Until recently I did not realize that it was even possible to refinance a mortgage that was upside down.  I assumed that if someone owed more on their home then it was worth they were out of luck.  I figured these record low rates were just out of reach for them.  In fact… Out of reach for ME.

Yes… just like hundreds of thousands of other American home owners I now owe more on my home then it is worth.  At least it is really close.  I may be able to break even.

I am watching the interest rates drop and drop and drop and drop… you get the picture, and I just have to sit on my “terrible” 5.5% 30 year fix.

Well I have some great news for those of you in this situation.

There is a loan specifically created for people in this scenario.  There are a few guidelines and here is what we know so far.

  • You current loan has to be a Fannie Mae or Freddie Mac loan to qualify as this is a Feddie/Fannie loan.  This is easy to find out.  For Fannie Mae click here. For Freddie Mac click here.
  • You cannot be over 105% LTV (loan to value). This simply means that your house value can only be 5% lower than what you owe on it.  (ie. If you owe 210K, your house could be worth 200K)
  • In order to avoid mortgage insurance your current loan cannot have it.
  • You must have a credit score of 680.

These are the main guidelines for this loan.  If you are in a similar situation it may be worth calling your loan officer to see what they can do for you.

If I can qualify for this loan I would personally drop my rate into the low 4% range and save big bucks every month.  I already have my application in as we speak.

If you are in Washington State check out Clark Davis.

Remember that your loan scenario is going to differ from others.  Contact a professional to get all the details you will need to see if you qualify.

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