mortgage

FAQs on mortgage refinancing

Can I challenge appraisal results?

QuestionI bought my house in July 2009 for $285,000 with an interest rate of 5.4 percent. I tried to refinance with the low rates being offered and the appraisal came in at $263,000. Is there anything I can do to challenge the assessment value?
-- Andy

AnswerI'll assume that you owe roughly what the house is worth now. You might try applying with your current lender for a refinance through the Home Affordable Refinance Program. HARP refis are for people who are current on their mortgages and who owe between 80 percent and 125 percent of the home's currently appraised value. Ask specifically what you need to do to apply for a HARP refinance.

How much house can you afford?
Bankrate's new house calculator can help you determine how much house you can afford on your income.

What if that doesn't work? If you asked the lender to challenge the appraisal and you didn't get what you want, then the next step would be to apply for a refi elsewhere. But you would have to pay for another appraisal, and there's a good chance that the appraisal would be too low again.

If you decide to apply for a refinance at another lender, explain to the loan officer what happened to your first refi attempt. If the loan officer tries to dissuade you, that's a good sign that a refinance isn't in the cards right now.

Will the new FHA refi program help me?

QuestionWhat refinance options do non-FHA mortgage holders in good standing have if their property has negative equity?
-- Evan

AnswerThe Federal Housing Administration, or FHA, is rolling out a new refi program for people who have non-FHA insured loans, are current on their loans, are underwater and want to refi. The lender has to forgive at least 10 percent of the debt, enough to allow the homeowner to refinance and get an FHA loan at a maximum of 97.75 percent loan to value.

There's also the HARP refi program. HARP never really caught on, and I doubt the new FHA refi program will, either. But a few people will get those loans. Might as well be you, right?

Will I get stuck paying PMI on a refi?

QuestionI was recently (formerly) working with a broker who told me that because my home's appraisal isn't what it used to be (and therefore I no longer had the equity I once had), I would be stuck with private mortgage insurance on any refinancing I did. Is that true or are there other options?
-- Guest 2

AnswerUnfortunately, the broker was telling the truth.

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