Refinancing Mortgage that is Upside Down

Refinancing a mortgage that is upside down isn’t impossible, but there are only a few situations where lenders will even consider it. Naturally, since the mortgage is upside down already, it would be a bad dead for any mortgage company to offer you even more money or better rates than your current mortgage has.

Refinancing upside down mortgage with bad credit

First of all, even if you have poor credit, all you need to do is to cough up the difference between your properties’ worth and the amount of the mortgage you are trying to refinance. For that matter you could simply pay your mortgage holder that amount and they may be willing to refinance for you one the load is right-side up again.

However, if that’s not your situation, then your second option to get lenders to consider an upside down mortgage refinance would be to offer something else as collateral in order for them to consider a refinance on an upside down mortgage. All you’d have to do is add some other real property to your refinanced mortgage.

That tactic naturally assumes that you have another piece of real estate such as a summer home or something already worth more than the difference between what you owe and what your mortgage is worth.

If you are not in a situation for either one of those options, then your credit will have to be excellent in order to get a refincance for your upside-down property. How high? At least 700 in all three credit bureaus, & possibly much higher due to the current conditions of the market.
 
If you do have that great credit score and your mortgage is upside down by only a small amount, (under 5% for most properties) then you might be able to get a 110%  loan on the properties’ Fair market value.

Shopping for loans

Such loans are not available in all states and at all times, so you’ll need to shop around and maybe even make friends with your local real estate investment group in order to find them.

If you can’t afford, or don’t have the credit score to attempt any of these options, then your only remaining choices are to keep your present mortgage, or attempt a real estate short sale with a local investor… Of course you must be willing to sell the home and move out for the latter.

• Upside Down in Your Mortgage