Want to ReFinance w/Cash Out, Confused. Advice, Please! (appraised, 5%, mortgage)

[JohnMatrix12]

In NY. Currently paying 6.8% on a ARM from Wells Fargo. Owned the home for seven years. It appraised for approximately $64,500 at purchase, and there's roughly $53,000 remaining on the loan. Called W-F to see about a refinance with cash out and was told they can't do it unless the total loan amount was 75% of the total value--so it would have to appraise for $90,000. I doubt it's appreciated by that much and I'm guessing it would be closer to $70,000. (Area around me is fairly stagnant.)

What I'd like to do is refi to get a lower rate and take out $10,000-$12,000 for some debt consolidation. Is this possible with any lender, or does the Loan to Value make it impossible? If so, what would be the best way to refinance with no equity lending? Wells Fargo was offering 5% or so, but I've seen rates as low as 3.25%. Quicken keeps sending me letters like this, but the fine print wants $90,000 in minimum income. Don't quite understand that. Any help appreciated. Thanks.

[MrRational]

Originally Posted by JohnMatrix12

...there's roughly $53,000 remaining on the loan.

And what is the current fair market value (+/- $10k) ?

I'm guessing it would be closer to $70,000. (Area around me is fairly stagnant.)

FMV is $70k? That's not much of a property or equity.

...was told they can't do it unless the total loan amount was 75% of the total value

Or... did they say they can't do MORE than 75%?

$70,000 x .75 - $53,000 leave negative $500
Not much of an equity loan or payout.

What I'd like to do is refi to get a lower rate
and take out $10,000-$12,000 for some debt consolidation.

Sounds like that won't be possible for some time to come.

Best you could do is sell it at FMV ($70) and pay off the mortgage ($53)...
That would leave you with $17K for selling expense and the $12k CC debt payoff.
Of course you'll probably have to move back into your Mom's basement.

Is this possible with any lender, or does the Loan to Value make it impossible?

Pretty much.

[jghorton]

Even at the full $64.5K appraised value, a $53K note leaves you a maximum of only $11.5 equity, which represents about 20% of the value. With a $10-12K re-fi withdrawal, you are essentially asking the bank to give you all of your equity back (leaving nothing for even sales expenses or closing costs if a sale became necessary.)

That's probably not going to happen with most banks!

[Lacerta]

Are you sure your value is even up from 7 years ago? 7 years ago was 2007. In my area, that was right at or just after the peak of the market. Most houses in my area are worth much less than they were in 2007.

Also, as to why your interest rate is higher than you are seeing advertised:

Most banks charge a premium interest rate for small loans, I believe Wells Fargo is any loan under $100k. So for a $70k loan, you are going to pay a higher interest rate. Some banks just won't do it at all.

I recently refid through a credit union, which typically have more lax rules than banks, and even they needed 20% LTV to do the refi. So if your balance is $53k and you want to take out $12k, you'll need to have an appraised value of at least $81,250 to even be considered by anyone as a possibility.

[thelopez2]

Sell your place and buy a new one with a low down payment.

[Jkgourmet]

Have you considered refinancing just to get the lower rate, then getting a second job to pay off the credit cards??

[wilfredjwright]

It would be better to sell your property and pay the mortgage, after that start saving and you will be able to buy a new house again after some time.