Equal Home Finance Bureau ALERTS!

Refinancing over 100% LTV

To the Equal Home Finance Bureau:

I currently have a 1st and 2nd mortgage with the old Money Store, now HomeEx. The 2nd is at a 125% ltv ratio and I would like to redo the 2nd at a lower rate.

The house will now appraise at a higher value than when the loan was secured, but not yet to the total value of the 2 loans. It would probably be $5-7000 short of the total appraisal.

HomeEx advised that they no longer do that type of financing. Any suggestions as to which way to turn as far as companies?

Thanx for any advice,

E. R.

Dear E.R.,

The best process for finding a mortgage source for refinancing is also the best process for getting a first loan. Of course, comparison shopping is the best way to find the best deal on a loan, and in your case, to find a lender at all that is willing to work with your loan profile - reaching above 100% of appraised value.

One of the best processes for comparison-shopping mortgage lenders is called the "Long-List/Short-List" method which begins with a number of potential sources, culling them down to a short list of potential lenders that you work with in great detail. Finally, you go with the one that offers the best total deal in terms of low interest rate, low closing fees, lack of prepayment penalty, and low points.

The reason we can't recommend you one lender is because the best lender for you may vary greatly depending on your specific profile. We would not think to ask you about those specifics, but the reasons include the following...

- City, County, State (and sometimes even the neighborhood)
- How long you've had the prior loans
- Your credit score
- Your credit reports
- Other cash reserves you might have
- If the appraisal has increased from rising prices or rehab or both
- Many others

Unfortunately, you may find after some shopping around that it could be cheaper to hold your loans until they reach a maximum LTV of 100% by you saving money for additional paydown or increased price. The costs for refinancing just the second loan may exceed the savings. We would hate for your next email to be telling of us of a "Home Loan Horror Story" of your own. Of course, there may be other issues, but that's the most we can tell by your short email. Feel free to provide more specifics if you like.

Thanks for your inquiry. Please spread the word about our organization if you feel you've gotten good information from us.

Best regards,
The Equal Home Finance Bureau

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