Can you refinance if you owe more than your house is worth? Depends on what kind of mortgage you CURRENTLY have. In NC our housing values are going up – so, in many cases people are “closer” than they have been in the past few years to being dead even on the value of the home (versus the balance of the mortgage). If you currently have a VA Loan, then you are probably in luck!
We received the following question, and I figured other people might have this same question:
We bought our home in 2008 for $189,900. We currently owe $181,600. Property tax assessment is at $188,o00. According to Zillow and Trulia the house could be worth as little as $182k or as much as $195k. Our current interest rate is 5.125%, and we have a VA Loan on the house. We have not missed any payment – and my middle credit score is 758.
I’ve been through various lenders, and looked at what is available. All of them want an appraisal and the fees have ranged from no closing costs (just pay the .5% funding fee and escrow) to $4000+. Feeling frustrated! I’d really like to refinance – but I don’t really want to gamble the $300 to $500 for an appraisal! Any advice is greatly appreciated! Scott.
First off, VA offers a NO Appraisal refinance. It’s a Streamline – meaning there’s very little documentation required at ALL… so, we don’t charge the Appraisal fee. In talking with other lenders, they may have missed the fact that it’s a VA loan? Anyway, in NC we DO have to verify that you have the ability to repay the loan (required by law) so even though we don’t ask for your pay stub or W-2, we will need to call and verify your employment. The minimum credit score for this program is 620 – so you should be fine.
Additionally – you mentioned that you’ve been quoted a fee for paying you .5% funding fee… this is also ODD, because that fee is “rolled” into the mortgage on a refinance. I mean, if you WANT to pay it out of pocket, you can – but most people don’t. If you are a disabled Vet, there are some waivers available.
LASTLY – most of the folks we know are getting “no closing cost” options for their VA Loan Refinance. The rates are in the mid 3% range for a VA Loan with us paying ALL closings costs (and the Funding fee being rolled into the balance). So, if you are still looking for a VA refinance – we’d love to help!