Refi on a 2 family vs a 1 family

First there are the General Loan Limits:  $417,000 for Single Family,  $533,800 for Two Family, $645,300 for Three Family and $801,950 for Four Family.  All of these are applicable to be priced for general Conventional Loan pricing. Now, above the General Loan Limits there is another tier of Limits for designated ‘High Cost Areas’ (which Kings County is a designated within) : $625,500 for Single Family,  $800,775 for Two Family, $967,950 for Three Family and $1,202,925 for Four Family.   These Loan amounts (above the General Limit) are called either ‘High Balance’ (by Fannie Mae) or ‘Super Conforming’ (by Freddie Mac).    While these loan sizes are Underwritten by Agency (Fannie and Freddie) guidelines, they also have specific Underwriting Guidelines that differ from General Loan amount guidelines; plus are priced differently (higher) than General Loan amount limits. While the term ‘Jumbo’ used to be designated for anything above General Loan Limits, there are now gerenrally three tiers of products:  (general) Conventional, High Balance, and then Jumbo. Back to the original scenario, with interest rates notably lower for a $533,800 loan amount, as they were looking at a $540,000 loan amount they should consider trying to lower the loan amount to the general limit of $533,800 as the rate will be at least significantly less (.50%-.75% depending on credit scores)  than the 4.25% they were quoted for the $540,000 loan amount. -Adam

mortgagepro

in Mortgage 12 years and 8 months ago

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crownheights2012 | 12 years and 8 months ago

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I was told by a bank – my credit union which has current mortgage, that the rates on a refi on a two family are higher than on a one family. Is this generally true ? Also the 30 fixed rate quoted for a 540,000 refi is 4.2  and (assumes the best credit scenario – credit not yet pulled) House is worth 900,000. Should I shop elsewhere ? Or does a 4.2 % rate/30 years fixed seem in the norm for a two family jumbo loan ?

mortgagepro | 12 years and 8 months ago

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crownheights, there are a couple of items to touch on here: 1\. Yes, there are pricing adjustments for two family residences (vs single family). 2\. As the conventional loan limit for 2 family is $533,850, if possible, you may want to consider lowering your loan amount to meet that limit, as this would place you within conventional loan pricing (significantly better rates than High Balance).  Those who know me here are aware I am not here to self promote.  Whether you utilize your CU or not, if you have ANY questions, feel free to contact me as I enjoy helping everyone any way I can.  Adam Roberts  South Shore Mortgage  adamr@fast2fund.com

ditmarsman | 12 years and 8 months ago

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I did a refi that closed about a month ago and rate was 3.75 @ 30yrs, for a 2 family, 480k. Your rate seems a little high since I’ve heard rates have dropped since my refi, I would shop around

notny | 12 years and 8 months ago

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Aren’t conventional loan limits higher in Brooklyn for 2 family? I thought the limit was $ 800,775.

Bklnite | 12 years and 8 months ago

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Good suggestion about doing a little bit of cash in to get to the 2-family conventional loan limit. For Brooklyn & other high cost areas, I think Fannie & Freddie will purchase loans up to $800,775 but it will be a slightly higher interest rate. This freddiemac page refers to “super conforming mortgages”. http://www.freddiemac.com/sell/selbultn/limit.htm mortgagepro or another mortgage pro can correct me if I’m wrong.