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San Francisco Real Estate Blog Readers Ask…

…and I try to answer.

Once in a while, a reader writes in with a question I don’t know the answer to.  And when that happens, I turn to my resources for help. 

A SF blog reader wrote in and asked:

I know you’re not a mortgage broker, but was wondering if you’re familiar with the situation now for refinancing. I bought a condo last year when I could still put 10% down. I have two interest-only loans (5/1 ARM and HELOC), and would like to refinance the first to a 30-year fixed, if possible. Is this impossible to do since I only have 10% equity in my condo?


Well, she’s right.  I’m not a mortgage broker.  So I asked my favorite mortgage broker if he had an answer to this conundrum.  As usual, he came through:


Provided you can obtain a new refinance appraisal with the current market value showing you still have a minimum of 10% equity in your condo you will be able to refinance your 1st mortgage from the LTV/CLTV perspective.  Good credit, typically a DTI under 50%, and 2-6 months of liquid reserves (lender specific) are the additional guidelines needing to be met in order to approve the new 1st mortgage loan file.


Current lender guidelines for a new Conforming 1st mortgage (max loan amount of $417k) read 80% LTV and 95% CLTV.  If you’re attempting to refinance a 1st mortgage into a High Balance loan (over $417k) then the Fannie and Freddie guidelines for which all lenders are underwriting against these days read 80% LTV and 90% CLTV.  The only exceptions to these guidelines would land with the current portfolio lenders.


Additionally, your current 2nd mortgage lender will need to approve subordinating their existing 2nd mortgage behind the new 1st mortgage.  Most 2nd mortgage lenders including HELOC lenders today are approving subordination requests provided you’re refinancing into a new loan program with P&I monthly payments.  Showing ability to make the new P&I monthly payment must also be established with the 2nd mortgage lender which plays into DTI ratio’s and DTI guidelines.  Although many 1st mortgage lenders may allow up to a 50% DTI to approve the new 1st mortgage some 2nd mortgage lenders are requiring the DTI to be at or below 45% to approve the subordination request.  Getting the subordination request approved will be one of the key factors in completing your refinance.


Feel free to call me if you have further questions.



Marc Geshekter

Senior Consultant

RPM Mortgage, Inc.


So – do YOU have questions about San Francisco real estate, financing, taxes, rentals, or anything else?  Give me a call at 415–307–1392 or email me.  I’m always happy to help!