Mortgage Loans
Conventional and Reverse Mortgages


Am I eligible if there is a lien on property?

Generally you should pay off the lien and then refinance. But depending upon the situation, you can file a quiet title lawsuit action so that any kind of title problems can be eliminated.

What is Seasoning?

Lenders often require you to make payments on an existing mortgage for at least 12 months before allowing you to refinance. This is known as seasoning.

Do I need to subordinate second loan if I refinance the first?

Yes, because if you do not subordinate the second loan, it will be treated as the first lien on your home whereas the refinance loan will be the secondary lien.

Will lender allow me to refinance if I quitclaim home?

The lender won't allow you to refinance because you are transferring away your rights to someone else. So, at the most, he may allow the new owner to refinance the loan.

Do I need to pay PMI?

PMI is meant for conventional or conforming loan whereas MIP is for FHA loans. Fannie Mae requires one to pay PMI premiums when the loan-to-value ratio exceeds 80%.

Should I refinance with poor credit or file bankruptcy?

Instead of refinancing with poor credit and getting higher rates of interest, its better to file chapter 13 bankruptcy. The trustee will develop a repayment plan based on which you'll be making monthly installments. It will help improve your credit because instead of paying nothing, you're at least making some payments.

Can I force ex-spouse to refinance after divorce?

You can request your ex-spouse to refinance the mortgage after divorce but she will have to submit documents such as divorce decree, quitclaim deed, income documentation etc.

Should I refinance to consolidate credit card debts?

You may do it only if you can afford to pay off the refinance loan in full. It isn't a wise decision to put your home at risk because if you fail to pay off the loan, you may lose the home.

Can I refinance after bankruptcy?

Yes, you can refinance but wait for some time to get the best rates. That is, for chapter 13, you may get better rates on your refinance at least 2 years after the discharge and for chapter 7, it should be 4 years after discharge.

Can I refinance while I am in bankruptcy?

Yes, you can go for it but you will need the bankruptcy court's approval in this regard. You will have to provide the lender with the bankruptcy papers. The lender will require you to make at least 2 years of payment in the chapter 13 plan after you've filed bankruptcy. The equity you've built while following the Chapter 13 payment plan is also considered.

Can I refinance if home value is lower than what I bought it for?

The home value may reduce from what you've bought it for but it shouldn't be less than the balance you owe. If the home value is still higher than the balance, and you have good credit and income, you can qualify for 100% rate term refinance.

What if I don't get appraisal report prior to refinance?

You have the right to ask the lender for the appraisal report. In case he doesn't respond, you should file a complaint with the State Department of Banking and Finance.

Can lender cancel loan due to low appraisal?

The lender may cancel the loan if the appraised value comes out to be lower than expected. A low appraisal will not help in case you need extra cash from the refinance.

Should I pay tax on extra cash from refinancing?

If your name is on the loan, then you'll have to pay income tax on the extra cash because you have pulled cash out of home equity.

What are the different cash-out refinancing options?

The loan options can be innumerable depending upon the situation you are in. For example, 30 year Fixed Rate mortgage, 5 year Interest-only, 5 year Interest-only ARM and 6 Month Libor Cash-out refinance are some of the options.

Can I refinance 80% first mortgage leaving out the 20%?

Yes, you can go for it but you need to obtain a subordination agreement for the 20% second except if you are in Texas.

Can I refinance 80-20 loan with FHA loan?

Yes, you can combine the loans and refinance with an FHA mortgage. Lenders approved by the FHA offer financing for up to 97% of the home value. Depending upon the loan limit in your area, you may qualify for it.

Which Refinance option is best if I have late payments on ARM?

You can go for the FHA Secure loan program but you shouldn't have late payments prior to the rate adjustment. Also, you need to satisfy other qualifying criteria.

Should I take a reverse mortgage or go for refinancing?

If you are 62 years or more you should definitely investigate reverse mortgage or refinance depending upon the situation you are in. You need to compare the costs charged by various lenders and select the right one for you.

Should I refinance with interest-only or take a reverse mortgage?

If you are looking for cash-flow in the next 10-20 years or a large lump sum payment, take a reverse mortgage (for 62 years and above). Otherwise, you may refinance into 30 year fixed rate loan. But interest-only loan may not be a good option.

Can I refinance reverse mortgage to pay off bill?

You can refinance reverse mortgage into another reverse loan or any other loan. But prior to that, check if you can use the line of credit option. However, it doesn't make sense to refinance if the house hasn't appreciated in value, since the original loan was offered. This is because closing costs and other fees on the refinance loan will use up the extra benefits of refinancing.

Can lender foreclose after I am into refinance agreement?

The lender can foreclose the property even though you're into a refinance agreement, if you're late on payments for 120 days. If the state court doesn't help, you can move to federal court. But consult with an attorney on how to proceed on this issue.

© Dawn Smith