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Refinancing renovation loan into the mortgage loan?

Bought a house with a loan 450k/30yr/5%, but also took 30k/10year/6.84% extra loan for unexpected repair needed. Because I don't yet have equity in the house except the down payment, I cannot refinance with cash out to pay the renovation loan without crazy rates. Is there any other solution to refinance/combine loans ? Crazy thing, my credit is excellent, I could sell and buy back the house in one loan. But apparently it's too risky to let me refinance :( by cjouny763 from Baltimore, Maryland. Jul 6th 2018 Reply

Joe Metzler (JoeMetzler)
#1 ranked lender in Minnesota - 4,421 contributions

Every Loan Officer here will tell you that underwriting rules and loan guidelines don't always make sense. Standard Fannie Mae conforming guidelines allow you to roll those two together only up to 80% of the current appraised value. Freddie Mac and FHA allow you to go only to 85% (with PMI). While it may not be you personally, these sort of transactions fall into a well documented higher risk category.

Jul 6th 2018
William J Acres (William_Acres)
#73 ranked lender in Arizona - 8,728 contributions

More info needed to be accurate.. but if you took out both loan's at the same time, then you have 1st and 2nd purchase money loans.. you would qualify for a rate and term refinance and you can roll both into one loan so long as you meet the loan to value ratio requirements.. 95% conventional, or 97.5% FHA.. If you did not take out both at the same time, then for conventional, you would be restricted to 80% maximum loan to value.. but FHA will go as high as 97.5%.. they don't have the same restrictions on 2nd's as conventional The caveat is that you must have had the 2nd for 12 months and if it's a HELOC, you cannot have had any draws in the past 6 months either.. the down side is that FHA has maximum loan amounts that vary by county.. If you are in Baltimore County, then $517,500 is the maximum amount you can finance. The down side to FHA is that regardless of your equity, you will have to pay a monthly mortgage insurance fee and there's a pretty hefty upfront MI premium as well.. so it might not make sense to refinance with FHA.. again, more info needed to address your specific scenario. I'm a preferred Lender with California and Arizona being my primary markets. If you or someone you know is looking for financing options, feel free to contact me or pass along my information. 480-287-5714 NMLS# 226347 / LendUS, NMLS 1938/ AZMB0121893

Jul 9th 2018
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