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Trusted Contributor
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Registered: ‎03-09-2010

If you have a $100,000 mortgage and the house has been devalued by half, and you try to refinance, will the bank make you pay the difference between the original amount you were loaned and what its value is now?  Ex. If the $100,000 loan gets refinanced and the appraisal is now $50,000 do they refinance for $50,000 and not the original $100,000.?  No way I could pay the difference in a lump sum. Someone on these boards must have had a similar experience. I am afraid to alert the bank---they might call in the loan.

Respected Contributor
Posts: 4,997
Registered: ‎03-12-2010

Re: Question about refinancing

If I am understanding your question, you refinance the amount of the rest of your loan.

 

You borrowed it, you owe it.

 

The lending institution usually requires an appraisal, so if your property is worth LESS than the appraised value, they may not want to lend the money.  Not a good deal for the lender.

 

I have refinanced a few times, but the property was always worth more than what we borrowed, so I have not had any experience with the situation you described.

 

Hyacinth

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Posts: 4,206
Registered: ‎08-08-2011

Re: Question about refinancing

I have not had this happen but I think there are federal loan programs available for this situation if you qualify. 

Respected Contributor
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Registered: ‎03-12-2010

Re: Question about refinancing


@itsmagic wrote:

I have not had this happen but I think there are federal loan programs available for this situation if you qualify. 


 

Is that the one called HARP?

 

Hyacinth

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Posts: 4,206
Registered: ‎08-08-2011

Re: Question about refinancing


@hyacinth003 wrote:

@itsmagic wrote:

I have not had this happen but I think there are federal loan programs available for this situation if you qualify. 


 

Is that the one called HARP?

 

Hyacinth


Yes and I think there is another one but I don't have any experience with either. 

Honored Contributor
Posts: 20,143
Registered: ‎04-18-2012

Re: Question about refinancing

Underwriting is not going to allow the bank to finance a 100k loan on a house valued at 50k. If you're making your present mortgage payments they can't call in the loan you already have just because your house has reduced in value. 

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Posts: 536
Registered: ‎05-05-2015

Re: Question about refinancing

I would look into one of the HARP programs if the amount owed is more than the appraisal.  Otherwise, refinancing would not be an option since a traditional refi would require the loan to be only 80-90% of the appraised value, and if more were owed these conditions couldn't be met without bringing cash to the table.

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Posts: 1,060
Registered: ‎03-22-2015

Re: Question about refinancing

BAILEYSUE____ The smartest thing to do is go to Your bank first (if it is a reputable bank) and see about re-fi through them, or, go to a finanacial ADVISOR, NOT a finance company, to see what the best way to go is.  You will HAVE to refinance your BALANCE, not what you think it is worth.  Can you paint,new carpet, landscape?  Things like that can help get a higher appraisal.  NOT PROFESSIONAL ADVICE HERE, JUST IDEAS FROM READING LOTS OF DIFFERENT STUFF!!!!!!!          tedEbear

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Re: Question about refinancing

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Esteemed Contributor
Posts: 5,902
Registered: ‎03-12-2010

Re: Question about refinancing

Your lender will not allow you to refinance a loan for more than the present value of your home. You must continue to pay the loan you have or sell. Those are your options, along with foreclosure.