Posted on: 26th Mar, 2011 11:25 pm
my husband and i have an 80/20 mortgage and want to take advantage of the low interest rates. we asked our mortgage broker and they indicated that due to the decrease in the value of our home we cannot refinance. is this true? are there other options out there?
Hi nelria,
Welcome to Mortgage fit,
It is true that due to decresed home value (effect of subprime) one may not be able to refinance the existing mortgage...To understand it better let us take an example...
If you had taken a mortgage of 300K..and till date you owe them 250K ...but due to market condition..value of your home has decreased to 120K then in this scenario you owe more than the value of your house so there is no question of refinance at lower rates if the home prices have dropped more than 50% of its initial value...
Feel free to ask any further query if you have.....
DIPA
Welcome to Mortgage fit,
It is true that due to decresed home value (effect of subprime) one may not be able to refinance the existing mortgage...To understand it better let us take an example...
If you had taken a mortgage of 300K..and till date you owe them 250K ...but due to market condition..value of your home has decreased to 120K then in this scenario you owe more than the value of your house so there is no question of refinance at lower rates if the home prices have dropped more than 50% of its initial value...
Feel free to ask any further query if you have.....
DIPA