Many Las Vegas residents have been reaching out to me for help. The common question seems to be "I owe more than my home is worth, can I still refinance?" or "Can I still refinance if I am upside down in my Home Loan?"
You may recall a couple of weeks ago when I posted Upside Down? Need To Refi? This Program May Help! In this post, I outlined an FHA Home Loan that would allow a person to refinance if they owe more than their home is worth. FHA does not care how far upside down you are as long as you meet their criteria for the FHA loan. Some people may still be a little confused on the process so I will go into more detail.
You may be a candidate for this type of FHA refinance if:
- You can qualify for an FHA loan
- Your have a first and second mortgage on your home currently
- The first mortgage is less than 97% of the homes current value
- Your first mortgage loan amount is less than $304,000 (Las Vegas)
- Note: Even if you have fallen behind on your mortgage payment or have recent credit issues because of your ARM adjustment, FHA will still consider your scenario
What are the keys to making sure we can Refinance in this manner?
- Get your FHA Refinance Loan approved. In order to do this you must submit an application through an FHA Approved Lender.
- The lender will then order an appraisal. Appraisals in Las Vegas usually cost around $350.
- Get your current Second Mortgage to Re-Subordinate.
What do you mean Re-Subordinate?
Currently your second mortgage is a lien placed on your property behind your first mortgage. In not so technical terms, the first mortgage has first rights to get paid. Then the second mortgage gets paid. Lien positions (First, Second, Third, etc.) go in order of time they are put on the property. So if your current first mortgage got paid off through an FHA refinance, the second mortgage would slide into first position because it is the oldest lien. FHA will require that second mortgage to re-subordinate or go BACK into second position when the new FHA loan is closed. Nowadays second mortgage companies are usually very receptive to this option because it means they have a better chance at getting paid.
How do I Re-Subordinate?
I will help you with that. Once we get an FHA approval and get our appraisal done, I will put together a re-subordination package for you. We will consult with your second mortgage bank about the fastest process and what their fees are. Their fees are usually around $250.
I fit into the above scenario and think I understand the process. Now what?
If you think this sounds like your situation or even close to your situation, feel free to contact me directly and I can help you move forward.
Your mortgage partner for life,
Rey "Steak Dinner" Gallegos
Senior Loan OfficerFive Star Mortgage Email: rey@steak-dinner.com
4NevadaMortgageLoans.comYour complete community mortgage broker
Proud member National Association of Mortgage Brokers
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Great education Rey, thank you! Listen, is there anything out there for someone upside down and in a second that is a balloon set to recast soon? Is there anything you can say or do for the mortgage company to hold off until they have enough equity?