AboutDenise Monaco Expertise I can answer questions about home mortgage financing, the difference between a mortgage banker and a mortgage broker, fees involved in purchasing a home and refinancing a home or obtaining a home equity loan and the difference between a 1st & 2nd mortgage and the option to have PMI (Private Mortgage Insurance) Jumbo loans, conforming and non-conforming loans.
Experience I have been a closer, processor and operations manager and currently a account executive for a national mortgage banking company. I have been in the field for 25 years.
Education/Credentials Real Estate License & 25 years field experience with many national mortgage banking companies.
Awards and Honors Top sales person, employee of the month, highest sales award
Question Hello,
I currently owe $448,000 on my first 30-yr mortgage at 5.875% fixed rate, which I plan to refinance and I have an outstanding HELOC for $65,000 (prime -1.01%). I have two options: 1. Refinance $448,000 balance (jumbo loan) at a rate of 4.875% on a 20-yr mortgage fixed rate, and file a subordination request to maintain current HELOC. The full balance on the HELOC is in a CD, so theoretically this money is available. 2. Second option is to pay down my current mortgage to $417,000 level (conventional)and then get a rate of 4.375% on a 15 year fixed rate mortgage (we can afford the payments) and pay the difference between my existing mortgage and the new balance, roughly $32,000, with my outstanding HELOC. From the perspective of my HELOC company, all of this money is outstanding, but with a rate of 2.24%, interest is only $123/mo on average. I know too prime rate will increase at some point next year, and will keep going up thereafter.
I have several risks, such as the appraisal value of the house, and if the HELOC company would allow to be subordinate with the new lender and maintain my current balance of $65K. I know they subordinate, but they they may request lowering the HELOC balance, but I don't have any cash available to pay down the 1st mortgage, except with the HELOC. Subordination requests take 15 days to respond, but we need to be specific what are the characteristics of the new mortgage (20-yr fixed at $448,000 or 15-yr fixed at $417,000), this is only possible by filing subsequent subordination requests. I'm stuck between a rock and a hard place.
My HELOC company does not allow CLTV higher than 80%, current "best guess" appraisal would probably be around $580,000. Not sure. Don't the CLTV ratio look better is I have the 1st mortgage at 417K plus the HELOC at 65K, rather than the 448K plus the 65K HELOC? An idea is to pay down my current mortgage to the $417 level (with the HELOC) and then get the great rate, but wouldn't that be shooting myself in the foot, if the HELOC company demands a lower balance outstanding? What is my best option to have an online appraisal available? I need answers before the appraisal takes place, which could be a couple of weeks.
Please advise. I like in central NJ. Thanks!
Answer Hi Alex
The current situation of our economy is making the guidelines so hard for people to refinance. All lenders are under new appraisal rules which doesn't allow them to pick their appraiser. They come from a "pool" of appraisers so the ones that we would be able to call and get a feel for your value really isn't an option anymore. There is a web site called Zillow that gives you an estimated value but I would suggest going to a realtor and ask for a Competitive Market Analysis. The realtors use the same Multi List System that an appraisers uses. As for the CLTV it would be better to have your first mortgage at $417.
About Real Estate Home Mortgages
This topic answers questions related to purchasing a home, owning a home, home ownership, mortgage education, mortgage applications, and mortgage needs whether buying a first home or refinancing a current loan. Issues related to home ownership, home equity, mortgage education, refinacing options, home improvment finacing, first time home loans, home equity loans, vactation home loans, and mortgages for investment homes are dealt with here also. Though not the primary focus of this topic, Home Equity Lines of Credits (HELOCS), reverse mortgages, and calculating home equity may also be asked. If you do not see your home mortgae, home finacing, or home equity question answered in this area then please ask a question here
