Refinancing with Fannie Mae or Freddie Mac?

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In general, how difficult is it to refinance a mortgage with Fannie Mae or Freddie Mac. Heard recently that their caps have been raised 2% and that future cap increases will allow more borrowers to refinance out of predatory loans. What steps need to be taken in order to initiate such a refinance other than simply contacting a lending partner of those two agencies?

Ok, here’s my situation…

My home was purchased in 2005 for 135k. My mortgage was a 120k for a 30 year fixed at 6.5% interest. Currently I owe 117,000 on the mortgage. Due to change in employment, I need to Re-Fi at the current rates (4.65%) to drastically drop my monthly payment…

Herein lies the problem: My homes value has depreciated so much due to the current market situation, that my home probably would not appraise for what I owe. I’ve contacted my original mortgage agent and he said in order to Re-Fi, I would need to order an appraisal and bring around 20k to closing to make it work… I don’t have that kind of liquidity.

Unfortunately, I lost my job in Jan. but luckily landed a new one in Feb. However, my new job pays around 40% less which means I eventually will not be able to make all my payments on a monthly basis.

My next step is to call my lender and see what they can do. However, I have heard that you need to miss at least two consecutive mortgage payments before they will work with you… The last thing I want to do is miss any mortgage payments, but with my current situation, within 3-6 months, I will not be able to make my mortgage payment at the current rate…

I have been doing a lot of research on this, and I have heard that the last thing a lender wants to do is take on ANOTHER foreclosure. By defaulting on purpose, the lender will be forced to refi my mortgage at current market values. Is this true?

My credit is outstanding and I have never missed a mortgage payment in the past. If I need to miss a few months of mortgage payments in order for my lender to refi my loan to a 4.75%, I am willing to do so.

My name is the only one on the mortgage… By missing payments, will that affect my wife’s credit too?

Any advice?? Please no solicitors…

Thanks in advance for the help!

  1. Reply
    February 18, 2011 at 9:47 am

    there no lending partners but approved lenders.

    Almost every lender in the US is approved with FNMA/FHLMC.

    You might be referring to FHA mortgages, which only a few are approved lenders. FHA Secure Programs are helping ppl out of the high ARM rates

    The regular FHA program can still help ppl with high rates. FHA rates are like 6.875% and lower right now.

  2. Reply
    Homer J. Simpson
    February 18, 2011 at 10:47 am

    You go to any institution that is authorized to originate conforming conventional, FHA or VA loans. Virtually all mortgage banks, mortgage brokers, and depository institutions are authorized.

  3. Reply
    February 18, 2011 at 11:36 am

    Depending on how you want to do the loan, meaning full docs or stated income.

    I would do full docs because you get a lower rate for taking the time to send them all of your information.

    After you contact them, they will run your credit, check your debt/ burden ratio, loan to value ratio, and more.

    After that they will let you know what rate you qualify for and what your new montly payments will be.

    Give them a call to see if they can help you. Aslong as nothing comes out of your pocket until after you get a solid rate and payment quote from them, then I guess there is no harm.

  4. Reply
    February 18, 2011 at 12:10 pm

    Ignore the mortage agent. He’s not really interested in helping you.

    Work with the bank while your payments are current. It’s the honorable thing to do. Explain the situation. From their perspective, if you’re current you’re still a valuable investment.

    It will impact your wife’s credit if the two of you have any accounts in joint ownership.

  5. Reply
    February 18, 2011 at 12:53 pm

    I seriously doubt if missing payments would allow you to refinance at a “lower” interest rate. Missing payments would drop your credit score, increasing interest rates on anything else (credit cards, etc.).

    If you discuss it with your lender, they may be able to reduce your payments by lengthening your loan, but you would likely end up paying more total interest over the longer time.

  6. Reply
    February 18, 2011 at 1:39 pm

    What you seek is not a “refinance” but rather a loan modification. Speak to your lender first.

  7. Reply
    David M
    February 18, 2011 at 2:33 pm

    Missing a payment or two will help ruin your credit rating making it impossible to refinance. The best play would have been to put more down when you initially bought the place. Like 20% or $ 27,000 instead of only putting down only $ 15,000. Too late to fix that. Better that you do something about your income and expenses. Can you take on a second job? Can your wife go to work? Can you you cut your expenses more? Good luck.

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