Refi under water?

April 18, 2011 11:39 AM

Is refinancing a house absolutely excluded when you're under water? (Mortgage balance ~250k, home value ~220k)
posted by LonnieK to Work & Money (7 answers total)

Yes, unless you have the cash or collateral to put as a ~20% down payment. At least in this current economic climate.
posted by Melismata at 11:44 AM on April 18, 2011

Pretty much. No sane mortgage company is going to lend you money for more than the house is worth.
posted by valkyryn at 11:57 AM on April 18, 2011

Your best option, from what I understand, is getting a re-mod with your current mortgage company. Unfortunately, it seems like the only way to try to attempt to do that is to stop paying them.

If anyone knows a better way I'd love to hear it! I'm underwater and want to swim far away.
posted by zephyr_words at 12:03 PM on April 18, 2011

This is what the government programs like "Making Home Affordable" are for. Contact your congress person and ask them about it if your bank blows you off. I have some friends who were finally offered deals after they enlisted their congress person for help after their banks blew them off. You will definitely not be able to do a traditional refi without a down payment to cover the difference.
posted by wherever, whatever at 12:03 PM on April 18, 2011

Check with your current lender about a MHA refinance. They can refinance up to 125% of the homes value under certain circumstances - and it's not a modification, it's a refinance.
posted by brownrd at 12:20 PM on April 18, 2011

When we tried to refi not long after the housing market went all kablooey, we were told that we were ~$24K under water, but that the bank would happily refi us if we came to the table with that $24K and made them whole. Of course, if I had $24K in cash I probably wouldn't need to refinance my house, but still. If you're underwater, no conventional refi for you. The gov't programs and other things mentioned in the thread might be of interest, though.
posted by pdb at 12:25 PM on April 18, 2011

Side question...does an MHA refinance mess with your credit score? I'm under the impression that it does...
posted by littleredwagon at 12:40 PM on April 19, 2011