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Colorado / Virginia Property

by Karen
(Colorado Springs, CO)

My husband and I co-own a house in Virginia. We have lived in Colorado for 5 years now, and when we moved to CO (military retirement and relocation for my job), we could not sell our home in VA, so we rented it out.

The VA home has a 1st mortgage at 5% and a very high interest home equity loan (8%!) that we would like to combine into one, lower-interest rate loan.

BTW, we bought a house in Colorado.

Right now, we're being told that the house's 1st Mortgage is owned by Freddie Mac, so we can only refinance that first loan (not the 2nd). Help - My income is higher than my husband's, and I think I can qualify for the loan by myself - Can I buy the house from my husband and refinance it?

=====ANSWER=====

Hello Karen,

I would like to say thank you for visiting my website and asking such great questions. This situation has me a bit stumped here.

Since the laws of each state are so different I cannot really give any kind of legal advice. (That's my little disclaimer LOL) You may need to seek some legal advice on the transfer of property between a husband and wife.

But the problem you may run into is the mortgage. It sounds like you both are on the current 1st and 2nd mortgages. If that is the case, you really cannot get your husband off the mortgage unless the house is sold and money transfers between the buyer and seller.

I have never heard of a case where one marriage mate buys the house from another unless it was a divorce. Then it would be a new mortgage that would be required to get the other one off the old mortgage.

If the house has good equity, I cannot understand why you cannot refinance the house into a new 1st mortgage and pay the second mortgage off.

Freddie Mac operates under the federal lending guidelines when it comes to (LTV) loan to value ratios, (DTI) debt to income ratios and credit requirements.

The only real problem I see would be the LTV. So are the balances of your first and second mortgages combined equal to say 80% of the homes value?

For example:

1st mortgage balance = $80,000
2nd mortgage balance = $20,000
Total balance owed = $100,000 (your refinance amount)

House appraises at $125,000

80% of this appraised amount is $100,000 so in this example you would roll the two mortgages together and have a single mortgage for $100,000.

Use my mortgage calculators page to help you find the payoff figures.

The most important part of this is the LTV at this point. Once you have that at say 80% (preferred amount to avoid PMI), then you should have no problem getting a lender if your credit scores are good and income is sufficent.

I hope this all makes sense to you. If you find this information helpful, would you be so kind and pay it forward by sharing my website in your FaceBook and Twitter accounts? This will help me spread the word and keep the FREE resource going for everybody.

Best Regards,

Jeffrey Ragan


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