How to Refinance Upside-Down Home Mortgages
It's wise for homeowners to take advantage of lower interest rates and refinance their mortgage loans. Regrettably, if you're upside down on your home loan (owe more than the property's worth), getting a home lender to refinance your mortgage can prove difficult. While challenging, it's possible to get a new home loan when you owe more than the property's worth. The key is knowing your options. Does this Spark an idea?
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Instructions
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Improve your credit to qualify for a mortgage refinance. Maintaining a good credit score is key to getting approved for a refinance. Get your totally free credit report from the Annual Credit Report website (see Resources for link) to check for mistakes that can lower your score. Pay your bills on time and reduce your consumer debt. Aim for a score of 700 or higher.
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Provide proof of income for the past two years. Make copies of your yearly tax returns or paycheck stubs to show proof of steady income.
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Pay for a home appraisal. Learn the value of your property with a home appraisal. Appraisal fees are typically between $150 and $400.
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Use a mortgage broker. A home loan broker can connect your with lenders who refinance upside-down home loans. FHA's streamlined refinance and HARP loans are government-backed loans for borrowers who need refinance assistance.
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Bring cash to closing. Use your own personal money from savings or a retirement account and apply this money as a down payment on your home refinance. For example, if you owe $100,000 on your mortgage loan, and your home is worth $90,000, a ten percent down payment or $10,000 can help you qualify for the refinance.
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References
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Comments
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windyp
Dec 01, 2010
For those who have Private Mortgage Insurance(PMI), or Lender Paid MI you will need to go back to your original lender to modify/streamline your loan. No mortgage company will touch your loan due to the insurance. If your original lender was purchase by another company then you will need to go to them for the streamline. Make sure you are current on your payments for the last 12 months and explain why you are going back to them, they are the institution that has been insured for your loan amount. Fannie Mae/Freddie Mac will not allow another institution to touch your mortgage. Hope this helps some of you out there. Windy
