I currently in the process of purchasing a home, my broker said I will be able to refinance within a year. but others say it is inpossible due the fact that I am getting 100%finance and I will not be able to refinance. is that true. The person that told me that is my landlord I not sure if he is being dishonest with me so I wont move out.
2007-07-02 14:29:36 · 4 answers · asked by karen a 2 in Business & Finance ➔ Renting & Real Estate
Oh by the way my interest rate is 10.1 due to the fact we are also going stated
2007-07-02 14:49:40 · update #1
No you wont be able to refinance. You are borrowing 100% so for the sake of simple math, let's assume you are buying the house for 100k. You buy the house and in 6 months you try and refinance. Your house will be worth about 101K if you appreciate with the nation average. You will have about 4k in closing costs, your original 100k mortgage, the 3k prepayment penalty and any closing costs you financed into your first mortgage. Since you wont be able to borrow 107k+ on a 101k house, you will need to come up with 6k out of your pocket to refinance in 6 months to maybe save 50 bucks a month. Your mortgage broker is trying to talk you into something you definately shouldn't be doing. Plus, 10.1% is high, even for a stated loan. There is also the fact that in 6 months rates could be even higher. No matter his motive, your landlord is giving you good advice. Never plan on refinancing in less than 2 years unless you are going to up the value of the home with renovations, and be prepared to show recepits of the renovations. There are a few other situations where you would, but this one doesn't seem like one where you would/could.
2007-07-02 17:13:29 · answer #1 · answered by blibityblabity 7 · 1⤊ 0⤋
Yes, you will be able to refinance if you are looking to get a better rate in one year. Most banks have a six months to one year time before you can refinance even if you do 100% refinance I do these all the time. Also in regards to prepays it all depends on your state and if the loan officer is going to put it on your loan. Some states like New Jersey don't allow prepays at all.
2007-07-02 15:16:34 · answer #2 · answered by Anonymous · 0⤊ 0⤋
If you have good credit you will be able to refinance. When you refinance you have almost the same amount of finance fees that you have with the first mortgage. You will have to determine if it is worth the expenses to refinance. If you have a decent rate and not a balloon mortgage you might not want to refinance.
2007-07-02 14:36:45 · answer #3 · answered by summer 2 · 0⤊ 0⤋
He is mostly correct in that you will not be able to refinance.. If you are getting 100% financing, do not expect the value of your house to increase sufficiently in one year to justify any refinancing. Your broker is making a rather naive assumption that property values will continue to rise. That is not any sort of safe assumption.
Some new mortgages are, as well, coming with a prepayment penalty for refinancing in less than two years.
2007-07-02 14:39:12 · answer #4 · answered by acermill 7 · 1⤊ 0⤋