Question by Danny S: Can we refinance a house that is now worth less than the mortgage?
We bought the house in 2006 for about $ 251,000, put 20% down and have a mortgage of about $ 194,000 left for 30 years at 6.6% interest. Looking at the house value, it is now probably only worth about $ 190,000 or so and want to refinance with new rates at about 5%. We have never been late on the payments and cannot show a financial hardship. Any suggestions?
Answer by ☼AstrologerJuliAnne☼
Believe it or not, you actually would probably qualify to refinance with the new bill that was signed to help homeowners who are underwater. Your loan to value is still manageable. Call your lender and see what can be done. If you can qualify for the 5% rate, that would be a good savings for you!
Even IF you had to come to the closing with 4k, that still would be worth it.
Add your own answer in the comments!
The best option for many homeowners is to try and work out a mortgage modification with their mortgage holder. This process basically involves the note holder collecting financial documents to make sure the borrowers can still pay the loan without causing financial difficulties. This is just like a normal loan application.
Then based off the financial worthiness of the borrower the lender may choose to modify the adjustable rate mortgage into a fixed rate or temporarily stop the adjustment of the mortgage for a set period of time.
Although there is no guarantee that the lender will do this you do have a down housing market on your side. Lenders know they will be sitting on your house for many months and more then likely lose money when they sell it. They would much rather keep you in the home so they can protect their investment in the property and maintain a good bottom line.
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