Trying to lower monthly mortgage payment- tried a refi and were appvd, until our home appraised for less?

Question

Than we owe on it. We paid 265 in 06 when it appraised for 275. As my husband and I both have less than perfect credit, it is hard for us to refi conventionally. We were trying an FHA loan. Could we sell the house to my father, who has sparkling credit, for what we owe on the home? To get a better monthly rate or even interest only rate? We don't plan on staying in the home for much longer- 2 yrs maybe.

Answer 1

Well, this is exactly the problem America is facing right now.  I am going through the same thing.  Bought my house at 234k three years ago....now worth 190k.  Ugh...very frustrating!

So, you can sell your house to whomever you want, except you still have to pay off your loan at closing.  Your father won't be able to get a loan for more than the value of the house so your proceeds at closing wouldn't be enough to pay off your mortgage.  No matter what your credit, banks don't refinance for less than you owe and don't give buyers mortgages for more than what the property is worth.....that's why the appraisal is important.   Basically, if you don't have the cash (the difference between what you owe and what it's worth), then you can't refinance or sell.    Period.

There are very few options for you at this point....I've been researching every possible avenue I can, and the result?  Bupkis....so we're trying a short sale.  Sorry to be the bearer of bad news.  I know how you feel!  I've been agonizing over it for several months and so have several of my friends.

Answer 2

You may do what you like with your house. Selling the house to your father will be OK.

There seems to be a problem with that scenario. A lender will only lend on the value of the propertyy today. Now if the propert have lost value and the loan amount is more than the value of the house, who will pay the current lender the difference between what the house is worth and what is owed on the mortgage.

The other problem how much will your father be able to put down on the house since a lender expects the minimum of 5% and in some cases more.

Even if your father qualified for a 100% mortgage you still have the difference of the current mortgage that is owed.

You might call your current lender, explain the situation to them and see if they can recast the current mortgage or refinance your mortgage.

In some instances the lenders will work with you so as not have a foreclosure on their hand.

Contact the "Loss Mitigation Department" don't fall for the line of there is nothing we can do, insist on talking to the department manager.

I hope this has been of some use to you, good luck.

"FIGHT ON"

Answer 3

You can't sell the home for more than what it is worth. No bank will allow that. I would try to go through a different appraiser & start over again.