OK Suppose your home is worth LESS than your current mortgage,,,

[benld74]

You want to re-finance to a lower rate, BUT since the house is worth LESS, HOW can the new mortage be given to you
for an amount greater than the house is worth?

[earthlover]

1. That is easy.....it WON'T!!!!

Mortgages are not higher than the appraised value....

[sam sarrha]

2. that fucked us over,, went to get a refinance and we lost $20,000 on our home

[benld74]

3. Exactly

so if you owe 250k at 5%, you can get a loan for 4% and the house appraises for 230k, what happened to the 20k they wont GIVE YOU?
oUT OF YOUR OWN POCKET?

[earthlover]

5. you guessed right....

[benld74]

4. so the homewoner loses that much EQUITY?

[earthlover]

8. the equity was already lost before the refinance....

the equity, by definition, is the difference between one's mortgage and its value....

[SheilaT]

6. Yep. You won't be able to refinance

as things are now. I had thought that part of the bank bail-out was specifically to allow refinancing at whatever the current value was.

This is also why at least some homeowners have been letting banks take back the house and then rent it at a rent far lower than the old mortgage.

[xiamiam]

7. well thats the problem ...even with 20-25% down...thats eaten up with the housing bubble burst...

and before anyone says..well we knew it was going to happen..go screw yourselves...millions of us are spiraling downwards because of this little event...the banks get the bailouts and would rather lose money than renegotiate the principal on the mortgage with the current owner...all the while, the middle class is losing what we thought was equity and in my case, a lot of sweat equity...the interest rates are low..who can benefit?..well none of the people who have been late on a payment or are already upside down on a house worth less than the mortgage...only the fat cats who are sitting on the sidelines..ready to take advantage of the whole mess...and the solutions available to THEM that have been created thus far...

[Warpy]

9. Well, you can make up the difference out of your fat 401K

or all your savings. Oh, right.

You also need to run the numbers by getting an appraisal in writing. The bank might work with you if the numbers are close enough and they know they'll have a better chance of getting paid over the next 30 years if you can refinance. Or see if you can swing refinancing with a 15 year note. Banks are a lot more enthusiastic about those.

The best advice if none of the above applies is to look at what rents in your area are and what they're doing. They're still rising in most areas and paying more than your house is worth every month can still be a good hedge against steadily rising rent, but you have to know what they are. You might find that rents will equal your monthly pound of flesh to the bank in a relatively short time, so you're actually better off slowly paying down the difference between what you own and what you owe and then actually building some equity.

[Riley18]

10. The homeowners should get the bailout of a 3% mortgage. Why should we

have to "qualify" again anyway? Did the banks have to "qualify" first before they got our tax money in their bailout? If this country is going to salvage the middle class, then the solution is to force the banks to share that bailout money with the people instead of keeping it for themselves.

[pnwmom]

11. This is the huge problem with all those adjustable rate mortages

that people took out, thinking that they could just refinance them when the rates went up.

That would only work out if the house value had remained the same or gone up.

But with house values down, they can't qualify for a mortgage as high as before, so they can't refinance.

[Citizen Number 9]

12. October 2008 mortgage equity data shows that

41.6% of US mortgages have zero or near zero (defined as less than 5%) mortgage equity. Since that was October and we know that home values have continued to slide, I'd argue that a full 40% or more are at ZERO by now.

That's less than 60% with ANY equity left and I'd be willing to bet that less than 2/3 of those have enough equity to be even eligible for re-fi.

So....40% or less are eligible for re-fi.

[notesdev]

13. Only options are a down payment... or...

mailing your keys to the bank and saying thanks anyway, packing your stuff and finding somewhere else to live. Or sticking with your current mortgage, if the terms thereof are an acceptable alternative.

Nobody - especially not in this financial environment - is going to finance a property for more than it is worth.

[Waiting For Everyman]

14. You can try for a Streamlined Modification with your current lender.

Not everybody is eligible for that program, which is the problem with it. But if you are eligible, it would be like getting a refinance without the closing cost. It's worth a try. It does deal with negative equity.

Also I think the FHA's H4H refinance provides for negative equity, but it would cost more than the mod - both in payment and in closing costs.