Need to refinance!!

[ChitChat]

I would like to refinance! We've been in our home since January 2003 - Here's what's going on...

 

We have a FHA the 1st is $265,533 at 6.55% and the second is a California Rural for $16,170.00 at 8.00 -- 100% financing. DH and I bought the house at $269,500 and now it's worth around $300,000 in the bay area. Does anyone know if I can refinance.

 

Thanks

 

Chitchat

[DACMAN]

Why do you want to refiance? What is the purpose or goal?

 

CAn it be done? Probalby? Would it be worth it? Depnds

[Hideous]

chit chat where are you ?

 

see if you answer my questions i atleast coem back and say whazzup ;-)

 

 

i am goign to make a prediction please chit chat tell me i am way off base. you want to get some cash out so you can buy some damn toys ? maybe a boat or an RV ?

 

 

my cousin just did this had about 8 years on mortgage to go and refied for a 30 year term so he could buy a new truck a new boat and a new RV. so he increased things that cost him money by 3 lol. insttead of getting it to say buy some rental propertys or somethign that would actually make money.

[ChitChat]

Sorry I'm just now responding - The reason for the refi is that our mortgage is $2,265.00 amonth, don't nesscessarly want money out, but it would be nice. I just don't know if it's possible. Anyone have any solutions??

[valdana]

To answer your question first---YES, you can refinance.

 

Here are a couple of things to consider:

1. Because you have been in your house less than a year, some lenders may require that the VALUE of the old (purchase) appraisal be used, with a slight adjustment.

 

2. You may have a prepayment penalty, which means you will have to pay the equivalent of 6 months of interest. See your Final Closing Statements for the "per diem" on each of your loans.

 

3. Rates may not be much different than you already have (most likely), you should ask for a loan with no MI. Mortgage Insurance does not benefit the borrower in any way, shape, or form. It is a policy you pay into, and in your case, FHA is the beneficiary.

 

Hope this helps.

[ChitChat]

Valdana,

 

Thanks for your response - what I don't understand about the loan is:

 

We would like to move in 1yr - but my real estate agent said we couldn't move until 2yrs - I don't know why. I tried calling the broker that work on my loan but for some reason he won't return my phone calls :x I don't know whats that about. I did look at my loan papers and there is no prepayment penalty. I need to refi soon, but your right we might not get anything lower at this point , but what about refi the 2nd, or is there a way we could combine the 1st and second. This is a FHA

[valdana]

Hi Chitchat!

 

I’m not sure why your real estate agent would tell you 2 years. My understanding is that when you sign loan docs for an FHA loan that you agree to live in the house for at least 1 year. I would call the real estate agent and ask him, “why 2 years?”

 

As for your broker, brokers are notorious for not calling back past clients who have gotten a loan with them in the past year. Because it’s usually a complaint phone call. Some people may not like the fact that I let the cat out of the bag, but many, many brokers are “less than upfront” with their clients. (industry experience)

 

You may refi and put your first and second together. And you do not have to get another FHA loan. Judging from your credit scores, you should be able to get a very decent sub-prime loan with no M.I. and most likely up to 100% of your equity.

 

However, I do not recommend taking out all of your equity at this time, if you plan to sell soon. You will have to pay a certain amount of closing costs.

 

Also--If you still want an FHA loan, you must meet at least these requirements to be eligible for a cash-out FHA refi loan:

 

• If the property was purchased less than one year preceding the refinance, you are allowed to refinance up to 85% of the original sales price plus the allowable new closing costs or the appraised value plus the allowable closing costs (whichever is lesser)

 

• (If the property was purchased more than one year preceding the refinance, you can cash-out 85% of the (new) appraised value plus the allowable closing costs )

 

• All borrowers must credit qualify

 

• 2nd mortgages may be paid off with the cash-out refinance (the second mortgage must be at least 12 months old)

 

• Loan amounts may not exceed the maximum loan limits for the area (ALAMEDA COUNTY IS $280,749)

 

P.S. You can get your refinance from ANY broker that is licensed through the D.R.E. or Department of Corporations in the State of California. That is, they do not have to be local to you.

[ChitChat]

Thanks Valdana - I'm now better prepared - because I had no idea were to start. By the way are you a broker

[Becky20fan]

Could it possibly be that they said you shouldn't move within 2 years because of the capital gains laws??? If you've lived in your home less than 2 years you will need to pay huge taxes. There are a few exceptions, such as if you get a new job and have to move to be closer (and it's more than 50 miles), or extenuating circumstances (don't know what they consider extenuating - maybe an illness of a family member if you have to go to take care of them...).

 

Anyway, just a thought.

[ChitChat]

Becky20fan~ They never gave a reason why - I think I'll call him and see! Thanks

[DACMAN]

Becky,

 

Capital gains law will most likely not affect this transaction as Most homeowners now have a $250,000 exemption before they owe taxes. Plus if they woudl be buying another home it woudl most likely be rolled forward. However, Becky is partially right here as you are supposed to live in the home for 2 out of 5 yrs ---- check with your accountant!!!

 

If you are planning on selling in a year or so it is most likely a total waste of your time to be even considering refinaincing. Most liekly you will not cover the cost of refiancing in the savings.

 

Since i beleive you used the 2nd mortgage to purchase the home this woudl not be considered a cash out refiance. However, FHA will not allow you to use the appraised value for 1 yr. Thus you would not have enough equity to combine both. You coudl do a FHA stream but the savings woudl not be worth the cost.

 

As for the 2nd. This loan may have a prepayment as part of the Rural Cal program. This is why your agent may have mentioned the 2 yrs.

 

 

Stay away from any subprime loans. it is not worth it again.

[ChitChat]

Thanks DACMAN - I was waiting for your response - DH and have decided to stay in our home for at least 5years, please explain a FHA streamline..

Can I combine both loans and bring down the monthly mortgage payment, and maybe get a little money? Boy this is confusing.

 

Thanks