Until recently I did not realize that it was even possible to refinance a mortgage that was upside down. I assumed that if someone owed more on their home then it was worth they were out of luck. I figured these record low rates were just out of reach for them. In fact… Out of reach for ME.
Yes… just like hundreds of thousands of other American home owners I now owe more on my home then it is worth. At least it is really close. I may be able to break even.
I am watching the interest rates drop and drop and drop and drop… you get the picture, and I just have to sit on my “terrible” 5.5% 30 year fix.
Well I have some great news for those of you in this situation.
There is a loan specifically created for people in this scenario. There are a few guidelines and here is what we know so far.
- You current loan has to be a Fannie Mae or Freddie Mac loan to qualify as this is a Feddie/Fannie loan. This is easy to find out. For Fannie Mae click here. For Freddie Mac click here.
- You cannot be over 105% LTV (loan to value). This simply means that your house value can only be 5% lower than what you owe on it. (ie. If you owe 210K, your house could be worth 200K)
- In order to avoid mortgage insurance your current loan cannot have it.
- You must have a credit score of 680.
These are the main guidelines for this loan. If you are in a similar situation it may be worth calling your loan officer to see what they can do for you.
If I can qualify for this loan I would personally drop my rate into the low 4% range and save big bucks every month. I already have my application in as we speak.
If you are in Washington State check out Clark Davis.
Remember that your loan scenario is going to differ from others. Contact a professional to get all the details you will need to see if you qualify.