I Have No Equity, Can I Get a 203K or Homestyle Refinance?

Although FHA 203K and Fannie Mae Homestyle loans are mostly based on after repair value, they still have a caveat that prevents many homeowners from utilizing them for refinances.

Renovation loans – the FHA 203K and the HomeStyle both require TWO values to work. They require the after repair value AND the AS-IS value.

Homeowners need to be at 95% loan to value or less on the as-is and 97.75% after repair value on the FHA 203k loan and typically (depending on lender) at 95% as-is and 90% afterrepairvalue on the Homestyle renovation loan.

If you are exploring either option for a refinance you need to research and pay close attention to BOTH values, AS-IS and AFTER REPAIR VALUE.

What Do I If I Have No Equity?

Well, you have several options. Some of which may not be ideal. However, this a financialdecision, you need to be smart and look at all the options. So, what ARE my options?

• Hang Tight – Don’t do anything, chill out, stay in you house and focus on other things
• HARP 2.0 Refinance – If you are upside down then your options are limited. You can’t sell, you can’t do a 203K, but you can still lower your interest rate if you have a conventional loan. Loan to value is NOT APPLICABLE for HARP 2.0. Regardless of how upside down you are, Obama’s Refinance plan can probably help!
• Not Eligible for Harp | DU Refi Plus? – Those that have a FHA, VA or USDA mortgage are not eligible for a Home Affordable Refinance Program. If you are upside down then you need to consider other options like a short sale or staying put.
• Short Sale – NEVER go with foreclosure, get an excellent Realtor and SHORT SALE instead
• HAFA – Government version of a short sale, you owe it to yourself to see if you qualify before you go into foreclosure.