Problem Re-fi primary residence w/large gain? - Posted by roundhouse

Posted by phil fernandez on July 14, 2001 at 12:36:21:

Hopefully you have all your receipts and documentation on what you did during your rehab. Do you have any before pictures. How about the old appraisal when you bought the house. In it there must be some mention of the condition at that time.

Mortgage brokers and bankers like to see alot of paperwork and documentation. Build your arguement around this paperwork and the mortgage broker might finally see the light.

Don’t know where you are in NH, but for the past year there has been tremendous appreciation. Some in the 15% range from what I am hearing.

Problem Re-fi primary residence w/large gain? - Posted by roundhouse

Posted by roundhouse on July 14, 2001 at 12:03:44:

Hi, Have a situation I need help with.

IN May of 2000 we bought a run down house in a very nice NH. We used a FHA first time homebuyer loan with 3% down @83/4 %

The house needed major structural repairs, it is a 2 story, round house built in 1970. Each side is 8 feet long
has 13 sides.
Had rotten floors, rotten joists, rotten studs in some of the exterior walls, and on of the sides, the first floor had leaned out and slipped out from under the second floor.

We have corrected all the probs, along with remodeling the bathrooms,(had to get rid of the harvest gold toilets and sinks, and Blue shag carpet) total paint inside & out and new carpet, hauled 4 pickup loads of rocks & stumps/limbs from the yard.

The houses in the NH are selling for $170- $210K.

HERE’s the prob, wanting to re-fi and lower the rate and pull some cash out (wanna buy a trailer park), we got approved for 7.125, mtg brokers appraiser, put the value at $170K, but the lender went bonkers and backed out when the found out we only paid $100K. I quote “Theres no way a house can be worth $170 if you only paid $100K for it a year ago”

I have the report from the structural engineers inspection telling the FHA what was wrong, at the time of the original purchase, and stating there was no eminent danger of the house collapsing on the occupants.
So I can prove the house was in poor condition at purchase.

What should my next plan be?

We are thinking of just doing the FHA streamline to lower the % but I suspect we will have a hard time getting an equity loan as well,local bank is advertising 100% equity loan at 8.5% but havent applied cause we didnt want more inquiries, our FICO is above 700 on 2 of the 3 reports.

Re: Problem Re-fi primary residence w/large gain? - Posted by RSteadham - Houston

Posted by RSteadham - Houston on July 15, 2001 at 14:37:55:

Keep in mind that you are attempting a cash-out refi. Generally, in order to use current appraised value and take cash out of the transaction rather than taking only your actual costs out, your current loan must be aged at least 12 months. Since you state that you purchased the home in May of last year, it would appear that you have met that requirement. What you paid for the house a year ago should be immaterial, but it can affect someone’s thinking. You need to determine who has the problem - your broker or the lender (underwriter), and try to work it out.

It sounds like your broker is the one with affected thinking. If you can’t work it out with them, move on to a more informed broker. FHA is not the only source of money for you, especially with 12 month history of timely payments.

Find another lender - Posted by Tarheel T

Posted by Tarheel T on July 14, 2001 at 17:09:35:

the increase in value is not that huge conidering the condition of the property when you purchased. In fact I was looking for you to say that you paid much less.
Tracy Thompson