Can I refinance with an LTV above 80 percent?

Q: Can I refinance with an LTV above 80%?

A: The short answer is "yes," you can get a loan in excess of 80 percent loan to value (LTV) in a refinance transaction.

However, if the loan is to be backed by Fannie Mae or Freddie Mac, your mortgage lender will need to secure a Mortgage Insurance (MI) policy on your loan. That, plus any credit issues you might have can be a stumbling block. There are fewer companies writing MI policies these days, and those that remain are battered by losses on policies they wrote over the last few years and so are wary about taking on new risky policies.

The closer you are to 80 percent LTV the better your chances, but you should be able to find responses in most areas for up to 90 percent for a single-family home. It's much tougher when you have a condominium or co-operative apartment. You can also consider a refinance through the FHA program, where you need at little as a 3.5 percent equity stake; the up-front fees and recurring costs will generally start at about the same as an MI policy. However, since the FHA is a self-insuring pool, you won't be able to cancel without refinancing at some point. Still, it might be a small price to pay to be able to refinance and save thousands of interest charges...even if you have to give some of that back in fees.

Lastly, the government’s HARP refinance program is designed for borrowers with 80 percent LTV or higher. The program targets underwater borrowers, so depending on your LTV level at the time you apply, you could be approved.

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