Can I refinance if the value of my house has dropped $60,000?
Author: Rob K. Blake | Date: June 7, 2008 | Filed In: Refinancing Answers
Maybe.
If your home was worth say $300,000 and now its worth $240,000 with a mortgage of about $200,000, you could since your mortgage is still less than the value.
But my guess is your question, was really more along the lines of, “Can I refinance when my mortgage is greater than my home’s value.”
This state of lopsidedness is called being “underwater” or “upside down” on your mortgage. In the industry we called it a state of “negative equity”. If I am right in the assumption… the answer is no.
Sorry…
In the late 90’s and early 2000’s, second mortgage programs were available to borrow 25% more than the value of the home. They are called 125% second mortgage loans, but they are long gone now. Back in the day folks were using them to buy stock options in tech bubble companies, to purchase more real estate, or to pay off credit cards knowing their home’s value would rise and they could refinance it in as little as a year.
Unless you have the cash the buy the mortgage down below the value, you’ll not be able to refinance. The days of 100% or more LTV refinances are gone.
Author: Rob K. Blake
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