Should I refinance if i owe more than my house is worth?

Question by chirailfan: Should I refinance if i owe more than my house is worth?
I have two mortgages, 1 is a 30 year fixed at 6.5% and another at 8.5% interest only. If you combine the amount i owe on both with the market, my house is no longer worth as much as i owe. However if you look at them separately, my house is worth more. Should I refinance?

Best answer:

Answer by GEEGEE
It’s highly unlikely any lender will consider you as a candidate for refinancing. They have all really tightened the reigns for just about all borrowers but someone in your shoes would be huge risk, even if you’re good for it.

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5 Responses to Should I refinance if i owe more than my house is worth?

  1. estielmo says:

    You won’t be able to unless you pay the difference as a lump sum.

  2. codysdoor says:

    Yes, you should refi if you can regardless of if you owe more than the house is worth.

    A refi is just getting a new loan to pay off an old loan. The value of the has nothing to do with the decision*

    (* As a refi is a new loan, if you owe more than it’s worth, then you’re not going to be able to get a large enough new loan to pay off the old loan because your house is collateral. You’ll have to bring money to closing, or just do a refi of that terrible 8.5% loan)

  3. antelopian says:

    You will not be able to refinance both of these loans together due to the negative equity. Most lenders on the 1st mortgage will only due a refinance if 1st mortgage balance is under 95% loan to value and the 2nd mortgage lender will have to approve the subornation agreement. On the 1st mortgage is it a FHA loan? The FHA loans you can streamline refinance regardless of your equity. Check out they have some good resources there.
    Best of luck!

  4. Pengy says:

    Sorry but that is not going to happen as you have no equity and in todays market they are looking for 20% With that interest only loan you actually owe more than when you took out the loan because you pay nothing on principle.

  5. Noneya says:

    It is possible to refi the first with an FHA loan as long as the 2nd will re-subordinate.

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