Refinancing My Home

[jlvkfyang]

I am looking to refinance my home for a lower mortgage rate (currently 7.43%), but the value of my home is less than what is owed. I talked to my credit union and they advised that I would have to prove some sort of hardship before they will consider modifying the interest rate/terms.

What do people suggest? I do not necessarily have a financial hardship, but would like to free up some cash to pay on other debt. Should I try other banks, or apply for the hardship and see if I get it.

Any advice is appreciated.

[EEinNJ]

Try other banks. Credit unions operate under different rules, and they may not have the flexibility to give you what you need. Loan to value ratio and the appraisal are key in mortgage underwriting, so the more equity you have and the higher the appraisal the better off you'll be.
Shop around, there may even be a gov't backed program that could help.

[jlvkfyang]

I don't think my home as any equity in it. I live in Michigan and the value of my home dropped like a rock.

Should I just go to random banks around town, or is there a better strategy, ie. a list of banks that have government backing, using a mortgage broker.

Thanks.

[Radiance]

Just sharing my own experience.
Do you have any significant 'new' expenses since you got that mortgage?

When I called my bank (being current on all payments) to ask them to modify the loan they asked me what changed.

I did have two big changes since I had a baby and was paying day care and I got separated.

I was at 8.0% and, based in my hardship letter, they reduced it to 5.5% for six months. Look up hardship letter templates online.

-Has your income been reduced?
-New dependants
-New Medical expenses

Also, call your credit card or other creditors and tell them you can not afford to continue having their accounts active because of the interests or anual fees. Tell them you will be forced to transfer balance to a cheaper card and close theirs. Maybe they will lower interests and or fees making it easier for you to pay off.

It didn't work for me with the Master card I had with HSBC, they wouldn't move, but it did worked with a couple other cards, which are now paid off.

Ah, call a HUD approved agency, they can tell you if you are elegible for any other programs for your mortgage.
If you have good credit you could be at 5.0 - 5.50

[maryannsms]

Homeowners compare only the interest rates available with different lenders. It is a wrong way of shopping for a home loan refinance. Constantly worrying about the interest rates might overlook the hidden charges and other fees which might cost thousands of dollars. Mortgage lenders are required to provide the document that itemizes all expenses and other fees details to the clients. A free mortgage guide might help the borrowers in a better way.