Refinancing with less than 20% equity

In the past 3-4 months most of my business has been working with customers that refinanced their homes with our current "historically" low fixed rate mortgages. In many of the early conversations with each customer the discussion of owners estimate of value comes up. I've seen many values drop as much as 20% within the past couple of years. Unfortunately, we've all experienced the fall of our market values and to many homeowners it has meant that they simply can't take advantage of sub 5% rates. I've locked customers into 30 year fixed rates as low as 4.375%.

In April, new refinance options allow those without 20% equity to refinance.Today I talked to my first customer that has found himself below the previous minimum equity standards for refinancing. And thanks to a new stimulus option my customer can refinance as long as his home's first mortgage isn't more than 105% of the home's value.

This to me is truly amazing. To take advantage of this incredible opportunity and participate with many other home owners there are a few simple steps that need to be taken and I wanted to share them with you.

Step 1) Identify your servicing lender. Access the following web site to identify if your first mortgage is serviced by Fannie Mae.

http://loanlookup.fanniemae.com/loanlookup/

Once you put your information into the site it will tell you if your loan is Fannie Mae serviced.

Step 2) Let's talk about any other mortgages that you may have on your home. That not only includes fixed second mortgages but Home Equity Lines of Credit. If so, your process may be even more challenging.

Step 3) Confirm that when you bought your home you put 20% down. Transactions that had less than 20% down and instead chose to pay a (MI) mortgage insurance premium are not currently able to proceed. So find your closing documents and provide the Hud-1 (closing statement) as an additional document needed for this new refinance.

Step 4) Gather the typical documents needed for a refinance.

A couple of items to keep in mind if you qualify.

1. You can only pay off your current mortgage and roll your closing costs into the new loan.
2. You need a 12 month payment history on your existing loan showing good payments.
3. Homes with second mortgages are not currently able to participate, but that may change.
4. Previous loans that included mortgage insurance are currently not eligible.
5. An appraisal still needed.
6. The newly established mortgage cannot exceed 105% of your homes value. Wow!

This new program called the DU Refi Plus will benefit many customers that didn't think they could refinance into rates as low as 4.5%. If this applies to you or any friends, neighbors, relatives please have them give me a call at 612-282-5863. And don't forget that I can lend in up to 50 States!