Q: We have requested a streamline refinance. Although we have a Fannie Mae loan, we were told we could not do this. Our lender was one of the big banks, and then they sold our loan to a company we’re not familiar with.
We are trying to refinance to a 15 year loan, but are upside down by about $40,000 on the mortgage. The lender says it doesn’t participate in this sort of lending and they’ve refused to help us.
Is there anything we can do?
A: When you’re upside down on your mortgage, your options for refinancing are extremely limited.
But let me clear up one misconception – you can’t get a streamline refinance with a Fannie Mae loan. Especially not if you’re upside down.
If you had an FHA loan, you could do a streamline refinance, but it doesn’t change the loan term from a 30-year to a 15-year. It just adjusts the interest rate on the loan, which might be good enough.
You can always prepay your mortgage to pay it off in 15 years by simply making about 3 or 4 extra mortgage payments per year. Not only would you cut your loan term significantly, but you would start making a huge dent in your mortgage balance, and much more quickly get right-side up on your mortgage.
Unless you go through a HAMP refinance, and I don’t know if you would qualify and it appears that your lender has told you that your loan does not qualify, you’re out of luck unless you come up with about $70,000 in cash to bring yourself to a point in which you no longer have “negative” equity in your home and allow a lender this lender or a different lender to refinance your loan.
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