How long before i can refinance my home?
Bought a home in April 07, with a sky high interest rate, due to lack of credit. How long before i can refinance and get a lower rate? Thanks
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Whenever your credit is good enough to get a lower rate.
You can refinance at any time if you have the equity. On a sub prime deal- meaning if your credit is not so good- you are generally held to the purchase price as the home value for the first 6- 12 months. If you can somehow qualify for A-paper loans you could take the new appriased value immediately with most banks.
The above answers are correct, however they left something out. You will need to check your Mortgage paperwork. There may be penalties that you have to pay if you pay off the first loan before a certain date. Some of the sub-prime loans had clauses that prevented you from getting out too soon, so that they could guarantee that they would get their investment back.
What part of the nation did you buy the house in? The 1st responder was not correct in his answer. The property has to have appreciated in value for a new lender to want to come in and take out the existing mortgage and you’ve only owned it for 2 months. You may have a pre-payment penalty to consider, too. If your rate is high, here’s 2 things to remember if you can’t refinance right now.
1) make 13 payments a year as this will reduce your principal
2) the interest, no matter what the rate, is a deduction.
lack of credit causing a high rate means you had a crappy loan officer.
You should be able to get 97% financing through FHA right now. Rates around 6.5-7% fixed. Not sure how you’ll manage to get closing costs paid for, but that’d be your best deal.
Credit is the key…just like everyone else has said so far. However, there are programs out there that are community based and can help you get a better interest rate even with marginal credit. You have to be aware of pre-pay penalties, look at page 1 of the note (legal page that say NOTE @ the top) 3/4 way down the page it will say prepayment…read that section and see if there is any type of penalty spelled out. Most subprime loans will have a 2-3 yr prepay attached. If so, then your penalty will be 6 mos of interest.
Depending on the rate you have and the rate offered the payment savings may be enough to offset the pre-pay. The closing costs should be reduced since you just closed. So it may be possible to refi and reap the benefits of a lower rate.
Bobby Bateman
Charter Funding
817-939-3032
http://www.charterfunding.com
You can refi 1 day after your initial closing; I recommend First National Banc Corp. They do business in most states and are your best opportunity for someone to say yes. ADDITIONALLY, IF YOUR CREDIT IS SUSPECT, THEY SOMETIMES FRONT THE MONEY TO GET YOU INTO A CREDIT RESTORATION PROGRAM SO THAT YOU CAN QUALIFY FOR A LOAN. Check out the free evaluation form at the source website and a First National loan officer will contact you within 24 hours. Good luck.