Making sense of Refinancing Today

May 27, 2009
Matt Isleib

 

Refinancing today is not a simple task. I liken one’s ability to refinance as a shell game on a street corner in the city. You watch intently on which shell the nut is under and you think you have the right answer and the dealer moves the shells around and around and then he stops and you think you have it all figured out and then, you were wrong!

That is what refinancing your mortgage is like these days. I am no pessimist; the glass is not half empty in my eyes. Call me a realist if nothing else. I have prospective clients call me all day asking and inquiring about refinancing and as God as my witness I have a different answer for each one that calls.

The premise of this blog is to help borrowers make heads or tails of the refinance process. LoanClassroom is the educational wing of Eversley Capital Mortgage LLC my mortgage company in Norwalk, Connecticut. Through LoanClassroom we help borrowers understand a process that once was so simple and now so complex. Here are some helpful bullet points on refinancing:

 

·         There are two programs out there that are in place to try and help borrowers. Both Fannie Mae and Freddie Mac have programs up to 105 percent LTV and no mortgage insurance. You need to have a clean mortgage history meaning no late payments, documentable income and your loan has to be owned by one of the two companies. For those that have purchased homes in the last three years or so this is your opportunity to refinance

·         If you have a second mortgage on your home it is going to potentially make things more difficult for you. Do not rule the option out. It may just make things harder.

·         Stated, no income, no documentation loans are a thing of the past. If that is the program that you used to obtain your mortgage than regardless of credit score if you cannot document income then refinancing will be near impossible.

·         If you are presently late or have been late in the past year with your mortgage then refinancing may not be your best bet. Try to contact your loan servicer and explore a loan modification with them.

·         The most important thing is NEVER assume that you cannot refinance. There are new programs like the Fannie and Freddie one that I mentioned that may allow you to refinance now. Always explore the possibility; it does not hurt to inquire.