How can you refinance a mortgage with no equity?

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There are programs for people to refinance loans if they are having financial problems, but what about the rest of us? Are there limits placed on how much you can refinance?

3 Comments
  1. Reply
    Judy
    April 29, 2011 at 11:34 pm

    First contact your mortgage company.
    You will have to prove financial harship.
    They will review your case and perhpas re-fi you.

    If they refuse to work with you there is a government agency that will help you:
    Making Home Affordable .org
    They will contact your mortgage lender after you have tried and perhaps help you.
    /

  2. Reply
    Caveat Emptor
    April 30, 2011 at 12:22 am

    Depends on the type of mortgage. If you have an FHA loan, you can do an FHA “Streamline Refi.”

  3. Reply
    Frank
    April 30, 2011 at 12:44 am

    Lenders are in the business of making loans to persons that will make their payments on time, often securing that loan with a legal right to take certain property if the borrower does not make their payments as agreed. In a home mortgage case, the borrower agrees to make payments on time but also agrees that the lender may take ownership (foreclose) of the house if the agreement is not met.

    Borrowers that have equity in their home, meaning that their home is worth more than they owe, probably will not risk losing the value that they have built up in their home, and will therefore work harder to make their payments on time.

    Borrowers that do not have equity have very little to lose if the home is taken back by the lender, and are therefore a much higher risk to the lender.

    Because of the higher risk, borrowers with no equity will have to pay a higher interest rate, but financing can probably be found.

    Because you asked about refinancing, though, it may be assumed that you have an agreement with a lender already. If you want to refinance because you want a lower monthly payment, ask your current lender what they might be able to do for you before going to an entirely new lender. Your current lender knows how well you have been making your payments already, and if you have held up your side of the agreement, your lender will probably be able to restructure your loan to provide a lower monthly payment. If you have been bad at keeping your agreement, though, don’t try to hide from your responsibiltity, because the lenders all “talk” to each other through your credit score. Honesty and integrity are always the best choices.

    Best Regards,
    Grandpa Frank
    Indianapolis

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