Thu Oct 15, 2009
Hi Daniel-
I work directly for Wells Fargo and can originate in Florida. Please contact me through my website if you want to speak directly with a Wells Fargo empployee that knows the HARP (Fannie or Freddie refinance programs) from bolts to nuts.
Thank You,
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Mark Doring, Agent, Coconut Creek, FL
Sun Jun 14, 2009
You could very well be eligible for a refinance under the Fannie Mae or Freddie Mac DU Refinance Plus Program which allows borrowers to refinance up to 105% of the appraised value of the home (no cash outs). Fannie Mae's program is a lot more lenient when it comes to rolling closing costs into the loan and there are some other rules differentiating the two programs but you must have either a Fannie Mae or Freddie Mac loan to qualify Currently, the rates are around 5.75-5.875% under this program. However, based on the very limited information you provided, I would not guess that your loan is either with Fannie or Freddie.

If your loan is currently an FHA loan, then you could be eligible for an FHA streamline refinance. This refinance also does not require a re-appraisal and there are no hits at the credit score you are providing. Rates for this loan are also around 5.75-5.875%. You will have to keep your PMI but your monthly savings could be in the $200-$225/month range.

I am a local mortgage broker in living in Boca Raton with my office based in Fort Lauderdale. I would love to discuss what options may be available to you. Please contact me at 561-929-0428 or at
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Daniel Fink, Both Buyer And Seller, Delray Beach, FL
Thu Jan 15, 2009
thanks for the adivice, to be more specific I have a 7.25 interest rate (really want to get this down), my wife and I are both on the mortgage and have pretty good credit - i think we're 670 and 680 respectively

I'd like to try to refinance, but whats frustrating is just to have a shot at it, I have to pay $400 or so for an appraisal which is pretty risky as I don't think the guy will even take a look around my house to see what we've put into the interior (ie 25k for granite, backsplace in kitche) - he's just gonna see that the place next door sold for 225, and since mine is a 2 bed and next door is a 3, this means he'll probably put me 200 or so which is 25k less than i owe...
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Tony Grech, Mortgage Broker Or Lender, Southfield, MI
Thu Jan 15, 2009
Hey Daniel,
You didnt say what rate you were at now, but I'll add my two cents anyway.

You can't finance more than the home is worth. Best bet is FHA, which like Luke said allows a high LTV. FHA however charges a 1.75% up-front fee (called MIP) on refinances AND monthly PMI would be mandatory so this may wipe out any savings generated by a rate decrease.

You should definitely start with talking to Wells to see if FHA is an option and if it will save you money. If not, then at least ask them about a loan modification. The kicker there is that normally they will only modify your loan if you demonstrate hardship and the inability to make your payments at the current rate. If you're just cheesed that you're hearing about all these great rates and you'd simply like to take advantage then you're probably out of luck.

The moves that the government is making to try to force interest rates down is aimed at A) helping people having difficulty making payments avoid foreclosure and B) enabling renters to become buyers, thus taking some of the excess home inventory off the market. While this doesn't help lower payments for you or I, who pay our bills on time, the intent is to stem the foreclosure problem and the benefit to us is that we hopefully won't continue to lose equity in our homes.

Best of luck,
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Luke Allison, , Asheville, NC
Thu Jan 15, 2009
I will assume that your credit is good but even with a good credit score, probably the best route to go would be an FHA loan. Rates should be between 5.00-5.25% an the mortgage insurance is really inexpensive - $100/month on $224k.
Your payment with P&I and MI would be $1,337 and you can add the taxes and ins to that.
You can go up to 97.75% of your home's value so you may need to bring something to the close, but nothing like if you were trying to avoid MI altogether.

If you have any questions, feel free to call me
Luke Allison
Flagstar Bank

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Scott Miller, Agent, Boca Raton, FL
Thu Jan 15, 2009
Hi Daniel,

There really is no way to refinance your mortgage if your 'upside down' or 'underwater' as you wrote. The best alternative is to try to modify your loan with your current lender. You would not be able to switch banks or mortgage companies while you have little-to-no equity in your home.

I think a good place to start is with Wells Fargo. If you need an attorney or someone to help with a 'workout', I can recommend several professionals to you.


Scott Miller, Realtor®
Estate Specialist
Commercial RE
Business Broker
Realty Associates
561-716-4060 direct
561-451-9377 fax

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