Posted on: 06th Apr, 2010 06:56 am
Hello, I have an 80/20, both with WF. The "80" is a 5-yr ARM, currently at 6.125%, that is set to reset at the end of this year. The "20" is a variable rate LOC that's now at 6.0%, but was as high as 11.0% back in '06 & '07. Both were interest-only, but I've paid some principal with each payment and have always stayed current. I have maybe 10% equity. I'm nervous about not being able to make the payments after the rate reset. I don't qualify for the new government programs. My credit score is in the 700-800 range, but WF will only refi 80% and I don't have the cash to make up the difference plus closing costs. I'm thinking a modification would be more appropriate. I do have a legitimate hardship - my girlfriend just started serving a life sentence so I'm raising our daughter by myself. I've seen a lot of informed, helpful responses in the forums. What do you guys think is my best option?
What syaye and county is property in? What are balanaces of first and second mortgages? Do you qulaify for a mortgage with just your income?
Cumberland county, Pennsylvania.
I have the exact balances at home. Is that relevant when my equity is so low? When I applied for them in 2005 it was with just my income so I would assume I'd still qualify.
I have the exact balances at home. Is that relevant when my equity is so low? When I applied for them in 2005 it was with just my income so I would assume I'd still qualify.
cumberland county in pa is notr a high cost county.
if you originally qualified with only your income, i can not think of a reaon why wells fargo would modify anything.
if you do not qualify for any of the existing government programs, you would not qualify for a modification. what other government program(s) are you referring to?
to qualify for a modification, you need to have a fannie mae or a freddi mac loan. to me that means you then qualfiy for freedie relif or fannie mae du refinance. that means you should at least be able to refinance the first mortgage and subordinate the second mortgage---all with wf. did you ask wells fargo?
the maximum fha mortgage in cumberalnd county is $271,050. if the balances of the first and second mortgages are less than that, look into refinance to consolidate both with fha mortgage.
if you got the second mortgage at purchase, combining the two into one refinance mortagge is possible with private mortgage insurance but maximum debt ratio is 41% as long as at least 90% equity
if you originally qualified with only your income, i can not think of a reaon why wells fargo would modify anything.
if you do not qualify for any of the existing government programs, you would not qualify for a modification. what other government program(s) are you referring to?
to qualify for a modification, you need to have a fannie mae or a freddi mac loan. to me that means you then qualfiy for freedie relif or fannie mae du refinance. that means you should at least be able to refinance the first mortgage and subordinate the second mortgage---all with wf. did you ask wells fargo?
the maximum fha mortgage in cumberalnd county is $271,050. if the balances of the first and second mortgages are less than that, look into refinance to consolidate both with fha mortgage.
if you got the second mortgage at purchase, combining the two into one refinance mortagge is possible with private mortgage insurance but maximum debt ratio is 41% as long as at least 90% equity
With conventional loan you can refinance up to 90% LTV (10% equity) for a rate and term refinance up to $417,000 mortgage with a 720 or higher credit score and debt ratio 41% or less. The requirement for private mortgage insurance eats up some of the savings for the lower interest rate and the fact that payments will be principal and interest may not make your payments lower now since you pay interest only now.
To combine both mortagges into an FHA mortgage, the maximum mortgage is $21, 050.
To combine both mortagges into an FHA mortgage, the maximum mortgage is $21, 050.
My hopes were that becoming a single dad would qualify as a hardship for loan modification.
I'm sorry, I should have been more specific. I was talking about the new federal Make Home Affordable program. The website's prequalifier said I didn't qualify. When I spoke with WF last year they said they couldn't do a Freddie or Fannie refi.
Thank you for explaining - my original total mortgage was for 105k, and the current balances are less than that. I don't like the PMI (who does, right) but the FHA conventional option sounds attractive, as do the Freddie/Fannie refis. I'll have another conversation with them about it, because obviously conditions now aren't the same as last year. Can you typically roll closing costs into the total or would those have to be paid upfront?
Thanks for the comments!
I'm sorry, I should have been more specific. I was talking about the new federal Make Home Affordable program. The website's prequalifier said I didn't qualify. When I spoke with WF last year they said they couldn't do a Freddie or Fannie refi.
Thank you for explaining - my original total mortgage was for 105k, and the current balances are less than that. I don't like the PMI (who does, right) but the FHA conventional option sounds attractive, as do the Freddie/Fannie refis. I'll have another conversation with them about it, because obviously conditions now aren't the same as last year. Can you typically roll closing costs into the total or would those have to be paid upfront?
Thanks for the comments!
You can roll closing costs into the new loan amount and still be a rate and term refinance.
It sounds like you can look at conventional with PMI or FHA. Do not discount one versus the other. Compare the two if you are eligible for both.
Conventional with PMI has stricter debt ratio guidelines--41% maximum and stricter credit score requirements at 720 score or higher. If you qualify for that, then you qualify for FHA.
FHA always adds the Up Front Mortgage Insutance Premium wich now is 2.25% of the loan amount and always has its own Monthly Insurance Premium. So, compare the two. Do not decide riught now FHA is better because conventional has Private Mortgage Insurance.
The goal and benefits are can you get out of what you have now while rates are low and go from interest only.
Also, conventional you are going to need that 10% equity because maximum loan is at 90% LTV. The FHA oan you only need 3% equity becasue loan can go to 97.75% LTV. In case you are a little off on your estimate of value, the FHA loan has lots of potential all things considered.
You are wellcome to check with WF. You can also check with any lender that does FHA.
It sounds like you can look at conventional with PMI or FHA. Do not discount one versus the other. Compare the two if you are eligible for both.
Conventional with PMI has stricter debt ratio guidelines--41% maximum and stricter credit score requirements at 720 score or higher. If you qualify for that, then you qualify for FHA.
FHA always adds the Up Front Mortgage Insutance Premium wich now is 2.25% of the loan amount and always has its own Monthly Insurance Premium. So, compare the two. Do not decide riught now FHA is better because conventional has Private Mortgage Insurance.
The goal and benefits are can you get out of what you have now while rates are low and go from interest only.
Also, conventional you are going to need that 10% equity because maximum loan is at 90% LTV. The FHA oan you only need 3% equity becasue loan can go to 97.75% LTV. In case you are a little off on your estimate of value, the FHA loan has lots of potential all things considered.
You are wellcome to check with WF. You can also check with any lender that does FHA.
Hi CoreyR,
Jveenstra is right on the money with everything he has told you. If you check with WF and they give you the run around... Do a search on here or ask me any questions as I am a Direct FHA lender. we also have many other programs that may be of interest. Look forward to assisting you.
Jveenstra is right on the money with everything he has told you. If you check with WF and they give you the run around... Do a search on here or ask me any questions as I am a Direct FHA lender. we also have many other programs that may be of interest. Look forward to assisting you.