We get questions constantly in regard to “upside down borrowers” who want lower rates but who also want to maintain their credit.
Option #1: Du Refi Plus – If a borrower has a Fannie Mae loan, he can refinance into a new Fannie Mae loan with No Mortgage Insurance even if his loan-to-value ratio is up to 105% (or higher with some lenders). Freddie Mac has a similar program, but the rates are much higher.
Option #2: A “Short Refi” – This is a relatively new program recently OK’d by HUD. It allows borrowers to get a new FHA loan at 96.5% of CURRENT appraised value and pay off an existing loan even if the existing loan is a much higher amount (the existing lender will accept a “short pay-off”). These loans are subject to all kinds of rules; they still require existing lender approval; and they take a long time to close, but they are a great way to shave off a lot of principal for upside down borrowers. These borrowers must be current on their payments, and the homes must be owner-occupied as well.
Founder/Broker | JVM Lending
(855) 855-4491 | DRE# 1197176, NMLS# 310167