does anyone in the Twin Cities help with short refi's?

Asked by Rjones238933, Prior Lake, MN Fri Jun 24, 2011

Why can i Not get help on a refi on my upsidedown house, i had a drop in pay and have an interest only jumbo loan that i can no longer afford. I was told the only option i have is a short sale. I would rather stay in my house.

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, ,
Fri Jun 24, 2011
Your existing lender has to agree to do a short-refi, but if they do then it is certainly possible with a new FHA mortgage. Requirements are explained in detail at… however the bullet points are:

1. Your new loan amount needs to be within FHA loan limits - which for Scott County, MN is $365k.
2. The homeowner must be current on the existing mortgage to be refinanced
3. The existing first lien holder must write off at least 10 percent of the unpaid principal balance
4. The refinanced FHA-insured first mortgage must have a loan-to-value ratio of no more than 97.75 percent (so if your home appraises for $373,402 then you could get a new FHA loan amount of $365k)

One item to note, is that the program allows for a 2nd mortgage up to 115% of the home's value (called combined loan-to-value, or CLTV for short). So the current mortgage lender can convert the portion of your loan over the amount needed for FHA financing into a 2nd mortgage, and it's permissible per the loan program.

Not a lot of lenders offer it though, so it is a tough find.

FHA's regular refinance program will do the same - it will have all of the 4 requirements above except for #3, and you cannot put a 2nd mortgage on the home over 97.75% doing what you'd be doing. See… for those requirements on maximum CLTV when you are refinancing with FHA. Many lenders are doing that, including us.

However if you are on an interest only loan, what type of monthly payment would you find affordable? What is your payment now? What is your interest rate now? How much is owed on your mortgage? How much is your home's value? Those (among other important information) will help determine if:

1. Refinancing would even help out your payment
2. What the new refinance terms could be
1 vote
Chris Block, , Saint Paul, MN
Mon Jun 27, 2011
I am interested to know Matt what particular program pays out $12,000 for relocation money? Oh, and HAFA is not always the best route to go either it just always depends on who is the lenders and what does the financials look like.

I will just reiterate with everyone else that a loan modification should be incredibley difficult to obtain, however there are local goverment assistance programs helping with loan modifications, and if your loan is backed by Fannie Mae they are improving the loan modification process. You should be getting help with this instead of doing it on your own.

You could always try to do a short on the 2nd only and threaten bankrupcty, immenant foreclosure, etc... and try to settle? Would that help you make the payments on your house I have no idea but it is possible.

There is a process to short sales, and I am not sure if all the bases have been covered on the loan mod or not. It does not seem you are comfortable with the situation so my guess is no. There is not enough information for me to give a definitive answer.

You can always contact me if you have further questions! I write a lot about loan modifications on my blog so feel free to check it out below..

0 votes
Donald James, Agent, Edina, MN
Sat Jun 25, 2011
In a difficult situation like yours you need a Realtor who can guide you through the mess, an agent who is experienced in problems like yours. Most Realtors may not be able to assist you.

Is your Realtor an experienced short sale negotiator? How many short sales has he / she negotiated in the past year?

If you are dissatisfied with your agent you should interview two or three experienced Realtors. Ask them the questions above.

Our Real Estate Attorney is an experienced short sale negotiator and may be able to help.
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Matt Jahr, , Sartell, MN
Fri Jun 24, 2011
I wouldn't think that your current agent is only looking out for himself, it's more likely that he's just unaware of available programs. Short sales in general are a tremendous amount of work, and most agents won't do them at all because of it. If you have an agent who is doing the short sale, I'm sure they have your best interest in mind.

Shane is absolutely right about the FHA guidelines. I have tried helping my clients into that program a couple of times, but didn't have any luck. The problem is that, while FHA allows for it, the underwriting and servicing lender have to approve it within their scope of lending, which as he said, is very tough. On top of that, your current lender has their own guidelines as to what they will and won't allow, and what their investor's intentions are regarding your loan.

If you are going to try a short sale, be sure your agent applies for a HAFA short sale on your behalf. It sounds like it may be the best fit for you, and can get you relocation assistance money.
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Rjones238933, Home Owner, Prior Lake, MN
Fri Jun 24, 2011
from what i understand is that there are home loan Mods and there is also a short refi. I'm not looking to profit from the refi, i just have a rate at 6.5% on the first and 8.75% on the second. both are very high. I'm in the process of a short sale now, because my new agent told me that was all that i could do, he said nothing about a relocation assistance money at all. I told the agent that since i had a drop in income that we might have to move to a different state so i could take on another job. that relo money would be helpful. My agent seems to be only looking out for himself and not whats helpful for me.
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James Fogarty, , Prior Lake, MN
Fri Jun 24, 2011
I would suspect that part of it is that if you do a short sale, you are not supposed to "profit" from the short sale transaction. If you were doing a 'short refi' of sorts, then you would actually profit from the exchange. Basically, you get a lower rate or lower amount owed, plus you get to stay in the house.

If you need assistance, I'm located in Prior Lake and would love to talk with you.


0 votes
Matt Jahr, , Sartell, MN
Fri Jun 24, 2011
I believe "Loan Modification" is what you are referring to. They are extremely difficult to come by because on one hand you need to exhibit the hardship and drop in income to support it, but at the same time, you need to show the ability to repay the loan according to the modified terms; kind of a Catch 22.

We specialize in short sales, so in the event that you do go that route, I'd be happy to help you out. We can usually get our clients qualified for up to $12,000 in relocation assistance money under one of the 2 or 3 government backed short sale programs.

Loan modifications are tough, so good luck. I wish you the best.
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