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How do i refinance my house

how do i refinance my house

You don't and you can't. You can't 'get out of' your mortgage without severe penalties and you can't refinance unless you still have equity.

It doesn't matter if you are 'upside-down' unless you need to sell. Really, it doesn't.

People are 'upside-down' all the time on car loans and it doesn't freak them out.

I think the following is the most important part of this answer:

The bank never agreed to be your financial partner and assume risk with you. The bank agreed to lend you money and you agreed that you would repay it. If you are able to do so, you should. If the property was worth 125% of what you paid for it (i.e. a 25% profit) would you be looking to share that with the bank? Why do you think they should take (or even share) YOUR loss? People walking away from upside down mortgages really have the potential to completely sink the financial sector!

You can't walk away with no penalty. That's because you borrowed the money and YOU agreed to pay it back. When you don't pay it back, it shows you are irresponsible with money and not a good credit risk.

There are four levels of things you can do if you have to sell. The farther down the list you get, the more damage it does to your credit.

#1 - come up with the difference out of pocket at

closing. Not terribly attractive, but does no damage to your credit.

#2 - get the bank to agree to a 'short sale'. From a bank's point of view a short sale is a loss mitigation technique - meaning they think they'll lose more if they don't do this. This is why they have means testing for a short sale and why you already have to be delinquent in payments.

#3 - deed-in-lieu of foreclosure. A 'voluntary' foreclosure. Saves the bank attorney fees and a court date. Trashes your credit. Similar to qualifying for a short sale, you have to be in distress for a bank to agree to this.

#4 - full foreclosure. The bank hires and attorney and goes to court to gain ownership.

In cases 2, 3 and 4 there is a deficiency. They can come after you for the balance. In some states it is difficult for them to do so and they may choose to forgive the balance. If they do, they will almost certainly send you a 1099 next tax season where the amount forgiven counts as income to you (and now you have a real tax problem). If the amount isn't forgiven, they can go to court and seek a deficiency judgement against you. After they get this, they can garnish your wages to get repaid (and garnish any tax return, etc. you might be owed).

There is no 'getting out of' your mortgage.

Category: Credit

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