Is it possible to refinance an investment property with a high loan-to-value ratio?

Question :

I bought a condo 6 years ago for $375,000. At the time, it was my primary residence. By the time I relocated from Massachusetts to another state for work, the housing crisis had affected home values. My condo is currently valued by the county for real estate tax purposes at $356,000. I have a 30 year-fixed mortgage at 6.125% with a balance of $267,800 and a 30 year home equity loan at 7.89% with a balance of $72,000 (taken out to avoid PMI and to renovate the condo). I can't get a refinance under HARP (I've tried), because, though the condo is my sole property, it is considered an investment property. I have a tenant, which helps with the mortgage payments, but, the rent doesn't cover the mortgage costs, so, I have to supplement. I've paid the mortgage and home equity loans on time every month over the last 6 years and have a credit score of 770.

My question is, whether there are any refinance options for someone like me (or loan consolidation options that merge the two outstanding loans into a 30 year fixed loan)? The bank that manages my mortgage says that, if the condo was my primary residence or a second home, I would have no problem getting a refinance under HARP. Unfortunately, because it is now considered an investment property, my risk category has increased and it doesn't matter whether I have a history of paying more than the minimum over time; Freddie Mac rules (Freddie Mac is the investor in my mortgage) don't allow them to help me.

Answer :

You have a few options. Most likely you can refinance your 1st to a much lower rate - likely about 5%; if your 2nd will subordinate.

If the 2nd won't subordinate, you could get up to 80% LTV; but, there are some costly pricing adjustments that would probably make your current financing more attractive.

For Income analysis, your lender will consider your 1040 Schedule E to determine your income/loss.

Date: September 26