125 LTV / No equity loans?

Nisi

Do banks still offer these, or did the mortgage crisis put an end to them?

I'm in the process of buying a house, and am thinking about taking out a loan for debt consolidation. However we won't have much equity after purchase since we're using an FHA loan with 3.5% down.

Anyways I know these types of loans have quite a bit of risk attached, and I can't seem to find any major banks that offer them. A google search turns up a bunch of random mortgage companies, but I can't tell if any are reputable or not.

Main thing I'm wondering is if this type of loan is even still possible to get, and where I might look for one.

Djeet

Is this a re-fi or primary lien?

FHA did permit (subject to specific circumstances) upto 125 LTV for a re-fi so those underwater can get a better rate.

Never heard of a bank doing 125 LTV for a primary mortgage, and this 125 LTV re-fi thing is a pretty exceptional program pushed by the administration. Before the real estate market bust I do recall 100% finance plus no closing costs from banks on primary notes, from pretty shady guys with unfavorable ARMs.

This is what I'm talking about.

Nisi

Secondary mortgage/equity loan, rather than a refinance. I'm not terribly knowledgeable in all this stuff, been reading a lot lately trying to learn. But from what I gather a refinance on a new mortgage is probably not the easiest way to go about it.

http://financial.wellsfargo.com/educationcenter/100_125_home_equity_loans.html

That describes the type of loan I'm talking about.

Liquid Hellz

Find a good mortgage broker in your area, they may be able to get you one. Its not a refinance, if you have enough equity in your home they can shop it around and possibly get you a 2nd mortgage on it. If you can't get one through this route you could also try a HELOC (Home equity line of credit) basically a credit card backed by your home value/equity. Other routes if you have enough income/good credit might just be a high balance credit card or a bank loan? All of this im sure will be hard to come by with everything thats going on. There are also alot of lawyers out there doing debt consolidation advice/programs now as well. Wouldn't hurt to talk to one of them.

Rubix42

I've worked in lending the last 6 years now.

Our company doesn't even offer second loans anymore at all. Some programs allow a refi at an LTV of greater than 100%, but never in a cash out scenario, only in a payment/rate reduction scenario for amazing credit clients.

Your best bet is to look for a zero or low interest credit card to consolidate your debts, and make a big push to pay the sucker off ASAP.

If you really want a Heloc or second up to 125%, you'll need to find a small local bank that makes their own guidelines or a broker with a eye for profit and flexible morals. The large lenders just won't assume the risk anymore.

The Crowing One

You're not going to be able to get a Credit Line to 125% CLTV. You just can't, as the collateral doesn't exist.

You may be able to get a personal line of credit from a bank or, better yet, credit union. You will not be able to borrow against the home. Low-interest Card (hah!) is an option, or a quick Google search can get you the National Foundation for Credit Counseling, who often have consolidation services.

The Crowing One

Djeet wrote: »

Is this a re-fi or primary lien?

FHA did permit (subject to specific circumstances) upto 125 LTV for a re-fi so those underwater can get a better rate.

Never heard of a bank doing 125 LTV for a primary mortgage, and this 125 LTV re-fi thing is a pretty exceptional program pushed by the administration. Before the real estate market bust I do recall 100% finance plus no closing costs from banks on primary notes, from pretty shady guys with unfavorable ARMs.

The refi program was under the "HOPE for homeowners" program, and was offered as a means to refi without equity. No HELOC there.

Some houses still do 100% CLTV (we do!), but they are very rare and generally attached to federal and state subsidy for low and moderate-income homeowners.

The Making Home Affordable Refinance Program is for homeowners in risk of "imminent default". Unless you're about to default you can't get 'em.

This stuff is the crux of what I do, so feel free to ask any other questions. I know MHA inside and out, and often spend time looking for creative ways to allow my clients to pay of excessive debt.

Nisi

I don't even really want a credit line so much as a loan, though I would go that route to get it done I suppose. Reason I'm asking about this is, I know these type of loans definitely existed in the past, just not sure they're available anymore since the economy went to crap.

My Boyfriend has access to a credit union through his job, I'm just unsure of whether we'd be able to qualify for a personal loan high enough to be of use.

The Crowing One

Nisi wrote: »

I don't even really want a credit line so much as a loan. Reason I'm asking about this is, I know these type of loans definitely existed in the past, just not sure they're available anymore since the economy went to crap.

Same thing, basically. The difference is between a lump-sum "cash out" (taking equity directly out) and having a LoC (the same equity attached to a specific account that can be drawn at any time, and if you repay you can draw again, etc.). These two things are the same, with different means of dispersal.

You won't be able to borrow against the house without equity, and the closing costs will eat up a good chunk of change.

Consolidation or personal line of credit is probably the best bet.

Nisi

Right, I understand all that. So I take it these products did exist in the past but don't anymore is basically what you're saying? They're referred to as no equity loans for a reason.

The Crowing One

Nisi wrote: »

Right, I understand all that. So I take it these products did exist in the past but don't anymore is basically what you're saying? They're referred to as no equity loans for a reason.

They no longer exist, but everything changes state-to-state. I'm unaware of no-equity loans still in existence.

Nisi

Ok :? Beh, so I guess I look into a personal loan. At the very least buying this place is going to reduce my living expenses. My rent right now is ridiculous. Are personal loans generally a 4 year repayment or can that vary a lot? Cause 4 year repayment makes payments impossible for the amount I'd need.

The Crowing One

Nisi wrote: »

Ok :? Beh, so I guess I look into a personal loan. At the very least buying this place is going to reduce my living expenses. My rent right now is ridiculous.

You're actually (usually) safer with a personal line of credit. Not having the lien on the property makes borrowing against it in a decade a hell of a lot easier.

Nisi

Right, but isn't it harder to obtain without collateral? That and the repayment term are the main issues with a personal loan vs an equity loan for me.

Edit: Sorry I keep ninja editing things

The Crowing One

Nisi wrote: »

Right, but isn't it harder to obtain without collateral? That and the repayment term are the main issues with a personal loan vs an equity loan for me.

Getting a bit complex, yes.

Depending on your credit. You need to talk to the institutions for options.

Nisi

Well thank you for the advice. Looks like I'll have to wait for my finances to get a bit more settled and talk to our credit union likely.

Rubix42

Something to take into consideration, if you end up looking at a credit consolidation company, they do put you on a plan and negotiate with creditors, but something that is often not made clear to you is that at most of these places you will end up with lates on your credit report. They will take the majority of your payments and just send them to one creditor at a time while letting the others slide. Much better to negotiate with the creditors themselves if you have the time.