Have equity in the house but can't refi the house for lower rate.

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Have equity in the house but can't refi the house for lower rate.

Taye N.
Hayward, CA · Member since 2009 · 258 posts · 62 votes

So currently my parents house is worth say, 525k and they owe about 260k. So the equity is about 265k. My dad makes about 45k he claims for his work.

His current interest rate is 5.5 percent. He wants to refi to get a lower rate. 

Any suggestions? I been to a few lenders and no one can help because he doesn't make enough.

Suggestions and advice, No co-signers 

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Andy D.
Investor · Zürich, Zürich · Member since 2016 · 292 posts · 115 votes
9y

Leaving aside the factual problem of him not qualifying: he should also run the numbers in the context of the bigger picture. Does it really save him much money? The refinancing costs, especially for a significantly lower rate, in relation to the new interest rate will make it a fairly long time before he will actually save money. While this obviously depends on the difference between the new rate and the current 5.5% as well as how much longer he will actually still own the property it is still something to consider.

Another idea: why not sell the place to, for instance, you, during which time you could refinance in your own name and have him rent the place from you, making you a landlord with all the benefits of deducting interest etc.? You would have to crunch the numbers. Again. Also: maybe even (partial) owner financing for the downpayment part that you would have to come up with could work? All this is, of course, dependent on you being able to qualify for a mortgage to begin with. ;-)

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  • Russell BrazilBusiness Member
    Moderator
    Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
    9y

    If it is an FHA loan, you can do a streamline refinance.

    [email protected]301-893-4635Podcast Guest on Show #192
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  • Taye N.
    OP
    Hayward, CA · Member since 2009 · 258 posts · 62 votes
    9y

    dont think it is a FHA loan

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  • Upen PatelPro Member
    Lender · Nationwide Lender · Member since 2015 · 1k+ posts · 814 votes
    9y

    @Taye N. With that amount of income, no way he will qualify for a new mortgage. As @Russell Brazil suggested your only hope is a FHA streamline refi, where you can get a lower rate, but no cash-out. If the current loan is not FHA then you might be out of luck.

    Anyone else with more income that can be added to the mortgage?

    [email protected]571-200-6180
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  • Andy D.
    Investor · Zürich, Zürich · Member since 2016 · 292 posts · 115 votes
    9y

    Leaving aside the factual problem of him not qualifying: he should also run the numbers in the context of the bigger picture. Does it really save him much money? The refinancing costs, especially for a significantly lower rate, in relation to the new interest rate will make it a fairly long time before he will actually save money. While this obviously depends on the difference between the new rate and the current 5.5% as well as how much longer he will actually still own the property it is still something to consider.

    Another idea: why not sell the place to, for instance, you, during which time you could refinance in your own name and have him rent the place from you, making you a landlord with all the benefits of deducting interest etc.? You would have to crunch the numbers. Again. Also: maybe even (partial) owner financing for the downpayment part that you would have to come up with could work? All this is, of course, dependent on you being able to qualify for a mortgage to begin with. ;-)

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