+1 vote
My home is worth ~325k, and we owe 260k.  We currently have a 4% FHA loan originated in 2014 that we pay 280 a month on in MIP that will never go away.  I originally wanted to do a cash-out refi, but realized I can't as we will be 80/20 to begin, so I'm wondering if we can do an 80/20 conventional refi and then immediately do an HELOC for 10%.  Are there lenders that will do this process together?  Thank you.
asked Feb 6, 2018 in Refinancing by JohnD.

2 Answers

+1 vote
Good morning, John, and thank you for writing. It appears that you are currently at exactly 80 percent loan-to-value. Definitely time to dump that MIP!

I think that your idea of refinancing out of your FHA loan to get a 90 percent conventional (non-government) mortgage is the right move. And there are lenders that fund second mortgages to 90 percent of your property value.

However, you don't necessarily want the same lender doing both, unless you'll get a significant break on the costs that way. It eliminates your ability to compare rates and terms for the second mortgage.

The main thing to consider is that larger loan, compare quotes for that refinance, and contact a couple of the most competitive lenders. That's the time to ask about the second mortgage -- check the rate and see if you actually save on title and appraisal charges by going this route.

I do have a call in to a title company, because I know that if you use the same title company, you may not have to use the same mortgage lender to get a break on your closing costs.

Finally, if you disclose that you're going to pile a 10 percent second mortgage on top of the first mortgage, the lender might consider you more risky when underwriting. And I do know that Fannie Mae does add a surcharge for a combined loan-to-value (CLTV) of .25 to .75 percent. https://www.fanniemae.com/content/pricing/llpa-matrix.pdf
answered Feb 6, 2018 by GinaPogol (47,650 points)
0 votes
I agree with Gina and she covered everything. I like to add the following to Gina's answer:
1. Most HELOC/Piggyback mortgage lenders require 700 credit scores
2. Debt To Income Ratio may be capped at 43% where Conventional Loans have max back end DTI at 50% for approve/eligible per AUS.
3. Most banks have 7 year waiting period after CHAPTER 7 BANKRUPTCY discharged date and/housing event
I would ask the about questions before starting your mortgage process

Gustan Cho NMLS 873293
The Gustan Cho Team at USA MORTGAGE
www.gustancho.com
answered Feb 6, 2018 by GustanCho (106,540 points)

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