Challenges and options for refinancing your personal residence!
Mickey Sullivan, Trusted Mortgage Advisor of Evergreen Home Loans
Challenges and options for refinancing your personal residence! Today’s lending environment can be intimidating for homeowners trying to navigate through all of the options that are available today in refinancing your primary residence. While today’s historically low rate environment is appealing to many homeowners, many are kept from taking advantage of them due to declines in home values and loss of equity. The following offers an overview of the different refinance options and the flexibility of each program with regards to appraised value and homeowner equity:
** Conventional refinances today consist generally of two types and your best solution may depend on whether your existing first mortgage is owned by either Fannie Mae or Freddie Mac (also known as Government Sponsored Enterprises or simply GSE’s). To see if your 1st mortgage is owned by Fannie Mae, please go to this link: www.knowyouroptions.com/loanlookup, and to see if it is owned by Freddie Mac, please go here: www.freddiemac.com/corporate/
- If your existing first mortgage is owned by either of the GSE’s, then you just might qualify for a refinance without an appraisal and where your loan-to-value (LTV) could very well exceed 125%. Homeowners can research information themselves or consult with a professional to assist with the process.
- But if your existing first mortgage is not owned by one of the two GSE’s listed above, then a traditional refinance may be in order and that will require an appraisal. The available equity in your home now becomes a key factor.
**Federal Housing Administration (FHA): The FHA refinances today also allow homeowners to take advantage of our historical low interest without regard to how much he or she owes compared to the homes current value but there are other factors that come into play as well. Today, more so than ever before, product guidelines are extensive so consulting with a professional is advised. To make sure your FHA 1st mortgage is under the county loan limits set by the Department of Housing (HUD), please go to: https://entp.hud.gov/idapp/html/hicostlook.cfm and simply input your state and your county where the home is located.
** Veteran Administration (VA): The VA refinance program allows veterans to refinance today but one of the key factors is that a VA appraisal is required and the new refinance loan amount cannot exceed 100% of the new appraised value. This is a great alternative for those Veterans who qualify and whose home values have not dropped below the loan amount needed to refinance.
** US Department of Agriculture (USDA): The USDA also has a refinance program where existing USDA home loan owners can refinance without any regard to appraised value. As with all of these programs, consulting with a professional to help navigate through the many layers of guidelines is advisable.
Hopefully the information provided above removed some mystery from the refinance options available to homeowners in this market environment. The above information was meant to be a high level overview and does not include 100% of all information available for each program. Set your expectations correctly if you decide to refinance as the lending environment is more stringent today than it was 5 years ago so be prepared to provide a more detailed financial picture then maybe you have had to do in the past.
For more information contact your mortgage professional or feel free to give me a call.
Trusted Mortgage Advisor