Refinincing soon after taking out a mortgage

[Christina]

Will mortgage companies generally let you refinance if you have taken out an initial mortgage for the home within the year? We bought a house in September and were only able to put 10% down because we had to pay so much to sell our old house. We did an 80-10-10 mortgage. We bought a foreclosure, which appraised for 50k more than we paid. A house on our street just sold for a few hundred k more than we paid. We are thinking of refinancing to get rid of that adjustable rate 10% mortgage since we know the property value is there. Thoughts?

[jenjen]

We closed on a house last June. The rules in mortgage lending changed and you have to have closed and owned the home for 12 months exactly before you can apply to refinance. Our lender said you can refi in the first 12 months but that the "value" of your home is the LESSER of a new appraisal OR the amount you paid plus documented (receipts) improvements at cost.

We did a lot of work in cash and rates have dropped 1% since we closed last year so we tried to start the refi this month after talking to our lender. He reached out to an underwriter that says our application date for the refi has to be 365 days after we originally closed on the house. We weren't sure if we just needed to close on the refi 12 m later but we can't start the refi process until we hit the 12m date. So, you'll need to wait until Sept before an actual appraisal will be used to value your home.

[SpicedApplePie]

It probably depends on your bank, but we closed in March and refinanced in July with the same lender (lower interest rate that lowered our monthly payment by about 10%)

[jenjen]

May 23, 2012 13:48:49 GMT -5 SpicedApplePie said:

It probably depends on your bank, but we closed in March and refinanced in July with the same lender (lower interest rate that lowered our monthly payment by about 10%)

I'm sure you can refi for strictly a rate reduction however it's the valuation of the house that is calculated differently for those less than 1 year and more than 1 year. The poster mentioned that the home apprised $50k above their sales price and other homes have sold for higher. I doubt that they'll be able to use the appraisals as value for the house until the 1 year mark. Just from our own experience (house apprised higher than we paid plus we dd renovations ourselves in cash) we wouldn't get any "sweat equity" or any value on the deals we got because our appraised value for the first 365 days is sales price plus documented renovations.