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Information on Refinance Without any Equity

I just puchased my first home 6 months ago. Can I still apply for refinance without any equity?

I just puchased my first home 6 months ago. I really didn't know what I was getting into. I have a 2yr ARM at 8%. I\'m trying to refinance in order to get a 30 year fix. I have no equity, in a 18 months the rate will go to 10%. I will not be able to afford that for my 2 daughters. I need some help in what to do.

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Bill's Answer
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Bills.com | Find Learn Save

Even if you do not have any equity, you still may be able to refinance your mortgage. This is particularly likely if your original loan was at a high interest rate such as yours and due to poor credit. Without equity, a mortgage refinance loan will be of the amount equal to or less than your current mortgage balance. If it is for less, it is the responsibility of the borrower to make up the difference. Nonetheless, such a plan still can save you money if your new interest rate is significantly lower than your rate before refinance.

First, you need to contact your current lender to find out how much the early refinance penalty on your current mortgage will be. You should then contact several different mortgage lenders to discuss the loan terms they can offer you based on your current financial situation. Once you have determined what the refinance will cost in terms of penalty charges, and what new loan terms are available to you, you can weigh the two options against one another to determine if the terms offered on the new loan will save you enough money to outweigh the cost of the penalties imposed by your current lender. If you find that you will save more money by moving forward with a refinance now, then by all means, I encourage you to do so. However, if the penalties charged by your current lender outweigh the savings on your new loan, then you may want to wait until your penalty period has expired before you move forward with a refinance.

If you want an introduction to pre-screened mortgage lenders, Bills.com makes it easy to compare mortgage offers and different loan types. Please visit the loan page and find a loan that meets your needs at: Mortgage Refinance Quote. These lenders should be able to tell you the loan terms available to you based on your current financial situation, and tell you if a refinance loan can help save you money over your current loan. It is important that you find out the details of the penalty clause of your current loan as soon as possible, so you can discuss the implications of a refinance loan with possible lenders.

To learn more about refinance loans, I encourage you to visit the Bills.com Home Refinance Resources page.

I wish you the best of luck in obtaining a refinance loan that will save you money over your current home loan, and I hope that the information I have provided helps you Find. Learn. Save.

Best,

Bill

www.Bills.com/blog

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