Hello All,

Just got back from my bank.  Originally talked to the loan officer about doing a Refinance with Cash out.  I wanted to do two things..A- Lower Monthly Payment B- Pay off about $30K in high interest/cc debt.  We locked in December at 4.875

Just heard back from the New loan officer "reassigned" to our loan that Chase is not going to allow the subordination for ANY cash out!  Hmm

Here are the stats

Both my wife and I have (what we thought was) good credit.  ( 720/710 ish)

Home just appraised thru B of A for $610,k

Our balance is about $375K

We have a HELOC with chase for $69K ( originally 165K then blocked down to our balance of $69k)  

Both have pretty good debt ratios  

According to the B of A loan services specialist,  Chase subordination officer said they will not go over a 65%CLTV and seemed adamant about us not getting any cash out on the first mortgage..even our loan officer was surprised by how much " Push back" he received from Chase. !?!

Does anyone have any suggestions what we should do next?  Could we even look at non conforming? Is there an appeals process with Chase?   Can we go to another lender?

Thanks for the ideas..

A.L...

Chase is using the full amount you can borrow on the HELOC - not the balance - so the total debt you can have on the property value of 610,000 is 396,500 - so you are well above the 65%  with your first and the balance on the HELOC - you could do a new first mortgage - if you qualify - as a cash out refinance - pay off and close the CHASE HELOC - As the Chase loan officer if you qualify for a new first, with no second - and of course you can ask other lenders what they can offer you with a cash out refinance into a new first mortgage. 

Thanks,

Isn't the refinance, about the same as a new mortgage?  What is the difference?  I only have the Chase subordination loan officers name on the email that was "cut and paste" to me.  I have not been involved in the back-and-forth between the two banks..only now at the END of the process do I find this out.   Our down payment is already in this house..remember we are looking into improving some cash liquidity..to pay off debt..  Will we have any cash in hand to do that...instead of using it all to pay off HELOC.

Also, Isn't it unfair to have a $155k limit on our HELOC and use THAT number, while blocking the loan down to its current balance of $68k.? 

Thanks

AL

Al, It is all risk based lending - you now (I assume)  have the ability to use the remainder of the line, so you could increase your debt on the property greatly in one day.  If your line is frozen, or reduced, then they use only the amount owed, which still puts you well over the 65% debt on the property with the first and second loan amount combined. To be more clear, I was suggesting you have your current new refinance loan amount increased to cover paying off and closing your current mortgage,  the Chase HELOC - and other debt you want to pay off - you should speak with the loan officer working on your refinance now - to see if you qualify for a new, larger mortgage.  Hope this helps. 

Cash-out refinance: 1st ($375K) 2nd ($69) AND CC ($30K) = $474K loan divided by appraised value of $610K = 78% Loan to Value (LTV). Conventional cash-outs allow up to 80% LTV and you would not need to pay mortgage insurance because you are under 80%LTV.

If you need the line of credit open and available there are other banks that will give you a line of credit.

that would be my suggestion.

You could close your new loan to pay off the credit card account and at the same time close a new line of credit to pay off your existing Chase account and open up availability to additional funds. This would solve the subordination issue that you face. Have you asked BOA if they can provide a new 2nd lien to pay off the existing Chase loan? If the answer is yes than that should be your solution. If the answer is no I would suggest findning a lender who can do that.

This sounds like an easy one.

Take Care,

Jason

Jason....I had thought that conventional cash out for high balance loan amounts above $417K is capped at 60%? I think this is why your suggestion could run into trouble. Maybe this is just our overlay, but I had assumed it was a GSE guideline.

Thanks,

Jason

It all depends on the Fannie loan limits in the area. If he's in a high cost area he might be ok.

The best thing to do is go to a local bank and get a new In-House Home Equity Loan or Line to replace your current 2nd and get your extra cash, most local/regional banks lend up to 85% Loan To Value.  The advantage of local banks having been a loan officer at one is that they normally have really low fees on their In-House Loans, generally no more than $200, and they only require  a title search, no title insurance (more savings), and may not require an appraisal(more savings) and do an AVM value.  

What is your current rate on your 1st mortgage?  How long do you plan on staying in your current home?  Answer these questions and I can tell you if you need to mess with the first mortgage.  It may be beneficial to do a simultaneous refi using the local bank for both transactions.

Wow

Didn't know all these options..might BE options.  I've got a friend who is a mortgage broker who said I could/should do a FHA loan.  The FHA loan would payoff the 2nd and first and give us the cash out $30k..  It is currently at 4.87 with NO points.  How does this sound??

My current first is at 5.35

We need to start impounding monthly for the taxes, instead of sruggling to come up with them quarterly.  The FHA loan REQUIRES monthly impounding.

I plan on being in the home maybe 5 more years, but not sure..I hate the feeling of starting over on the 30 yr mortgage..Is it just me, or is it silly after paying almost 10 years into this 30 year??

Thanks.

Tony

It sounds like you just need a new 2nd if you are 10 years into a 30 year note at 5.375%. FHA would add hefty monthly PMI and reset your amortization at 30 years. A new 2nd would let you get the cash needed for consolidation and maintain your current amortization. Little or no cost involved....

I agree with Jason - go to your local bank and credit unions - and the credit unions have some very very good rates and programs -  see about a new second line of credit or second loan - and ask them about a new single cash out refinance for a new first for the total amount you need - if you are only staying in the house for 5 years or less - also price a new 7/1 ARM (rate is fixed for 7 years) - right now a jumbo 7/1 ARM cash out refinance with your credit scores - up to 80% loan to value is about 4.25 - 4.50%  - and a new 20 year jumbo - if you want a fixed in case you are staying longer and do now like the ARM option - about 4.50% - the loan officers at the smaller local banks usually offer some very good solutions - and if they want you to open an account - move your money if the loan makes sense. 

As to the 30 year fixed question - a new 30 year will offer you the lowest payments for a fixed rate loan - and if you sell in 5 years - you will have paid less monthly cash - but have a higher pay off balance at the sale - so the question is - do you want to pay now with a shorter term and higher monthly  payment - or do you want to take a little less cash from the house when you sell.  If your plans were to stay in the house and eventually pay the mortgage off, I would agree that a new 30 year fixed did not make sense – but as you plan to move, and your goal is to lower your total monthly payments – a new 30 year fixed will most likely save you the most per month.   

Oh Here is an update

I was totally off on our credit scores..

Mine ( 749-780)

Wife (768-789)

Tony, I'm a little late to this thread, but the item that surprised me the most was that your friend the mortgage broker suggested FHA!  Absolute worst idea based on what you've posted here.  Don't know why you couldn't go $417k 1st and new 2nd to 80% ltv.  Good luck!